Without federal direction, states are finding unique ways to fund projects
A growing and disturbing trend is developing around the country as cash-strapped states struggle to both maintain and fund highway infrastructure projects. It's how states are trying to deal with the shortfalls. It's public-private partnerships. It's trying to skirt traditional regulatory process to avoid public scrutiny. It's failure waiting to happen. And we all know who pays in that system.
Ohio is the latest state that to embrace the trend, choosing to go the route of the public-private relationship. Governor John Kasich signed a $6.8 billion transportation bill into law at the end of March that will allow a private entity to partially or fully fund future public infrastructure projects. According to an article written by Joe Vardon for the March 31, 2011, edition of the Columbus Dispatch, the private enterprise that chooses to work with the state on a project would recoup its investment in one of three ways: interest payments from the state, toll collections, or other user fees. According to Jerry Wray, Ohio Dept. of Transportation director, the use of private money would likely lead to many projects being completed at a lower overall cost.
Of course, with the installation of tolls on those roads, the public will be paying for it for quite a long time.
Just recently, a bill started working its way through the Indiana legislature that opens the door to public-private partnerships in that state. It would also give the Indiana governor the authority to fast-track infrastructure projects, even bypassing the normal regulatory approval process. In essence, the governor would have the sole authority to approve projects, and even okay tolling, all without legislative approval or public input. His spokesperson said they would still seek approval from the legislature, but the bill doesn't require it.
While public-private partnerships might be a good idea, the real issue ultimately comes back to who pays. Under the current system, we pay gas and diesel fuel taxes that are used to fund the Highway Trust Fund. That fund pays for infrastructure projects. But if a private enterprise leases or even builds a highway — especially a major highway such as the Ohio Turnpike — are we not setting the public up to simply be putting profits into the pockets of private companies? I'm not against tolling, per se, but the idea of allowing a private enterprise to toll a road seems fraught with potential problems. Why would a company do that unless it thought it could make money on that stretch of road? And if that company can make money with tolls, can't the government do the same thing? At least then the revenue could be put to good use and improve the condition of roads throughout the state and not the bottom line of executives.
The fact remains that there isn't enough money in the Highway Trust Fund to maintain our current infrastructure, let alone pay for the construction of new highways. The Obama Administration has called for a $551 billion transportation spending bill over the next six years. The Republicans are proposing about half of that. Neither side, though, has said how it will pay for the bill, and it's also unclear as to when a bill will be signed. Some people are suggesting raising the fuel tax; others are suggesting a mileage-based tax. And without clear answers coming from Washington, that leaves states up to their own devices to find ways to fund projects. And the ones paying will be the American motoring public.
Brian Straight is Fleet Owner's managing editor. He can be reached at firstname.lastname@example.org