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Stay Away from the Private Sector-Why?

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March 26, 2008

Baton Route, Louisiana

PRIVATE OWNERSHIP OF ROADS AND BRIDGES?
HEAVEN FORBID!

In Louisiana, a number of Jefferson and St. Tammany Parish officials were aghast last week over supposedly “secret negotiations” to sell the Causeway Bridge that goes to the North Shore across Lake Pontchartrain. When the state’s largest paper, the Times Picayune, mixed the idea editorially, one elected official after the other fell all over themselves running away from even any talk of such an atrocity.

“That is the most ridiculous thing ever heard in my life,” said one Jefferson councilman. “I’m just flabbergasted that is even being considered,” said another. The gang at the TP took the final blow by editorializing that “this bad idea can’t die fast enough.” So why on earth would any public official even consider such an idea?

Well, perhaps because the sale of roads, buildings, sewer systems and a number of other publicly built projects are being sold to private groups in more progressive states all over the country. New projects are regularly being bid out to private groups to either lease or own. It’s the wave of the future, not just in the U.S., but in industrialized countries worldwide.

In Virginia, the major interstate south of Washington, DC is a toll road built by a private investment group. In Detroit, there is an ordinary four-lane bridge in the busiest commercial border crossing in North America, carrying one-third of all road trade “” or more than $122 billion in goods a year “” between the two countries. It is owned by one man and his privately held company.

In a lengthy story appearing in Time Magazine last week, they reported that Texas has gone ahead and devised something new for the Longhorn State: their first privately owned and privately financed modern toll road. This week the Texas Turnpike Co. will start constructing a 223-mile, four-lane thruway from the Dallas area to Houston, at a cost of $140 million. At the same time the Sam Houston Toll Road Corp. will start building the first leg (Dallas-Waco, 83 miles) of its $140 million 246-mile Dallas-San Antonio Thruway. Private operators. Private leasing.

Airport rail links like the Chicago Skyway and the new California South Bay Expressway are examples of many privately owned toll roads in the US. Privately owned toll roads have been popular in Europe and Australia for years. In Chicago, Mayor Richard Daley auctioned off the city’s Skyway Transportation system for $1.8 billion. And right now, he’s trying to sell Midway Airport for more than $3 billion.  And take a look at Indiana. Facing a $3 billion transportation-funding shortfall, Governor Mitch Daniels two years ago auctioned off the rights to operate the Indiana Toll Road to a private group for a mere $3.85 billion.

Estimates have been made by the U.S. Department of Transportation that worldwide there have been more than 1100 private-public deals in the transportation field alone in the past 20 years, with a value of some $360 billion.

So what gives here? The Wall Street Journal asks the question recently as to whether there is any legitimate concern that private operators are only interested in making “money at the expense of taxpayers, and that new owners will skimp on maintenance and repair work in order to squeeze profits out of these operations?“  Progressive states around the country have dealt with these objections by building in restrictions and operating requirements to the contract which allow any such deal to be canceled and the roads and bridges taken back if” operators do not live up to the terms.”

If you want to be a bit cynical about those who oppose private ownership, one might wonder whether those objecting are looking to maintain their hold on public assets, especially since the commissions that often run these public authorities, as we have often seen, can create real job-patronage mills. And who is really happy with the condition of roads and bridges throughout Louisiana?

Here’s what the Wall Street Journal has a say about private ownership of bridges and highways. “For the first time in over a generation, America’s mayors and governors are looking at a realistic way to jump-start spending they’ve neglected for too long. Such deals bring welcome benefits to the transportation sector.”

Louisiana is facing a massive backlog of road and bridge repairs, as well as new construction needs. It is completely unrealistic to think that the new governor and legislature will be able to find enough new revenue to deal with this huge transportation problem. Rather than limping along, other states are becoming aggressive and proactive in bringing in the private sector. We need less parochial grandstanding and more well-thought out vision by those who are elected to serve us in the New Orleans area as well as throughout the entire state. As Indiana Governor Daniels told critics at a congressional hearing last year, “Does no one notice the risk of inaction?”

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“A new leader has to be able to change an organization that is dreamless, soulless and vision-less … someone’s got to make a wake up call.”
– Warren Bennis

Peace and Justice.

Jim Brown

7 Responses
  1. mlo

    great column. Good points. thanks for helping us understand why private ownership should be an option in Louisiana

  2. I. B. Freeman

    Privatization of highways and bridges is an excellent idea.

    In addition to the arguments Mr. Brown makes, one should consider that without fuel tax increases the revenue to maintain and construct roads will go down as the nation moves to alternative vehicle power technology and more fuel efficient automobiles. Privatization puts this risk on the backs of investors instead of the state.

    Louisiana, for example, should sell the right of way rights to construct the Zachary Taylor Freeway to private investors and get on with building this much needed highway project. This road would reduce the traffic in and around Baton Rouge and take traffic off the I-10 and I-12 system. No doubt there are several good proposed projects across the state that privatization would make sense
    (What if we sold I-10 and paid off most of the state debt? Would we get a tax reduction?)

    It is very good these out of the box solutions are being discussed. Kudos to Mr. Brown for his support of private enterprise.

  3. S. W. LeJeune

    Privatization of our transportation routes is not new to Louisiana. Its just none of us(except Jim)are old enough to remember. I recall reading that the old and/or new basin canals that serviced New Orleans in the 19th century were put out to bid by the state to private operators. They collected the tolls and were responsible for the maintenance.

  4. bob

    Privatization of our transportation??? so what this means is the taxpayers build a road or bridge and afterwards a private person can buy it and make a profit from the toll money. why not sell Louisiana to Privatization and remove the road and bridge tax.

  5. James

    Any time anyone refers to “progressive” entities of any type, I tune out. Was a favorite term of the communists in years past and idiots in the present.

  6. BR Attorney

    Don’t confuse a well connected firm like Shaw cutting a deal in secret with “private enterprise.” This is more like “crony capitalism” in the Phllippines under Marcos. In fact, this deal is just one more way La. resembles a third world country. Had this been legit, the Causeway would have been auctioned off to the highest bidder, the way the rights to the “only” lnad-based casino should have been.

  7. The reason there are not enough highways to handle the ever increasing traffic is because the public has always encouraged the legislature and congress to spend a large portion of both state and federal road use taxes on projects other than highways and bridges.

    Federal and state road use taxes must be spent only on highways and bridges if the state is to build only those projects that are necessary to relieve traffic problems in Louisiana.

    But with 144 members in the Louisiana Legislature and 535 members in the Congress, local political patronage always will take precedence. And that is the reason highway construction never will keep up with the needs to build a modern highway system in Louisiana.

    The public — the people of Louisiana — have never wanted to build and maintain a modern highway system in Louisiana. Until that notion is changed and the people really want to have a modern highway system, road use taxes will continue to be mis-spent on other projects.

    Private ownership of highways and bridges is just another way to keep spending road use taxes on everything except highways and bridges.

    Private ownership of roads and bridges will make a few person very rich at an enormous cost to the motorists and taxpayers.

    There is nothing wrong with the present road use taxes that new state and congressional leadership cannot correct.

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