Barron's Magazine: Foreigners are anteing up big bucks for U.S. toll roads

Barron’s Toll Article published May 8, 2006.

This cover story hits the nail on the head when it says: “America’s toll roads, better known for political patronage than for strong business and financial management, suddenly are HOT assets.” Yep, as we’ve contended all along, this is about a money grab and greedy politicians fleecing the taxpayers for BIG foreign payouts. Elected officials whose sworn duty is to represent and serve the public interest are selling off America’s infrastructure to make a buck.

Here’s some of the most telling statements:

“Gasoline taxes, the traditional method of funding highway repair and construction, are no longer sufficient for the job….if anything, lawmakers are looking to cut these taxes.”

Oh really, is that why ex-Transportation Commissioner David Laney told the highway lobby at the San Antonio Mobility Coalition’s Transpsortation Leadership Forum last Septmber that we need to increase the gas tax, tie it to inflation, IN ADDITION to tolling nearly every highway in Texas? Is that why State Rep. Carter Casteel introduced a bill to allow counties to increase gas taxes up to 10 cents per gallon while she also supported dozens of bills to toll existing freeways? Our lawmakers have shown us there’s no tax they’re not willing to raise or levy on behalf of the highway lobby. Our politicians’ campaign donations and perks courtesy of road builders are too well-liked to put the public good and our economy over the priorities of lobbyists.

“The $1.8 billion purchase last year of the Chicago Skyway (by Cintra-Macquarie, bidders of SA toll system read about it here) and the $3.8 billion deal last month for the Indiana Toll Road have opened the eyes of politicans, who didn’t recognize that their toll roads could fetch such hefty sums.” ‘This is just the beginning,’ says Philip Villaluz, a municipal bond analyst at Merrill Lynch. ‘The shock value of these price tags is getting the attention of politicians across the country.'”

Well, it’s getting the attention of the public, too. Indiana politicians voted to sell the Indiana Toll Road to Cintra-Macquarie even though the voters didn’t want them to by a margin of more than 2 to 1 (read about it here)! These politicians even acknowledged there could be a BIG political backlash for stabbing the taxpayers in the back yet they did it ANYWAY! You bet there will be a backlash, see Pennsylvania’s political fallout for BIG SPENDERS here.

“The lure for investors is that, before maintenance costs are taken into account, the margins on toll roads can be 80% or more.”

No doubt there’s BIG money to be made or we wouldn’t see our government salivating at the selling of American infrastructure to the highest bidder! Cintra-Macquarie is already seeing increased revenue on the Chicago Skyway…guess why? A 50 cent toll hike to $2.50 for cars. That’s what we can count on when our government opts to privatize our public highways….the highest possible tolls

“For motorists , privatization’s downside is higher tolls. Investors won’t buy roads without being assured that they can raise tolls over the years.”

Collin County officials up in Dallas feel the same way…privatizing our roads equals the highest possible tolls for our citizens. Read about it here.

“Wall Street investment bankers, led by Goldman Sachs, have descended on state capitals, trying to convince toll authorities and legislators of the benefits of privatization.”

Well, there ya have it. See why the public outcry gets largely ignored? We have a hard time competing with the army of lobbyists who exert more influence over our elected officials than the voters do (read about lobbyists corrupting politics here)! Well, that’s why we’re in the midst of a taxpayer revolt the size of Texas…to toss out these corrupt politicians who repeatedly ignore the will of the PEOPLE and ignore the pleas of their own constituents!

“Politics plays a key role in determining which roads are privatized. The easiest to sell are those used heavily by out of state drivers rather than local motorists.”

Oh really, how would US 281, Loop 1604, and Bandera Rd qualify as being heavily used by out of state motorists? Politics is being played for sure, but TxDOT clearly wants to stick local motorists with the tab for these toll projects, and they intend to get their cash by taking away existing FREEway lanes and replacing them with frontage roads to do it (see plans for 281 here)! Before long, drivers won’t be able to get anywhere on an expressway without paying a toll even though we all continue to pay gas taxes!

THE INSIDIOUS PLAN OF INCREMENTALISM
“…Electronic payment systems have made toll increases less painful for motorists because they no longer have to fumble for money and wait in long lines. The relatively modest charges appear monthly on credit card statements amid many other items.”

Just like income taxes are hidden since they’re taken out of paychecks BEFORE you get your money, politicians think they can get away with tolls not only because they can now make them more invisible, but also get away with raising tolls regularly by hiding it on your credit bill so you will never feel the full hit of this new tax!

“The good news for the Cintra-Macquarie group is that it didn’t have to guarantee the Chicago and Indiana debt; the lenders accepted the road lease as collateral.”

WOW! How much worse for the taxpayers can you get??? Now these BIG foreign investors don’t even have to back-up these loans with their own collateral? Former Executive Director of the Alamo RMA, Tom Greibel, as well as others at TxDOT said repeatedly that the justification for privatizing our public freeways on these toll projects is because the PRIVATE ENTITY is taking on all the risk (not our government) and they deserve a return on their investment through steady toll increases. So how is that true if the same companies bidding on San Antonio’s toll starter system didn’t have to put up ANY collateral of their own? What’s the collateral, OUR ROADS! So if they default, the road goes under the control of a private lending institution? What absolute thievery!

Even toll road insiders like Golman-Sachs/JB Were analyst Allison Booth have been critical of the deal.

“Increasing competition for new toll road projects is resulting in monpolistic returns being competed away.”

Investors may end up just as livid as the taxpayers…privatizing our PUBLIC infrastructure translates into the highest tolls for our citizens, a drain on the economy (like all increases in transportation), and risky investment for the public and private sector alike. Read more about the foolish plan to sell our public infrastructure to foreign investors here.

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