With the next continuing resolution for the federal highway program coming to an end March 31, lawmakers in the nation’s Capitol have been scrambling to address systemic shortfalls in the Federal Highway Trust Fund before they run out of time. Though making some structural changes to consolidate programs, the U.S. Senate chose to kick the can down the road once more, passing a short-term extension bill, S 1813 also referred to as MAP-21, last week.
Meanwhile John Mica (R-FL), Chair of the House Committee on Transportation and Infrastructure has been pushing for a 5 year bill and a more long-term solution, but has struggled to gain the votes necessary for passage. They have until March 31 to either pass the House bill or take up the Senate bill and, in either scenario, they’ll need to work out the differences in conference at lightning speed.
Both versions would increase — by nearly ten times — the borrowing of money we don’t have from the Federal Reserve to loan to states through the TIFIA program. TIFIA loans gets doled out almost exclusively to private corporations in contracts called public private partnerships (or P3s) in order to federally subsidize an unaccountable toll road boom across the country. The first TIFIA loan went to a private corporation in a P3, and the project went bankrupt (http://texasturf.org/index.php?option=com_content&task=view&id=837&Itemid=2) less than three years after the ill-conceived toll road opened, forcing the taxpayers to write-down nearly $80 million.
Most notable in the Senate version are two provisions authored by Senator Jeff Bingaman (D – NM). One limits the tax breaks for the private corporations in these controversial P3s, and the other reduces the amount of federal dollars a state receives if the state chooses to sell-off the public’s highways to private toll operators using P3s. Bingaman’s goal is to remove incentives for states to turn sovereign public highways into unaccountable cash cows in the hands of private corporations.
Texas take on DOUBLE TAX toll roads
Two Texans, Sen. Kay Bailey Hutchison and Con. Quico Canseco filed nearly identical amendments to protect taxpayers from double taxation by prohibiting tolls from being imposed on existing free lanes of any federal aid highways (both federal and state). However, Sen. Tom Carper (R-DL) offered a competing amendment that would have expanded states’ ability to impose tolls on existing free lanes. Special interests of the toll industry castigated the Hutchison Amendment and called in well-heeled lobbyists as well as so-called ‘conservative’ think tanks like Competitive Enterprise Institute (CEI) to fight what they opined to be a ‘populist amendment’ to limit states’ ability to toll.
In reality, the amendment doesn’t limit states’ ability to add new toll lanes to highways, it merely puts existing paid-for free lanes off limits to the money-grubbing politicians in Washington and the state house who wish to raid our wallets with impunity. Senate leadership ultimately got Hutchison and Carper to pull their amendments, averting the needed showdown over runaway toll taxes.
State rights shouldn’t be a blank check
Pro-toll special interests wrapped their arguments in states rights and ‘free market’ rhetoric, but how quickly they forget that these highways in question were built with federal dollars, therefore the federal government has a say in what’s done with them. Also, let’s not forget that states ought not to have the ‘right’ to a blank check to DOUBLE TAX Americans by imposing new taxation (without representation since toll authority boards who control the toll tax rate are not elected) on existing paid-for freeways, which is nothing short of a tax grab. When states hand over our public roads to private corporations, that tax rate is then controlled by private entities who the voters also cannot hold accountable — lurching us toward fascism, not a ‘user fee’ system as pro-toll interests would have us believe.
Not a true user fee, it’s a new tax
Think tanks like Reason Foundation, Cato Institute, Heritage Foundation, and CEI argue that the business of building highways needs to devolve back to the states and that the ‘free market’ solution to building roads is to move away from gas tax funded roads and charge what they dub a ‘user fee’ (a toll) to more directly tie the cost of usage to each highway user. In theory world, this all sounds so utopian, but in the world of economic reality and in the world of forcible taxation, a little thing like freedom to travel and truth in taxation gets in their way.
The majority of these new-fangled toll roads do not remotely resemble a toll viable project or the traditional turnpikes of old where strictly the users of the road paid for the road. Traditional turnpikes were brand new roads, didn’t put taxpayers on the hook for the losses, and the toll rates were kept reasonably low. Now, the plan is to add toll lanes to existing highways (and even toll existing lanes in some cases).
The majority of the proposed P3 private toll projects as well as public toll projects require massive taxpayer subsidies (which again is a form of double taxation to use public money to build the project but make taxpayers pay again to drive on it), non-compete agreements that limit the expansion of free routes surrounding the toll road, and profit guarantees that put the taxpayer on the hook for the losses versus the private bond investors.
So users are not paying for these toll roads that utilize ‘innovative financing’ techniques like P3s and TIFIA loans, the costs are being borne by ALL taxpayers who are then required to pay AGAIN to actually use the road. Also, in Texas, state law grants unelected regional toll authorities ownership of all state and federal highways it tolls in perpetuity, so these tolled segments will NEVER revert back to a part of the free state highway system again. Why? Because these unelected bureaucrats plan to charge tolls in perpetuity; therefore, tolls are a permanent NEW tax on driving, not a user fee in place until the road is paid for.
The toll rates are also significantly higher than they used to be with traditional turnpikes (that used to average 9 cents/mile). In Texas, the average public toll project ranges from 12 cents to 25 cents a mile. When private corporations get a hold of the road in a P3, that rate goes up to 75 cents per mile — like adding $15 to every gallon of gas you buy. The most affordable way to build roads is the gas tax, which hasn’t been raised since 1993. Congress doesn’t want to cast a vote to raise the gas tax (which isn’t keeping pace with inflation), especially with gas prices escalating out of control. It would rather outsource the tax increase to unelected boards or to their buddies — the private toll operators — regardless of the fact that it will cost drivers precipitously more money and price many off our public roads.
So the way toll roads are being done by states today are not only a threat to your freedom to travel through punitive taxation, it’s not truth in taxation — it’s taxation without representation. So the accurate terminology to describe this new version of tolling is double taxation and runaway taxation in the hands of unelected officials. In the case of privatized public roads, it’s more akin to fascism.
Either way, every American has a lot at stake in what Congress does with this federal highway bill. Failure to make your voice heard will no doubt result in unaccountable, oppressive new taxation on driving. Contact your member of Congress and your U.S. Senators at (202) 224-3121.
By Terri Hall
March 19, 2012