It’s a new way for states to manage their highways that could solve traffic congestion in some of the most clogged parts of the country while also warding off tax increases and bringing state governments more money.
Who could oppose such a plan? For one, the companies that are being subsidized by the current way of doing business — that is, the trucking industry. For two, the industry’s friends in Congress.
Governors in both parties are warming up to the idea of leasing roads to private companies, which would pay the state for the right to maintain the roads. In exchange, the company would get to keep some sizable portion of the tolls they collected.
While states would regulate these private road managers — setting minimum maintenance standards and requiring approval before increasing tolls — these “Public-Private Partnerships” would probably result in higher tolls.
On Capitol Hill, key congressmen are raising a red flag, warning governors not to go too far in privatizing highway management, expressing concerns about “the public interest” and “sweetheart deals.”
Leading the congressional resistance to privatized road management is Democratic Rep. Jim Oberstar, who in 2006 received more campaign contributions from the trucking industry than any other congressional candidate.
The issue at hand is, who should pay for new roads and the care for existing roads? Currently, state and federal gas taxes pay for most highway costs, while local governments fund local roads out of sales tax and property tax. This means that local drivers are, on balance, subsidizing highway drivers.
Also, many states get at least part of their highway money from statewide sales or income taxes, resulting in walkers and bike-riders subsidizing highways. When toll revenue funds highways, the people who use the highways are paying for the highways. The PPPs all would raise money through tolls and thus shift the cost of highways onto the users of highways.
So while PPPs could result in more road money and lower taxes, they mean higher tolls. For trucking companies, this means losing the subsidy they get from the current system. Luckily for the truckers, they have important friends in Washington.
The American Trucking Association, with Capitol Hill offices smack in between the Republican National Committee and the National Rifle Association, spends more than $2 million in the average year lobbying in behalf of trucking companies. ATA’s president and CEO is former Kansas Gov. Bill Graves, a one-time contender to be President Bush’s secretary of transportation.
In the past two election cycles, ATA’s political action committee has given more than $1 million to candidates for federal office, including $7,000 to Oberstar. In the 2006 election cycle, Oberstar pulled in $49,500 from all donors within the trucking industry, according to the Center for Responsive Politics, more than any other House candidate.
On May 10, Oberstar, newly minted chairman of the House Transportation Committee, sent a letter to governors, state lawmakers and state highway officials warning them not to get too carried away with these PPPs that could result in new or higher tolls. “The Committee will work to undo any state PPP agreements that do not full protect the public interest,” he wrote.
Even though these PPPs are state contracts with private contractors about state-owned roads, Oberstar’s committee has already held four hearings on PPPs since Democrats have taken control of Congress.
Why is this Washington’s business? Bill Graves said on CNBC in February that PPPs constitute “an abdication of federal and state responsibilities to serve the public good” and objected that expanding PPPs would start “building in profit margins where none need exist.”
In other words, truckers like the fact that highways currently operate at a loss, with taxpayers or local-road drivers picking up the shortfall — and they want Congress to keep it that way.
Any business would like to have one of its vendors operate without concern for profit — which is exactly what the state and county highway authorities currently do for truckers. Surely, most businesses would love it if their shippers weren’t “building in profit margins.”
Because retailers and manufacturers have options other than trucks — rail, water, or finding closer suppliers or buyers — when it comes to transporting goods, trucking companies might not be able to pass higher tolls to customers. In some cases, companies would switch away from trucking, and in other cases, the higher tolls would simply shrink truckers’ profit margin.
You can see why Bill Graves and the ATA are willing to fight hard against privatizing roads and why they’re glad they invested nearly $50,000 last election to ensure Oberstar would be on their side.
Examiner columnist Timothy P. Carney is author of “The Big Ripoff: How Big Business and Big Government steal your money.”
