For example, in 2006 the state of Indiana leased 157 miles of its 55-year-old publicly financed toll road to a Spanish-Australian joint-venture firm called the Indiana Toll Road Concession Co. Under the deal, Indiana received $3.8 billion in cash, upfront, and the concession company got the right to collect tolls on the road for the next 75 years; some of the tolls go toward maintenance, and others go straight to the company’s bottom line. The state uses the upfront cash for anything it wants.
What this means is that the nation’s drivers paid for the road with 55 years’ worth of their tolls, and now they essentially have to buy it back.
Today Indiana has 157 fewer miles of highway the public is responsible for operating. One might assume its share of federal highway maintenance dollars would have been reduced to reflect the change. Not so. This year, Indiana received nearly $900 million in highway maintenance funds — the same amount it would have received had it never made the deal with the Indiana Toll Road Concession Co.
And if the funding formulas remain unchanged, it’s possible that Indiana could lease all 1,200 miles of its interstate highways to a private company and still receive nearly $900 million each year from the highway fund.
Does this make sense? I don’t think so.
To be sure, Indiana has not put forth a proposal to privatize all of its highway system. But that it could do so without losing federal highway funds illustrates the problem Congress needs to fix.
Like all members of Congress, I appreciate the need for additional transportation improvements to alleviate congestion and promote economic development. We need to invest in our nation’s roads and bridges, which is one of the main reasons to pass a long-term highway bill. The current primary source of federal funding, fixed taxes on gasoline and diesel fuels, is increasingly inadequate to maintain transportation infrastructure. The combination of declining fuel sales and rising construction costs is adding tens of billions of dollars to the funding backlog needed to sustain a safe and efficient transportation network.
I also understand that, during these difficult economic times, states are struggling financially to meet the needs of their residents, and “selling off” a public asset for billions of dollars might be tempting.
But I don’t believe that states should be allowed to use their existing publicly funded highways as a virtual ATM, leaving the rest of this country’s drivers to foot the bill. Among Congress’s responsibilities is to be a good steward of federal tax dollars. That means we should not encourage the kind of short-term political expediency Indiana has relied upon.
The Senate approved a highway bill in March that contains an amendment I wrote to correct the funding formulas. Under the revised version, states would receive highway funding without including public roads that have been essentially “sold off.” That would mean states such as Ohio, which is considering privatizing its 60-year-old, 240-mile turnpike, would lose federal funding it no longer merits. House and Senate negotiators are working to finalize a highway bill, and I hope they include my amendment.
States should explore new and creative ways to invest in public infrastructure. There’s no doubt that the private sector could play a major role in that. I support existing federal incentives that promote building new roads, tunnels or lanes, such as the high-occupancy toll lanes that Virginia and private partners are constructing on the Capital Beltway.
But I do not believe states that privatize existing public roads should be allowed to get more than their fair share from the highway fund, at the expense of federal taxpayers in other states. Congress should eliminate this perverse incentive for states to turn over operation of critical existing highways to private companies.