It’s big news for taxpayers, but for the special interests who have been pushing public private partnerships (P3s) and toll roads as the way to fund $1 trillion in upgrades to America’s infrastructure not so much. President Donald Trump officially pulled the plug on P3s as the centerpiece to his infrastructure plan.
The president said simply, “They don’t work.”
Trump mentioned it in a meeting with members of the House Ways and Means Committee on Tuesday as the president met with lawmakers to discuss tax reform. Citing the failure of the Interstate-69 P3 contract done under Vice President Mike Pence when he was governor of Indiana, the state recently had to sever the contract, take over the project, and issue its own debt to get it finished.
There were a host of problems with relying on P3s and federal incentives to get private investors to bite. First, only projects that generate some sort of revenue attract private investors — hence toll roads. Second, giving out further federal tax incentives was likely to benefit projects that were already underway, not generate new investment. Plus, the feds have been generously doling out taxpayer-backed loans and bonds to guarantee the private investors’ losses and the track record of failure is well-documented.
P3s also give private investors exclusive, long-term monopolies designed to extract the highest possible toll from the traveling public while requiring taxpayers to foot the bill for most potential threats to the private entity’s profits. For instance, such contracts contain non-compete provisions that limit or prohibit the expansion of free routes surrounding the privatized toll lanes, deliberately slow speeds on the free routes and increase speeds on the toll lanes, force taxpayers to pay the private operators for any uncollectable tolls, and most P3 contracts used public funds to subsidize them (including every single P3 toll project in Texas).
But that’s just the tip of the iceberg. The very idea that the public’s right to travel on public roadways is being subordinated to for-profit private corporations flies in the face of fundamental freedoms, the public interest, and abdicates this core function of government — building and maintaining the public highway system — to special interests in sweetheart deals.
Toll rates for two P3s in the Dallas-Ft.Worth area during peak hours can cost commuters $24/day just to get to work. Tolls, especially privately operated toll roads, explode the tax burden to unaffordable levels adding thousands a year in taxes by entities the taxpayers cannot hold accountable. Congestion tolling, where the toll rates go through the roof in peak commute time, hits working class families and those rust belt workers Trump promised to protect the hardest.
Then, there’s the problem for rural America. Congestion is not a problem in rural towns. Since those projects can’t generate toll revenues, private investors would ignore small town infrastructure needs entirely, leaving vast swaths of the country without any meaningful solution to fixing rural highways. The Center for American Progress published a study that attested to that fact when it stated only one half of one percent of all highway projects could even be done using a P3.
Trump’s reversal on P3s came suddenly to most folks, even inside the beltway, given that Transportation Secretary Elaine Chao was still pushing tax incentives to attract private investment as the core of the Trump infrastructure plan as of August 30. Now the focus becomes how to pay to fix the country’s infrastructure absent P3s and tolls. Let’s start by taking a look at the gas tax and why it hasn’t kept pace with the needs.
Terri Hall is a citizen activist who founded the statewide group Texas TURF (Texans Uniting for Reform and Freedom) when she learned that TxDOT was to convert her only access to San Antonio, Hwy 281, into a tollway (which is a double tax to charge taxpayers again for what they’ve already built and paid for) and when she saw a major shift in Texas transportation to tolling our existing freeways. She has worked in two sessions of the Texas Legislature, spoken before 12,000 people at a rally in Washington D.C., organized marches on Austin, spoken at national conferences, appeared on both the Lou Dobbs Show, CNN’s American Morning, and Fox News nationally, and done local radio & TV interviews all over Texas. She also writes for the Express-News and Houston Examiner and has had many columns published by news outlets nationwide.