AMAZINGLY, GOVERNORS LIKE INDIANA’S MITCH DANIELS, TEXAS’ RICK PERRY AND NOW GEORGIA’S NATHAN DEAL THINK THEY CAN GET AWAY WITH CLAIMING TOLLS AREN’T A TAX HIKE!
By Terri Hall l May 29, 2012
Tolls are coming to an interstate highway near you. This time, it’s Interstate 75 in Georgia, where Governor Nathan Deal just announced re-worked plans to add toll lanes to I-75 from I-285 to I-575 and single reversible lanes running north from the I-75/575 split along I-75 to Hickory Grove Road and along I-575 to Sixes Road. It’s an easy sell for special interests. States are broke. No politician has the appetite for raising the gas tax or even the courage to propose indexing the gas tax to inflation in order to keep pace with infrastructure needs, including construction, maintenance and repair costs. So, politicians turn to tolls as the way out, and depending on how the deal is structured, it’s often a way for states to make some quick cash.
Amazingly, elected officials and so-called ‘conservative’ think-tanks claim tolls aren’t a tax. But even the slightest examination of how these toll roads are being financed blows that claim right out of the water. For example, on the 30 mile I-75 toll project in Georgia, Deal is forcing all American taxpayers to subsidize this project, not just Georgians, since it will use a $270 million federal taxpayer-backed TIFIA loan, along with $500 million in gas tax revenues to pay $770 million of the $950 million price tag to build the project. Deal still plans to charge travelers a DOUBLE TAX – tolls – to drive on a road built mostly with gas taxes. Therefore, the tolls the Deal administration will be charging aren’t ‘user fees,’ at all; they’re taxes.
In fact, there’s a need for Georgians to read the fine print. It’s not uncommon for public-private partnership (P3) agreements to quietly increase tolls in future years based on the Consumer Price Index, also known as the CPI or inflation calculator. But as long as drivers are increasingly required to use ‘transponders’ that silently and automatically extract the toll from their account electronically, they’re not expected to notice it. Yet, the politicians don’t have the courage to index either the federal or state gas tax to inflation, which would be far less expensive than ever-increasing tolls. San Antonio’s Alamo Regional Mobility Authority (Alamo RMA), for example, according to their notice of public hearing for the 281 toll construction contract “has adopted a policy to increase annual toll rates at 2.75% through 2022 and at 3.00% annually thereafter or at the Consumer Price Index, whichever is greater.”
These contracts also contain non-compete clauses that penalize or even prohibit the expansion of free routes surrounding the toll lanes, guaranteeing congestion on ‘competing’ free alternatives. P3s are not competitively bid. They use ‘best value’ bidding and/or something called design build, which nearly always translates into higher costs to the taxpayer than using traditional design bid build procurements.
Though GDOT’s P3 stops short of being a full blown public-private partnership, where the private operator gains the right to set and extract tolls by leasing the toll road from the state in return for a large up-front payment, as was done with the Chicago Skyway, the Indiana Toll Road and two toll roads in the Dallas-Ft Worth area of Texas. Georgia is using a more traditional P3 model called design-build-finance. Instead, with the I-75 toll project, the private sector partner, who is yet to be chosen, is expected to bring from $95 to $190 million to the table to be repaid with interest at a later date by the state from toll revenue collections. But there are still significant costs to the taxpayer, besides automatically indexing tolls to inflation, when doing a toll road with any version of a P3.
In a May 11 Georgia Department of Transportation (GDOT) press release, Governor Deal stated, “We need to make these improvements to our system but we also have a responsibility to do so in a manner that best protects the sovereign interests of the State – insuring that Georgia forever retains control of its assets, their use and their future development.” Well, what about the taxpayer, Governor?
Heading in the wrong direction
Deal initially canceled Georgia’s P3 program just months after the taxpayer blowback he experienced with the I-85 HOT lane disaster. GDOT turned successful carpool lanes, known as High Occupancy Vehicle (HOV) lanes, into High Occupancy Toll (HOT) lanes, where single occupancy vehicles could access the lane, if they paid a one way toll of $5.40. GDOT also increased the number of people needed in order to use the HOV lane from two to three. The toll rates varied daily based on the level of congestion on the toll lanes. So, commuters paid a premium to get to work in peak hours of the day. The same variable toll rates will apply to the HOT lanes on I-75. Needless to say, the opening week of the I-85 HOT lane experiment was a commuter disaster – with so few able to afford the toll and next to no carpoolers able to access the lane that the HOV/HOT lane was nearly empty and the free lanes were hopelessly gridlocked. So much for government-managed congestion!
After just the first week in operation, Deal lowered the toll rate from 34 cents a mile down to 11 cents and later asked the feds for permission to return the carpool requirement back to two occupants from the current three, but the feds denied his request and Atlanta commuters remain stuck in traffic. Shortly thereafter, Deal announced the state was not going to move forward with another HOT lane toll project, this time a P3 on I-75, citing concerns with compromising state sovereignty over public infrastructure. By the time the I-75 tolling construction is completed in 2018, Deal will no longer be governor and the headache will be kicked down the road, although the taxpayer will still continue to be penalized for bad transportation policy.
Though in the case of I-75, the state would set the toll rates and collect the tolls. But it’s still beholden to those private interests because it costs the taxpayers more through the higher cost of borrowing from a private entity than to issue bonds. It usually involves paying back the private entity first, where the taxpayers’ federal TIFIA loan is paid back last.
Trade corridors at risk?
Another concern with tolls on I-75 is its strategic importance as a trade corridor linking to ports in Ft. Lauderdale and Tampa, Florida up to the international border crossing in Canada, currently serviced by the nearby Ambassador Bridge. It’s no coincidence that the Ambassador Bridge is a private bridge that’s gained a monopoly at the crossing over the years. The Michigan government is now considering building a competing bridge of its own, with Canadian funding, called the Detroit River International Crossing, but since it plans to use a P3 to do it, that just means exchanging a private monopoly for a government monopoly.
The Detroit River International Crossing bridge would directly connect I-75 with border traffic into Windsor, Canada. There have been several legislative battles over the new bridge as well as P3s in the Michigan Legislature – important battles since the control of America’s trade corridors is at risk of falling into the hands of private interests, whom the public cannot control nor hold accountable. Toll rates in the hands of private corporations threaten affordable travel for both autos and trucks, which ultimately threatens the cost of living and the affordability of these goods that need to be brought to market. Since P3s grant monopolies, the cost of these goods would necessarily skyrocket, with no way to rectify it for 50-100 years – the usual duration of monopolistic public-private partnerships. This was the original plan for I-75, until the state changed course following the pushback by drivers over the I-85 toll road. Yet, by tolling this portion of I-75, the powers that be are able to complete more of the I-75 trade corridor on the backs of drivers and consumers rushing headlong into a borderless nation to our north as well as to our south.
Governor Deal is walking a political tightrope
Even publicly-controlled HOT lanes are runaway taxation since the toll rates go up in real time based on the level of traffic, not actual project costs. GDOT’s I-75 scheme uses such a tolling system, which is called managed tolling, a characteristic of P3 financing. Under all these toll scenarios, affordable travel and the free flow of people and goods is at risk.
When contemplating the big picture, it’s easy to connect the dots and see how Americans’ sovereignty and control over our critical public infrastructure and trade corridors will be shredded if this concerted push for privatization and P3s is successful. Thankfully, Deal has maintained state sovereignty over I-75, but there are a lot of other states whose leaders may not draw such a line in the sand over I-75 or America’s freeways. It’s incumbent upon every American to hold their politicians’ feet to the fire to ensure affordable travel and that our public infrastructure stays in the peoples’ hands – that means keeping the Highway Trust Fund whole while considering the less expensive indexing at the gas pump instead of the invisible high rate indexing extracted by the transponder in the toll lanes.
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