June 30, 2005
Government admitting failure
Wow. In my last post, I asked why our politicians don’t have the ability to admit when they’ve failed. Well, they’re not explicitly admitting failure, but any time government takes something that was public and privatizes it, it’s an admission that they can no longer handle it.
US Congress seen paving way for private toll roads
Looking for ways to finance highway projects without hitting the public trough, the U.S. Congress appears set to pass a proposal to encourage private ownership of new toll roads.
The provision, part of the highway spending bill now being hammered out by a Senate and House conference committee, would allow private companies to raise up to $15 billion for highway projects with bonds that are exempt from federal income taxes.
While the proposal has broad support in Washington and the business community, the idea of private highways has incited grassroots opposition in some states, with some saying the government — not a profit-seeking company — is the proper owner of the public’s roads.
This is something that libertarians have been talking about for years. It’s one of those things that every rational non-libertarian has said to us that it’ll never work, which is understandable, since we’ve watched our entire lives as government had a monopoly on the highway business.
For pragmatic libertarians like myself, I’ve always thought there is a convincing argument that roads are a public good, and thus it is easily argued that it may be a legitimate purpose for taxation. I’ve taken the middle position against the anarcho-capitalists and more extreme libertarians, in that I would absolutely slash federal involvement in the process, but not necessarily fight local and state government spending on roads. This is due both to the inability to manage something properly that you’re a thousand miles away from, and the ease at which the Federal Government oversteps states’ rights by taxing them for highway funds and then withholding those funds unless the states are cooperative in other matters.
But although I see a legitimate need for public roads, I think augmenting those roads with private toll roads makes a lot of sense. Roads, to a certain extent, benefit everyone. Most people drive on roads, and those who don’t at least receive deliveries, benefit from the shipment of food and other goods, and thus it is a truly public good. Often, however, the entire population is forced to pay for roads that are very rarely used, or that benefit certain classes of people much more than others. As an example, when I lived in California, I had two routes to get into the mountains on the weekend. One route cost me $3, and got me a good portion of the way there in 15-20 minutes on a Friday afternoon. The other route cost me nothing, and got me to the same point, but in Friday afternoon traffic, could easily take more than an hour. On a Friday afternoon, I’d gladly pay the money and save the aggravation of LA traffic. On Sunday when coming back, I would often choose the free route, because faster traffic made the $3 more valuable than saving only 5-10 minutes in shorter distance.
Of course, there is a quick response to this. Someone could say that the public would be better served if both roads were opened to the public for free. To them I say yes, that is true. And if both roads were completely funded through public means, I would strongly agree. But the toll road, in the long run, is not a necessary road. It is a convenience and an advantage. It provides a route between two points that already has a major freeway between them, and since it is routed through non-developed land, it serves no local businesses or groups. It is the perfect example of a road that would be better to develop privately than publically. It is a non-essential highway, and thus it is paid for by its users, rather than the general public. (For those familiar with SoCal, I’m talking about the 241/261 freeway complex between Orange County and the 91 freeway).
I’m not that big of a fan of funding these through tax-exempt bonds, but that’s not a major issue, as they mention:
And while the private-activity bonds will not require any outlay of public funds, the government would pay for the plan in the form of reduced tax rolls, estimated at $500 million over six years.
In a highway bill that would cost $275 billion or more in that time, $500 million is a small price to pay for a novel financing mechanism that could pay for dozens of projects, said Katherine Hedlund, an Arlington, Virginia-based partner at Nossaman, Guthner, Knox & Elliott LLP, which advises state governments on transportation issues.
So the ramifications to taxes on those bonds are paltry in comparison to the savings to already-stretched highway budgets.
As completely expected, Reuters throws in a bone to those who are upset at the Bush tax cuts as well:
But Ellen Danning, a law professor at Wayne State University in Detroit who has written on privatization, said private companies are not necessarily more efficient at running roads, and their tolls amount to a regressive tax on highway building.
A better solution to public underfunding of the road system may be to roll back tax cuts that are squeezing the federal budget, Danning said.
“One of the things to ask yourself is, why doesn’t the government have the money to spend on the infrastructure that we need?” she said.
Ahh, the quick response of a liberal to inefficient, bloated government. No, they shouldn’t try to figure out whether there is waste. They shouldn’t try to ask why the government doesn’t use their money more wisely. They should simply ask that we, the taxpayers, trust that they’re being efficient, and with the largest federal transportation budget in this nation’s history, that they just simply need more to work with.
No. The fact that this is being pushed at all shows that the government has realized that federal control is not the most efficient method for disbursing money for local projects. I believe that we not only need to encourage more of this practice, but we need to ask our elected officials just where all that money is going. It is fine when the government realizes they can’t provide services to us. But I wish someday they’d understand that they should stop charging us for those services as well.
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I’m assuming there will be no emminent domain issues here?
I have no problem with toll roads. I actually think that cities with underused HOV lanes should also sell access to individuals willing to pay. Charge for the right to access, or use an electronic signal that charges for the time in the lane, charging more during rush hour and other peak times.
Just b/c the govt. is involved doesn’t mean user fees, rather than taxes, couldn’t be employed. We charge people to file lawsuits. We can charge them for certain road convieniences also.