Should We Raise Taxes to Fund Road Improvements?
Today’s Kansas City Star has a story by Brad Cooper about the efforts of the Missouri Transportation Alliance to generate discussion of the future of transportation funding in Missouri. I commend the MTA for its efforts, but I am concerned that it is focusing too much on simply trying to decide which tax (or taxes, plural) to raise:
The group has looked at various ideas for funding transportation — gas taxes, sales taxes, licensing fees — but hasn’t settled on any ideas that could eventually be taken to voters to approve, McKenna said.
Too little of the discussion appears to be devoted to the question of the role that private financing can play in Missouri — or, put another way, how can the laws be changed to allow for more private financing in Missouri? My own preference is for a dramatic expansion of private financing and tolling for projects both big and medium (it does not really work nearly as well for small projects), along with a small increase in the gas tax. But check out the story in the Star and visit the MTAs web site for more details of their work.
Combine private financing with design-build as the default project-delivery approach for large efforts, and you could likely close most or all of the state’s funding gap for the biggest projects.
The key challenge for private financing is *not* simply legislative approval or even public acceptance.
Past experience (I’m thinking in particular of the 91 Express Lanes project in Southern California, which I was involved with) shows that even clear and legal contractual obligations between the DOT and the private contractor are subject to ex post facto political meddling.
That’s a lesson that already-tight credit markets will remember, just as they remember some high-profile mistakes in the models that predict traffic (and thus, revenue) on other projects.
I’m a long-time supporter of public-private partnerships. But while we’re waiting for the moon and the stars (and the legislature and the credit markets) to align on private financing, let’s also convince the Governor that we can handle having more than just two percent of the state’s road-construction projects to be built using design-build.
That would start saving money — and delivering improvements — immediately.
Comment by Greg Brooks — January 19, 2010 @ 9:48 a.m.
Privatizing the roads can be a good deal, but I would be wary of doing it now, as the prices are probably depressed. Writing a good contract with enforceable provisions is very necessary as well.
Knowing that the good/bad times won’t last forever means that you can’t get panicked in times like this, nor can you think the too good to be true growth rates are sustainable.
Governments/endowments/pension funds, please read the above paragraph.
Comment by Papillon — January 19, 2010 @ 10:14 a.m.
Don’t privatize your rights-of-way! Those are common property, public property, and permitting anyone to privatize them is a poor idea.
Every worthwhile investment in good infrastructure creates or maintains more property value — land value — than the project costs. Good roads that don’t damage cars; plowed roads; good bridges. All these things enhance the value of the land they serve.
It makes a natural tax base.
Natural public revenue!
Recycle that value locally to meet local needs. Don’t permit anyone to privatize what is rightly public value.
Comment by LVTfan (google it!) — February 22, 2010 @ 8:46 p.m.