The Driving Boom—a six decade-long period of steady increases in per-capita driving in the United States—is over.
Americans drive fewer total miles today than we did eight years ago, and fewer per person than we did at the end of Bill Clinton’s first term. The unique combination of conditions that fueled the Driving Boom—from cheap gas prices to the rapid expansion of the workforce during the Baby Boom generation—no longer exists. Meanwhile, a new generation—the Millennials—is demanding a new American Dream less dependent on driving.
Transportation policy in the United States, however, remains stuck in the past. Official forecasts of future vehicle travel continue to assume steady increases in driving, despite the experience of the past decade. Those forecasts are used to justify spending vast sums on new and expanded highways, even as existing roads and bridges are neglected. Elements of a more balanced transportation system—from transit systems to bike lanes—lack crucial investment as powerful interests battle to maintain their piece of a shrinking transportation funding pie.
The time has come for America to hit the “reset” button on transportation policy—replacing the policy infrastructure of the Driving Boom years with a more efficient, flexible and nimble system that is better able to meet the transportation needs of the 21st century.
Here’s an excerpt from the study on page 38 regarding PPP’s, in the section “Increased Risk for Public-Private Partnerships”
As gasoline tax revenues have dried up, federal and state transportation officials have sometimes looked toward publicprivate partnerships (PPPs) as a potential alternative. There are many possible ways for government to partner with the private sector, including traditional forms of financing and procurement that raise private money through the municipal bond market and hire private contractors to provide materials and labor. But most of the attention given to PPPs involves the potential for a private entity to agree to build and/or maintain a highway for a given period of time in exchange for revenue—in many cases, from vehicle tolls.
Uncertainty regarding VMT trends reduces the attractiveness of toll revenue as a payout to private investors. Fewer investors will be willing to invest the massive amounts of capital required to build and maintain a toll road if the number of paying customers is not likely to rise over time. In 2005 and 2006, foreign toll road operators financed by large financial companies made large bets on future traffic volume by purchasing a 99-year lease in Chicago and a 75-year lease in Indiana for major toll roads. In
each of these deals and many smaller ones, the private investors acted as concessionaires, collecting tolls for their own bottom line. Many people thought these toll concessions were the wave of the future.
Several toll concessions have produced less revenue than expected. Some have needed to be bailed out by the government. Others—such as a brand-new billion-dollar toll road in Texas that sought to attract traffic by posting the nation’s fastest speed limit, 85 miles per hour—have faced the threat of a credit downgrade as a result of flagging traffic. These shortfalls in privately collected tolls do not necessarily mean that the government received a “good deal,” since more expensive private capital costs and other potential compensation must also be covered.
Changing vehicle travel trends pose risks not just for private investors but for taxpayers as well—regardless of how the risks are distributed at the outset of a PPP arrangement.
Toll roads, in and of themselves, were never the problem. The problem has always been with how our elected leaders decided to go about paying for, are in reality, financing them.
The main problem I see is that there really is no place in our state or in our country right now where we can have a sane and honest debate on a topic like this. But this study certainly makes it seem like continuing to spend our transportion dollars just on highways is shortsighted and ignorant. In light of this study, it’s definitely time to re-think transportation.