The Start of Privatized Roads?

A good way to beat traffic: Lease major toll roads

If you traveled by road over the Fourth of July, you might have found yourself in a parking lot mistakenly labeled as a highway. That was not the goal 50 years ago as the nation embarked on one of the most successful government programs ever: the interstate system. The 47,000-mile network of roads has been a boon to commerce, employment and family vacations ever since. But the vision isn’t keeping pace with the traffic – or perhaps more precisely, the public isn’t willing to finance the vision.

In the past decade, usage of interstates rose by more than 30%, according to the Department of Transportation, while additions of routes and added lanes increased capacity by only 4%. The problem is simple. Gasoline taxes and tolls, already unpopular, provide a fraction of the money needed to keep traffic from getting worse.

Now comes an idea to get around this problem. A number of states, most visibly Indiana, have proposed leasing major toll roads to private companies. By doing so, they can raise billions of dollars needed to make road improvements elsewhere.

Ideally, such leases would not be necessary. Governments would give highways and public transit systems the funds they need, and they would not shy away from raising the requisite money from the people who use them. That would ensure a network of efficient, carefully integrated transportation systems in ways that a more piecemeal approach cannot. But given the extreme resistance, which dates back decades and shows no signs of abating, leases are the best option for easing gridlock.

Truthfully, I’m not quite sure what to make of this. In some ways, I see this as being a starting point to private funding of the maintenance and operation of toll roads. And if the cost of travel is based on something at least resembling a balance of supply and demand, it actually starts to approximate a market-based system.

But I see some issues, the first of which being that this seems to be simply a shift of money. Road users will still pay for this, but they’ll pay over years and years of higher tolls on this road. At the same time, government either gets a one-time windfall of lease fees, or relies on the toll on this road to subsidize other construction for decades into the future. It’s not a way to make the toll road pay for itself, it’s a way to extort tolls from one road to subsidize the rest of the system. Why should the users of this road be forced to subsidize other roads they never use?

But even more striking is one simple passage: “Gasoline taxes and tolls, already unpopular, provide a fraction of the money needed to keep traffic from getting worse.” This overlooks two crucial problems. First, tax money isn’t always used for the purpose it is supposed to be. Whether it’s a “rainforest” in Iowa, a bridge to nowhere in Alaska, or any of the other places the Porkbusters folks have pointed out, it’s clear it’s not always spent on the roads it’s supposed to be. And this only underscores the second problem: our roads are managed by a central bureaucracy dominated by political interests. Normally I’m all for privatization, because the free market is much more efficient at producing functional systems than the political market. But I feel like this attempt to lease roads is taking a bad system and applying an even worse solution.

What does everyone else think on this one? Anyone think this is a good idea, and willing to explain where I’m wrong?

  • VRB

    They are probably looking for the onetime windfall and the continued lease fees to fill there coffers. They might even repair roads.
    For the consumer the better idea would be if Indiana would sell them. Maybe you would get a chance for the roads that you pay tolls would actually be drivable.

  • Eric

    Public roads are a classic “tragedy of the commons” problem. As long as they are treated as commons, they will be over used. And the average citizen will continue to refuse to fund them fully precisely because of the commons aspect.