Toll roads good for shareholders, bad for TX taxpayers

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Toll roads a good deal for shareholders, but a bad bargain for Texas taxpayers

March 24, 2007

The Houston Chronicle
Copyright 2007

Few issues have become as emotionally or politically charged over the past few years as toll roads. As a Texas transportation commissioner for eight years and current sitting state senator, I have a well-documented history of supported toll roads to ensure our transportation infrastructure meets the demands of our growing population.

However, supporting toll roads does not equate to supporting a plan that prohibits competition or agreeing to policies that enrich a few shareholders at the expense of the taxpayer.

Gov. Rick Perry, the Texas Transportation Commission and the Legislature exhibited bold leadership and vision by embracing the toll road concept. Using toll roads enables the state to build more roads faster without raising fuel- or other taxes. Few Texans realize that current state fuel taxes do not cover the cost of maintaining current roads, much less to building new roads.
As is usually the case, the devil is in the details. As the Transportation Commission began negotiating contracts with private companies to build and operate new toll roads, the commission hit several bumps.

Most companies require at least a 50-year contract to operate and collect tolls. So the decisions we make today will affect taxpayers for the next half century. In the event the state needs to “buy back” the road during the 50-year period, it is imperative for us to have a clear buy-back provision to protect taxpayers.

The private companies prefer to put off addressing the buy-back issue until another day. This means the private companies would be free to hire experts to determine what they think the road is worth. It does not take a genius to figure out the companies will calculate the price in a way that enriches their shareholders and leaves taxpayers holding the bag. Therefore, before any contract is signed, the state should negotiate an agreed-upon formula.

Imagine if you could make a deal with the state to build a store in your hometown, use the state’s power of eminent domain to take the land needed for your store and then get the state to agree to refrain from building another store in your hometown for 50 years.

Now, imagine your hometown was projected to have double-digit population growth. While it may be hard to fault any business for pursuing such a deal, the taxpayers would hold elected officials accountable.

When the Transportation Commission announced the proposed corridor along I-35 in 2004, both Cintra-Zachary, the company chosen to build the system, and the Transportation Commission publicly stated there would be no “no-compete” clause in the contract.

Fast-forward a few years later and reality is like a cold glass of water in the face. With few exceptions, the Cintra contract contains a non-compete clause stating no alternative roads can be built within miles of either side of the toll road for 50 years without paying penalties. Many similar contracts are being negotiated that would give private companies exclusive rights to many-mile wide areas of land in Texas’ highest growth areas.

Put simply, the state is enacting a policy that forces Texans to drive on a toll road with very few alternatives. In high-growth areas, the private toll operator would be free to increase tolls as demand for the road increases. New road construction by the state would be penalized, thereby setting up a classic monopoly, agreed to by the state, forcing Texans to pay ever-increasing tolls. There should be incentives to relieve congestion, not penalties.

Texas’ transportation policy is too important to determine without open debate. Moving fast to meet today’s demand does not merit shortsighted decisions.

I filed Senate Bill 1267 to place a two-year moratorium on private equity toll projects. Toll roads can be built in the interim by the local authority or TXDOT; however, the government may not contract with a private company to operate toll roads until the Legislature ensures adequate protections are in place.

Surely we can agree that signing away our ability to expand our transportation system for 50 years in the name of expediency is not a wise decision.

Nichols, a Republican from Jacksonville, represents Texas Senate District 3 in East Texas. He is a retired engineer and former Texas Transportation Commissioner.

© 2007 Houston Chronicle: