Senate Punts on Long-term Fix to Federal Highway Program

By Terri Hall l March 19, 2012

With the next continuing resolution for the federal highway program coming to an end March 31, lawmakers in the nation’s Capitol have been scrambling to address systemic shortfalls in the Federal Highway Trust Fund, before they run out of time. Though making some structural changes to consolidate programs in the transportation reauthorization legislation, the U.S. Senate chose to kick the can down the road once more, passing a short-term extension bill, S. 1813, also referred to as MAP-21, last week.

Meanwhile, John Mica (R-FL), Chair of the House Committee on Transportation and Infrastructure, has been pushing for a 5-year transportation spending bill and a more long-term solution, but has struggled to gain the votes necessary for passage. They have until March 31 to pass the House bill or take up the Senate bill and, in either case, they’ll need to work out the differences in conference at lightning speed.

Both versions would increase – by nearly ten times – the borrowing of money, which we don’t have, from the Federal Reserve to loan to states through the TIFIA program. TIFIA loans get doled out almost exclusively to private corporations in contracts called public private partnerships (or P3s) in order to federally subsidize an unaccountable toll road boom across the country. The first TIFIA loan went to a private corporation in a P3, and the project – San Diego’s South Bay Expressway — went bankrupt less than three years after the ill-conceived toll road opened, forcing the taxpayers to write-down nearly $80 million. P3s touted as ‘free market’ solutions to transportation financing are anything but free market and nearly always require taxpayer bailouts when they fail.

Most notable in the Senate version are two provisions authored by Sen. Jeff Bingaman (D – NM). One limits the tax breaks for the private corporations in these controversial P3s, and the other reduces the amount of federal dollars a state receives if the state chooses to sell-off the public’s highways to private toll operators using P3s. Bingaman’s goal is to remove incentives for states to turn sovereign public highways into unaccountable cash cows in the hands of private, usually foreign, corporations.

Texas take on DOUBLE TAX toll roads

Two Texans, Sen. Kay Bailey Hutchison (R-TX) and Rep. Francisco Canseco (R-TX-23) filed nearly identical amendments to protect taxpayers from double taxation by prohibiting tolls from being imposed on existing free lanes of any federal aid highways (both federal and state). However, Sen. Tom Carper (R-DE) offered a competing amendment that would have expanded states’ ability to impose tolls on existing free lanes. Toll industry special interests castigated the Hutchison Amendment and called in well-heeled lobbyists and so-called ‘conservative’ think tanks like the Competitive Enterprise Institute (CEI) to fight what they opined to be a ‘populist amendment’ to limit states’ ability to toll.

In reality, the amendment doesn’t limit states’ ability to add new toll lanes to highways, it merely puts existing paid-for free lanes off limits to the money-grubbing politicians in Washington and the state houses, who wish to raid our wallets with impunity. Senate leadership ultimately got Hutchison and Carper to pull their amendments, averting the needed showdown over runaway toll taxes.

State’s Rights shouldn’t be a blank check

Pro-toll special interests wrapped their arguments in State’s Rights and ‘free market’ rhetoric, but how quickly they forget that these highways in question were built with federal taxpayer dollars, therefore the federal government has a say in what’s done with them. Also, let’s not forget that states ought not to have the ‘right’ to a blank check to DOUBLE TAX Americans by imposing new taxation (without representation since toll authority board bureaucrats who control the toll tax rate are not elected) on existing paid-for freeways, which is nothing short of a tax grab. When states hand over our public roads to private corporations, that tax rate is then controlled by private entities who the voters also cannot hold accountable – lurching us toward fascism, not a ‘user fee’ system as pro-toll industry interests would have us believe.

Not a true user fee, it’s a new tax

Think tanks like Reason Foundation, Cato Institute, Heritage Foundation, and CEI argue that the business of building highways needs to devolve back to the states and that the ‘free market’ solution to building roads is to move away from gas tax funded roads and charge what they dub a ‘user fee’ (a toll) to more directly tie the cost of usage to each highway user. In theory world, this all sounds so utopian, but in the world of economic reality and in the world of forcible taxation, a little thing like freedom to travel and truth in taxation gets in their way. The true ‘user fee’ is the original gas tax, which was designed to finance the Highway Trust Fund, that is when the politicians don’t raid or squander the revenues. It has been responsible for the building of America’s extraordinary road system, including our Interstate highways.

But, don’t take my word for it. Just listen to what President Ronald Reagan said in his 1982 radio address on the pending highway bill at the time. “Good tax policy decrees that wherever possible a fee for a service should be assessed against those who directly benefit from that service. Our highways were built largely with such a user fee – the gasoline tax.”

These days, so many politicians are ignoring the true transportation ‘user fee’ that’s paid at the gas pump, as if it doesn’t exist. Meanwhile, special interests lobby for tolls just for the privilege of driving on America’s roads. Reagan strongly believed in the freedom to travel. But, today, huge toll levies on top of the under-priced gas tax is endangering that long-held freedom. The majority of these new-fangled toll roads, however, do not remotely resemble a toll viable project or the traditional turnpikes of old, where strictly the users of the road paid for the road. Traditional turnpikes were brand new roads, they didn’t put taxpayers on the hook for the losses, and the toll rates were kept reasonably low. Now, the plan is to add toll lanes to existing highways (and even toll existing lanes in some cases in perpetuity).

The majority of the proposed P3 private toll projects as well as public toll projects require massive hidden taxpayer subsidies (which again is a form of double taxation to use public money to build the project but then make taxpayers pay again to drive on it), non-compete agreements that limit the expansion of free routes surrounding the toll road, and profit guarantees that put the taxpayer on the hook for the losses versus the private bond investors.

So users are not the only ones paying for these toll roads that utilize so-called ‘innovative financing’ techniques like P3s and TIFIA loans, the costs of which are being borne by ALL taxpayers who are then required to pay yet AGAIN to actually use the road. Also, in Texas, state law grants unelected regional toll authority bureaucrats ownership of all state and federal highways it tolls in perpetuity. So these tolled segments will NEVER revert back to a part of the free state highway system again. Why? Because these unelected bureaucrats plan to charge tolls in perpetuity; therefore, tolls become a permanent NEW tax on driving, not a traditional ‘user fee’ in place until the road is paid for.

Highway robbery

The toll rates are also significantly higher than they used to be with traditional turnpikes (that used to average 9 cents/mile). In Texas, the average public toll project ranges from 12 cents to 25 cents a mile. When private corporations get a hold of the road in a P3, that rate jumps up to 75 cents per mile – that’s like adding $15 to every gallon of gas you buy. The most affordable way and the fairest way to build roads is to utilize the gas tax, which hasn’t been raised since 1993. Congress doesn’t want to cast a vote to raise the gas tax (which isn’t keeping pace with inflation), especially with gas prices escalating out of control. But, then again, they didn’t want to index the gas tax to inflation and cap the increase when gas prices were low either, saving the taxpayer the pain of huge toll increases. It would rather outsource the tax increase to unelected boards or to their buddies – the private toll operators – regardless of the fact that it will cost drivers precipitously more money and price many Americans off our public roads.

So the way toll roads are being contrived by states today are not only a threat to your freedom to travel through punitive taxation, it’s not even truth in taxation – it’s taxation without representation. So the accurate terminology to describe this new version of tolling is RUNAWAY DOUBLE TAXATION in the hands of unelected bureaucrats. In the case of privatized public roads, it’s more akin to fascism.

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 eight turned citizen activist. Ms. Hall is also a contributor to

SFPPR News & Analysis.