There is a good column on infrastructure privatization by Washington Post columnist Jerry Knight in today’s Fort Wayne Journal Gazette. He talks about how corporations like Goldman Sachs and the Carlyle Group are getting into infrastructure purchases.
Transportation was once one of the things Americans counted on their government to provide. New York Gov. De Witt Clinton built the Erie Canal and opened up the Midwest in the early 1800s. President Dwight D. Eisenhower started the interstate highway system in the 1950s and put America on the road to being the world’s most motorized society.
But anybody who’s ever been caught in Washington traffic knows our elected officials lack the vision and the political will to deal with transportation issues that require difficult, politically unpopular decisions. Like raising taxes.
Ducking tax increases is what motivated the state of Indiana and the city of Chicago to sell their toll roads. Indiana was facing a $10 billion bill for updating its highway system when Gov. Mitch Daniels, a former federal budget director, came up with an alternative to paying the price – tapping the Toll Road. Chicago didn’t need roads; it needed money. Monetizing the Skyway brought in $1.8 billion. That was enough to pay off $855 million in debt – only part of it due on the road itself – as well as set aside $500 million for a “rainy day fund†and give a few million in home heating assistance to the city’s poor.
If that sounds like tossing the family furniture in the fireplace to keep the house warm, you’re getting the message.
The Chicago Skyway was an easier sell in Chicago because very few Chicagoans need it to go places on a regular basis, unlike the relationship of northern Indiana residents to what was our Toll Road. The Skyway was, and is, almost purely about tapping non-residents of the city. What has been of some interest to me is how Chicago used the money it realized. And it wasn’t about building more roads, but more about putting the city on a sound financial footing. Daniels’ building binge will eventually increase the claims Indiana’s transportation system makes on our resources, particularly if higher fuel costs result in less travel and higher fuel efficiency in vehicles (and less fuel tax collected). Indiana residents will eventually have to pay to maintain these roads, but one supposes Daniels will be long gone by the time that bill comes due.
The Chicago Skyway is also about 10 miles long, if I remember correctly, unlike the 157 or so miles of the tollway and the yet-to-be-determined route for I-69. It’s one thing to give away control of a bridge, it’s a whole other thing to give away monetary control of about half of the state highway system.
Like I have said the before here, the primary sane rational for the privatization of a public asset is to lessen the public’s exposure to a potential decline in its value or utility. In other words, a hedge. The French Government is selling off their holdings in the nation’s tollroads inorder to pay down debt and continue building out its Nuclear power, alternative energy, and high speed electric rail/mass transit infastructure. When Peak Oil hits in year or two, the French will look like geniuses.
Dimwit Daniels is selling off the tollroad for the following reasons: To reward buddies in the investment community and road building industry who will be glad to pump millions into his reelection campaign or hand him a plum job if he is thrown out of office. Because he is an unimaginative Neo-Liberal/Ayn Rand Libertarian idealogue who can not look around and see that there is a global revolt brewing around the world against such policies. Because Daniels has a 1950’s mindset and is incredibly ignorant of how Peak Oil will make spending more public money building roads an insane waste of money and contribute nothing to Indiana’s economic future.