Trump’s reversal on public-private partnerships (P3s) came suddenly to most folks, even inside the beltway, given that Transportation Secretary Elaine Chao was still pushing tax incentives to attract private investment as the core of the Trump infrastructure plan as of August 30. Now the focus becomes how to pay to fix the country’s infrastructure, absent P3s and tolls. While our focus should be on building freeways NOT tollways, let’s start by taking a look at the gas tax and why it hasn’t kept pace with the needs of the driving public; could this be due to political gas tax diversions combined with taxpayer distrust?
By Terri Hall l October 12, 2017
It’s big news for taxpayers, but for the special interests who have been pushing public-private partnerships (P3s) and toll roads as the way to fund $1 trillion in upgrades to America’s infrastructure, not so much. Maybe President Donald Trump realized the political consequences. In any event, he officially pulled the plug on P3s as the centerpiece to his infrastructure plan.
The president said simply, “They don’t work.”
Trump mentioned it in a meeting with members of the House Ways and Means Committee as he met with lawmakers to discuss tax reform. Citing the failure of the Interstate-69 P3 contract done under then-Governor of Indiana Mike Pence, the state recently had to sever the contract, take over the project, and issue its own debt to get it finished.
Interstates like I-69 were conceived as thoroughfare-legs to facilitate the NAFTA Superhighway to enhance global trade routes in North America through the U.S., Canada, and Mexico.
There were a host of problems relying on P3s and federal incentives to attract private investors. First, only projects that generate some sort of revenue attract private investors — hence ‘toll roads’. Second, giving out further federal tax incentives was likely to benefit projects that were already underway, not generate new investment. Plus, the feds have been generously doling out taxpayer-backed loans and bonds to guarantee the private investors’ losses and the track record of failure is well-documented.
P3s also give private investors exclusive, long-term monopolies designed to extract the highest possible toll from the traveling public, while requiring taxpayers to foot the bill for most potential threats to private entity’s profits. For instance, such contracts contain non-compete provisions that limit or prohibit the expansion of free routes surrounding the privatized toll lanes, deliberately slow speeds on the free routes and increase speeds on the toll lanes, force taxpayers to pay the private operators for any uncollectable tolls, and most P3 contracts used public funds to subsidize them (including every single P3 toll project in Texas).
But that’s just the tip of the iceberg.
The very idea that the public’s right to travel on public roadways is being subordinated to for-profit private corporations flies in the face of fundamental freedoms, the public interest, and abdicates this core function of government — building and maintaining the public highway system — to special interests in sweetheart deals.
Toll rates for two P3s in the Dallas-Ft. Worth area during peak hours can cost commuters $24/day just to get to work. Tolls, especially privately-operated toll roads, explode the tax burden to unaffordable levels adding thousands a year in taxes by entities the taxpayers cannot hold accountable. Congestion tolling, where the toll rates go through the roof in peak commute time, hits working class families and those rust belt workers the hardest that Trump promised to protect.
Then, there’s the problem for rural America.
Congestion is not a problem in rural towns. Since those projects can’t generate toll revenues, private investors would ignore small town infrastructure needs entirely, leaving vast swaths of the country without any meaningful solution to fixing rural highways. The Center for American Progress published a study that attested to that fact when it stated only one half of one percent of all highway projects could even be done using a P3.
Trump’s reversal on P3s came suddenly to most folks, even inside the beltway, given that Transportation Secretary Elaine Chao was still pushing tax incentives to attract private investment as the core of the Trump infrastructure plan as of August 30. Now the focus becomes how to pay to fix the country’s infrastructure, absent P3s and tolls. While our focus should be on building freeways NOT tollways, let’s start by taking a look at the gas tax and why it hasn’t kept pace with the needs of the driving public; could this be due to political gas tax diversions combined with taxpayer distrust?
Terri Hall is the founder of Texans Uniting for Reform and Freedom (TURF), which defends against eminent domain abuse and promotes non-toll transportation solutions. She’s a home school mother of ten turned citizen activist. Ms. Hall is also a contributor to SFPPR News & Analysis of the Conservative-Online-Journalism Center at the Washington-based Selous Foundation for Public Policy Research.