It's a private matter
Legislators tackle privatization of public roads, infrastructure
By Keith Goble
state legislative editor
While more than 20 states already allow for privatization of public roads, lawmakers in two states where the process has been implemented are working either to expand the concept or diminish its appeal.
Legislators in another statehouse are waging a battle about whether to allow their state to join in the leasing process.
What happens in these battleground states is being watched closely by power brokers throughout the nation – and the world. Some lawmakers see privatization as a way to generate cash for their strapped state budgets. Others say the cash they get now won’t help in the long run.
Indiana
Less than a year after state officials signed a deal to lease the Indiana Toll Road to a foreign group, that state’s Senate has forwarded a bill to the House that would clear the way for two more projects.
A bill touted by Gov. Mitch Daniels would allow a private group to build and operate the proposed 75-mile Indiana Commerce Connector that would link Interstate 69 northeast of Indianapolis with Interstate 70 to the southwest.
Sponsored by Sen. Thomas Wyss, R-Fort Wayne, the bill would also remove the state’s authority to collect tolls along a portion of I-69. In return for that assurance, the proposed connector project could be tolled.
Another provision in the bill – SB1 – would authorize the proposed Illiana Expressway to be privately funded. The 63-mile, limited-access route would be in northwest Indiana.
Like the $3.8 billion,
75-year lease of the Toll Road to a Spanish-Australian consortium, the latest round of privatization talks has rankled Indiana Democrats. In hopes of making it more difficult for the governor to sign lease deals, House Democrats have offered legislation to boost oversight of the privatization process.
That legislative package includes a bill that would create a panel to review privatization proposals of more than $15 million before they could be implemented. The bill also would limit the length of privatization contracts to make sure they don’t exceed the terms of office of the governors who may sign them.
“In the rush to put these contracts in place, I think we can get too enamored at the large dollar figures being thrown around, and not examine the long-term implications of what is being done here,” Rep. Joe Micon, D-West Lafayette, said in a written statement. “There is a human cost to this effort, and we want to make sure that part of the equation gets a full hearing.”
Another proposed measure in Indiana would require the state to prove cost savings in any privatization plan in which state employees would lose their jobs. It also would allow state employees to offer a competing bid. The bid must be accepted if it’s lower than the current cost of operations.
A separate bill would require agencies pursuing privatization deals to publish plans that include details about the potential cost savings, and the impact on state employees and state assets.
Texas
Pending legislation in Texas would either completely sideline, or at the least rein in, the planned Trans-Texas Corridor project.
One bill would prohibit the Texas Department of Transportation from buying land or issuing contracts for Gov. Rick Perry’s $184 billion pet project. Another bill offered would forbid TxDOT from turning state highways into toll routes. It also would prohibit allowing those roadways to be leased or sold to private groups.
Several other bills are intended to minimize the attractiveness for groups to pursue deals with the state to build roads in return for keeping revenues. That legislation would bar the state from entering into non-compete agreements for toll roads, limit the duration of private contracts to 30 years and prohibit TxDOT from accepting upfront payments from private groups to build toll roads.
In hopes of creating alternatives to privatizing roadways, two other bills would help Texas generate more revenue for transportation through higher fuel taxes and make sure transportation-related revenue isn’t diverted.
“We can’t expect toll roads to be the solution for all our transportation needs. While they are part of the mix, the state needs to explore other funding options,” Sen. John Carona, R-Dallas, said in a written statement.
New Jersey
Private groups could have an opportunity to run the New Jersey Turnpike and Garden State Parkway in exchange for as much as $15 billion to the state.
Sen. Ray Lesniak, D-Union, has introduced a bill that would authorize leasing the roadways to help reduce the state debt. He said that without a new means to generate revenue, the state won’t be able to adequately fund such programs that include transportation.
Lesniak’s plan includes a provision that would allow the New Jersey Turnpike Authority the option of matching the best private firm offer.
Another provision would allow annual toll increases to be tied to the gross domestic product for commercial vehicles. Rate increases for cars would be linked with the consumer price index. Lawmakers would have 60 days to veto any privatization deal.
While Gov. Jon Corzine is said to still be deciding what he thinks about the leasing idea, the list of Pennsylvania lawmakers and others lining up in opposition to the plan is growing.
Two bills that are likely to get a long look from lawmakers leery of lease deals would prohibit foreign groups to take over operation of state infrastructure and require a public vote on asset sales worth more than $100 million.
