Both Democrats and Republicans criticized public-private partnerships in a recent U.S. House hearing on the privatization of highways. After the Feb. 13 hearing, U.S. Rep. Peter DeFazio, D-Ore., chair of the Highways Subcommittee, criticized the Bush administration for encouraging such deals as an answer to highway funding problems.
“In pushing this ideological policy, the administration has failed to disclose the potential downfalls as well as possible gains of privatization,” DeFazio said. The U.S. Department of Transportation should be honest, DeFazio said, about such problems as monopoly pricing and non-compete agreements, in which governments are actually prevented from building roads that would siphon traffic from the for-profit highway.
“Overall, the hearing raised questions about the appropriateness of many of these anticipated agreements, especially those involving existing assets like the Pennsylvania toll road and others,” DeFazio said.
U.S. Rep. John J. Duncan Jr., R-Tenn., the ranking Republican on the subcommittee, said he shared many of DeFazio’s concerns. Long-term lease agreements can be a financial windfall for the current governor or mayor, but the benefits don’t necessarily extend to future administrations, DeFazio said.
“I am concerned about possible sweetheart deals for private companies,” Duncan said. “In particular, it is very important to make sure that decisions made by state and local governments regarding long-term lease agreements are made with the public good firmly at the forefront.”
Rep. Jim Oberstar, D-Minn., chair of the House Transportation Committee, said he was skeptical these local and regional deals can add up to a national transportation program.
“I am not convinced that 50 states, each pursuing its separate transportation priorities with their respective private-sector partners, will, in the end, produce a coherent, integrated, national surface transportation system using numerous public-private partnerships,” Oberstar said. “Such a national system can only emerge with strong federal leadership, as when the interstate system was being proposed and subsequently launched.”
The panel heard from partnership proponents including Tyler Duvall, U.S. assistant secretary for transportation policy. President Bush’s DOT, under Norman Mineta and now Mary Peters, views the proliferation of such deals as key to reducing congestion costs, Duvall said.
“In general, we believe that the planning and regulatory framework in place now is sufficient to protect the public interest as it is affected by public-private partnerships,” Duvall testified.
A group of heavy hitters among transportation lobbies recently formed Americans for a Strong National Highway Network, a group opposed to the trend toward privatizing toll roads and bridges. The coalition includes the American Trucking Associations, the Owner-Operator Independent Drivers Association, NATSO, the American Automobile Association, the Recreation Vehicle Industry Association and the American Highway Users Alliance.
ATA supports the maintenance and improvement of the current toll-free national highway system, in which highway construction funds primarily come from highway user fees, such as the fuel tax.
In the biggest public-private deal so far, in 2006 the state of Indiana under Gov. Mitch Daniels sold a 75-year lease on the Indiana Toll Road to an Australian-Spanish consortium. Pennsylvania Gov. Ed Rendell and New Jersey Gov. John Corzine have explored similar leases for their turnpikes.
While the road deals affect the most people, the recent trend toward contracting the work of state governments to private companies as a quick fund-raiser is not limited to transportation. States are exploring similar deals for the operation of their lotteries, for example.
