Everyone Will Have a Say
Toll Roads: Joe Mysak
By Joe Mysak
Jan. 10 (Bloomberg) -- Before any
U.S. state or locality decides to
sell the streets, toll roads or
airports, it should:
Disclose any proposed future toll
or fee increases or maximum rate
frameworks to the public;
Detail all fee or toll
provisions, contract incentives and
Set minimum environmental
Establish operating standards,
safety requirements, security
arrangements, and capital
Disclose who gets the jobs;
Describe what would happen in the
event of default;
Say how the municipality will
replace the money that it now
collects from the airport or toll
Disclose any non-compete
agreements that might affect the
expansion of other transportation
And reveal how much it's all
going to cost, including how much
the bankers and lawyers get.
That's just for starters. The
state or locality should also hold
hearings and town-hall meetings and
ask for everyone's opinion and --
Well, you can see how we might
have some problems here, if any of
us actually expect to make this
privatization of public assets thing
a reality before, oh, the century is
What Elected Officials Do
Don't get me wrong.
It's a big
mistake for public officials to rush
into a fire sale of the public's
assets, things like toll roads and
airports and whatever else lends
itself to privatization these days.
Governing magazine estimates in its
current issue that investors have
$100 billion they want to put to
work in U.S. infrastructure.
We aren't really talking about a
sale of these assets, but rather
what are being termed public-private
partnerships, where states or
localities lease an asset to a
private company for a 50-year or
75-year or 99-year period, in
exchange for a pot of cash upfront.
More and more states and
municipalities are thinking about
leasing assets, reasoning that they
can do a lot with the cash, and at
the same time get out of businesses
that aren't particular areas of
They should be very careful. At
some point, however, let's all
realize that we elect our public
officials to lead and govern on our
behalf. In other words, this
privatization business isn't going
to be run on democratic lines.
particular, the leasing of public
assets, it seems, isn't going to be
run along "liberum veto''
lines, which refers to the veto
every member of the Polish
parliament had in the 18th century.
Predictably, nothing got done.
These thoughts occur after a read
through the Regional Plan
Association's white paper, released
Jan. 8, titled "Proceed With
Caution: Ground Rules for a Public
Private Partnership in New Jersey.''
You may have heard that New
Jersey is thinking about selling
some assets, notably the turnpike
and the Garden State Parkway, big
roads that run through the state and
that are cash cows.
"In fact,'' the
notes, "the New Jersey Turnpike has
the highest revenue flow of any
tolled facility in the U.S,''
collecting $507 million in 2004.
Chicago Skyway, by
comparison, brought in about $40
million in 2004; the city of Chicago
leased it for $1.83 billion in 2005.
The Indiana Toll Road made about $95
million in 2004 and was leased for
$3.85 billion in 2006. New Jersey
thinks it could get a lot more for
the turnpike, and the figure of $10
billion has been bandied about.
is a good read. It is also brutally
roads can be worth more to private
firms primarily because they can
potentially raise tolls more easily,
and, in some cases, because they can
reap substantial tax benefits,'' the
Let's put aside the possibility
of those tax benefits and focus on
just the first part of that
Private firms can raise
tolls more easily than governments.
firms are insulated from a political
climate that discourages raising
tolls, and the ability to schedule
and rely on future toll increases,
even if such increases are modest,
attracts investment into privately
operated toll roads.''
It can't be put any clearer.
Leasing the roads in exchange for
billions of dollars is going to
result in toll increases, and lots
This is why we won't see lots of
referenda on selling the streets.
When it comes to public services, we
don't want to pay what things
actually cost. We think we already
pay enough in taxes to cover the
white paper includes a
laundry list of the things New
Jersey must make absolutely sure
about before selling the turnpike.
Many of them are common sense. But
something tells me that the list of
things people will demand to know
with absolute certitude is going to
grow, and grow, and grow, and will
include things that are unknowable
or incalculable. That won't stop the
critics of these transactions from
demanding them, in essence
attempting to torpedo the deals.
New Jersey might sell some stuff
-- in Governor Jon Corzine's second
(Joe Mysak is a
columnist. The opinions expressed
are his own.)
To contact the writer of this
column: Joe Mysak in New York at