OUTSOURCING PUBLIC HIGHWAYS TO PRIVATE INTERESTS
DANIEL SCHULMAN & JAMES RIDGEWAY, MOTHER JONES - Over the past few
years, the federal government has rolled out the welcome mat for private
road companies. The 2005 highway bill changed the tax code to allow
private firms to raise tax-exempt financing for road projects, something
that only governments were able to do up to now. (For congressional pork
buffs, this was the same legislation that contained Alaska Republican
congressman Don Young's "bridge to nowhere," and that, by way of homage
to Young's wife, Lu, was named the Safe, Accountable, Flexible,
Efficient Transportation Equity Act - A Legacy for Users, a.k.a.
SAFETEA-LU.) The bill also expanded eligibility for a transportation
subsidy program that includes loan guarantees and lines of credit, and
created a pilot program that lets participating states use tolling to
finance interstate highway construction and invite private-sector
participation on the projects. "It's a very, very sweet deal," says a
veteran congressional transportation committee staffer who requested
anonymity because of his role advising members on highway policy.
On June 29, 2006, Mitch Daniels, the former Bush administration official
turned governor of Indiana, was greeted with a round of applause as he
stepped into a conference room packed with reporters and state
lawmakers. The last of eight wire transfers had landed in the state's
account, making it official: Indiana had received $3.8 billion from a
foreign consortium made up of the Spanish construction firm Cintra and
the Macquarie Infrastructure Group of Australia, and in exchange the
state would hand over operation of the 157-mile Indiana Toll Road for
the next 75 years. The arrangement would yield hundreds of millions of
dollars in tax breaks for the consortium, which also received immunity
from most local and state taxes in its contract with Indiana. And, of
course, the consortium would collect all the tolls, which it was allowed
to raise to levels far beyond what Hoosiers had been used to. By one
calculation, the Toll Road would generate more than $11 billion over the
75-year life of the contract, a nice return on MIG-Cintra's $3.8 billion
investment.
The deal to privatize the Toll Road had been almost a year in the
making. Proponents celebrated it as a no-pain, all-gain way to off-load
maintenance expenses and mobilize new highway-building funds without
raising taxes. Opponents lambasted it as a major turn toward handing the
nation's common property over to private firms, and at fire-sale prices
to boot.
The one thing everyone agreed on was that the Indiana deal was just a
prelude. . .
http://www.motherjones.com/news/feature/2007/01/highwaymen.html
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DANIEL SCHULMAN & JAMES RIDGEWAY, MOTHER JONES - Over the past few
years, the federal government has rolled out the welcome mat for private
road companies. The 2005 highway bill changed the tax code to allow
private firms to raise tax-exempt financing for road projects, something
that only governments were able to do up to now. (For congressional pork
buffs, this was the same legislation that contained Alaska Republican
congressman Don Young's "bridge to nowhere," and that, by way of homage
to Young's wife, Lu, was named the Safe, Accountable, Flexible,
Efficient Transportation Equity Act - A Legacy for Users, a.k.a.
SAFETEA-LU.) The bill also expanded eligibility for a transportation
subsidy program that includes loan guarantees and lines of credit, and
created a pilot program that lets participating states use tolling to
finance interstate highway construction and invite private-sector
participation on the projects. "It's a very, very sweet deal," says a
veteran congressional transportation committee staffer who requested
anonymity because of his role advising members on highway policy.
On June 29, 2006, Mitch Daniels, the former Bush administration official
turned governor of Indiana, was greeted with a round of applause as he
stepped into a conference room packed with reporters and state
lawmakers. The last of eight wire transfers had landed in the state's
account, making it official: Indiana had received $3.8 billion from a
foreign consortium made up of the Spanish construction firm Cintra and
the Macquarie Infrastructure Group of Australia, and in exchange the
state would hand over operation of the 157-mile Indiana Toll Road for
the next 75 years. The arrangement would yield hundreds of millions of
dollars in tax breaks for the consortium, which also received immunity
from most local and state taxes in its contract with Indiana. And, of
course, the consortium would collect all the tolls, which it was allowed
to raise to levels far beyond what Hoosiers had been used to. By one
calculation, the Toll Road would generate more than $11 billion over the
75-year life of the contract, a nice return on MIG-Cintra's $3.8 billion
investment.
The deal to privatize the Toll Road had been almost a year in the
making. Proponents celebrated it as a no-pain, all-gain way to off-load
maintenance expenses and mobilize new highway-building funds without
raising taxes. Opponents lambasted it as a major turn toward handing the
nation's common property over to private firms, and at fire-sale prices
to boot.
The one thing everyone agreed on was that the Indiana deal was just a
prelude. . .
http://www.motherjones.com/news/feature/2007/01/highwaymen.html
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