More Toll Roads In Our Future?
SAN FRANCISCO (Reuters) - The next road you travel -- and pay a toll to use -- could be privately owned.
Looking for ways to finance highway projects without hitting the public trough, the U.S. Congress appears set to pass a proposal to encourage private ownership of new toll roads.
The provision, part of the highway spending bill now being hammered out by a Senate and House conference committee, would allow private companies to raise up to $15 billion for highway projects with bonds that are exempt from federal income taxes.
While the proposal has broad support in Washington and the business community, the idea of private highways has incited grassroots opposition in some states, with some saying the government -- not a profit-seeking company -- is the proper owner of the public's roads.
Toll road owners such as Spain's Cintra and Australia's Macquarie Infrastructure Group stand to benefit from the move to private infrastructure bonds, since their tax-exempt status would keep interest rates and funding costs low.
The move would also bring lucrative fees to Wall Street banks and others for underwriting and trading tax-exempt debt.
"The time has come for this," Sen. Jim Talent, a Missouri Republican who co-sponsored the proposal, said in a telephone interview. "I think we have an excellent chance of the $15 billion bond issue coming out of conference."
Personally, I think this is a great idea as long as it isn't overdone. Clearly a toll booth at every road junction would be a hindrance to travelers and freight movers.
That aside, I see no reason why major highway projects shouldn't be funded by private industry in exchange for the right to collect tolls for the use of the road or bridge for a set amount of time. Ownership of the roads should remain with the government with the rights for collecting tolls part of a contractual "lease," or something along those lines. France recently did something similar with a major bridge project (the tallest bridge in the world, no less) that seems to have worked out just fine.
One thing that had better happen, should this pass, are some serious tax cuts for the citizens who will now be paying for their roads through tolls instead of taxes. After all, taxing citizens for road upkeep and then having them pay tolls for that same upkeep would be sort of ridiculous.
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