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A backlash against public-private partner- ships has emerged in the United States. Last year brought critiques \ue000rom the long-term leases o\ue000 the Chicago Skyway and Indiana
The articles you\u2019ll read on the \ue000ollowing pages represent a small \ue000ragment o\ue000 Reason\u2019s work on transportation public- private partnerships; indeed, the articles themselves are shorter versions o\ue000 much larger pieces. I invite you to visit our Web site, www.reason.org/transportation where you can fnd \ue000ull-length versions o\ue000 these articles in addition to our entire extensive catalog o\ue000 work.
Geo\ue000\ue000rey F. Segal(geo\ue000\email@example.com)
Samuel R. Staley(firstname.lastname@example.org)
Adam B. Summers(email@example.com)
Frequently cited by journalists and sought a\ue000ter by policymakers, Moore is one o\ue000 privatization\u2019s lead- ing authorities.
Reason Foundation, a national organization
dedicated to advancing a \ue000ree society through
the promotion o\ue000 choice and competition.
law in June 2007, revising the state\u2019s current PPP law to permit the lease o\ue001 existing toll roads (except the Florida Turnpike). It also added some concession-related provisions to the existing PPP law\u2014\ue001or example, limiting concession terms to 50 years unless the state DOT shows that a longer term (up to 75 years) is needed. The new law also requires regular toll increases by state and local toll agencies to keep up with in\ue000ation.
his proposal \ue001or two new PPP highways, one a beltway around Indianapolis and the other a joint project with Illinois. In both cases, strong opposition arose \ue001rom landowners, which would likely have been the case regardless o\ue001 whether the roads were proposed as toll roads or not.
PPP-enabling act, which will make that state the 22nd with such a law on its books. It permits the government or private contractors to design, fnance, build, and operate new toll roads and bridges. Free alternative routes must be available, and the tolls must be removed a\ue001ter the construction debt has been paid o\ue001\ue001.
Congestion in America is bad and getting worse. The lack o\ue001 adequate investment in road capac- ity has resulted in tra\ue001fc congestion that costs Americans at least $168 billion each year. Vital
centers o\ue001 American li\ue001e, including our cities, are increasingly clogged by tra\ue001fc, making them unsustainable as centers o\ue001 culture and economic activity.
America\u2019s congestion problem largely stems \ue001rom the inad- equacy o\ue001 traditional fnancing mechanisms. Federal and state highway budgets are determined by government grants and \ue001unded by taxes on gasoline. The gas tax-and-grant system, a product o\ue001 the period between 1920 and 1950, is running on \ue001umes. First, as cars have become more \ue001uel-e\ue001fcient, the revenue generated by gas taxes has \ue001allen relative to the need \ue001or more roadways. Second, since the completion o\ue001 the Inter- state Highway System in the 1980s, the \ue001ederal gas tax has been used by politicians not to build needed roadways, but largely as a source o\ue001 money \ue001or pork projects. Finally, while a sensible transportation fnancing policy would link revenue with road use, providing critical in\ue001ormation about where new road construction is most critically needed, gas taxes are paid at the pump and, there\ue001ore, provide no in\ue001ormation about where transportation construction is warranted.
Policymakers, however, have another tool to provide critical transportation in\ue001rastructure to their citizens at their disposal that reduces congestion, improves travel time, and conserves public resources.
Toll concessions, sometimes re\ue001erred to as \ue001ranchises, leases, or public-private partnerships, grant a private company the right to operate a toll business under specifed conditions \ue001or a specifed long-term period. Analogous in many ways to the long-term \ue001ranchises granted to investor-owned utilities, such as electric utilities, today\u2019s toll concessions are a refnement o\ue001 19th century road and bridge charters that permitted private frms to build and operate in\ue001rastructure along public rights- o\ue001-way under terms outlined in the charter.
Toll concessions operated by businesses o\ue001\ue001er customers a specifc service\u2014the use o\ue001 the road\u2014in return \ue001or a \ue001ee (the toll). Toll \ue001acilities are businesses that thrive only i\ue001 they pro- vide a valuable service to customers, manage costs, and provide competitive rates o\ue001 return to potential investors who provide
Toll \ue001acilities\u2019 single-minded devotion to these \ue001actors means that over the long run they can provide transportation in\ue001rastructure more e\ue001fciently than government, which is o\ue001ten subject to many competing special and political interests.
The major advantages o\ue001 tolls include:
1. Toll concessions o\ue001\ue001er greater access to capital;
2. Toll concessions encourage much-needed toll \ue000exibility;
3. Toll concessionaires achieve greater cost savings; and
In the 20th century, America showed the world that inves- tor-owned electric, gas, and telecom utilities worked better than the state-owned utilities carrying out these \ue001unctions nearly everywhere else. Nearly every developed country has since privatized those utilities. Major roadways also make sense as investor-owned utilities, as pioneered in Australia, France, Italy, Portugal, Spain, and elsewhere. The global capital markets have recently discovered the U.S. highway market as an untapped business opportunity\u2014just as consensus was developing that we have a major short\ue001all o\ue001 highway invest- ment.
Within just the past two decades the development o\ue001 low- cost electronic tolling and other automatic vehicle identifca- tion technologies has made it \ue001ar less costly to use tolling to fnance roads, and less nuisance to motorists. Stopping to pay tolls has been made obsolete by technologies that allow tolls to be collected at \ue001ull highway speeds. The harnessing o\ue001 these new toll technologies to impose \ue000exible market pricing in the
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