Toll Road Privatization Schemes Get Blasted At Congressional Hearing

Posted in Privatization, Road Issues, Around The Nation, Around The State at 4:07 pm by wcnews

A recent commenter pointed me to the site of Land Line Magazine, The Business Magazine for Professional Truckers. Let’s just suffice it to say that roads are these people’s business and they take issues with roads very serious. They have a special report about a committee hearing that was held yesterday, Public-private partnerships hammered in congressional hearing. It was a hearing of The Highways and Transit Subcommittee of the House Transportation and Infrastructure Committee to be exact. Some really great stuff in the report, excerpts are below the fold:

Members of the subcommittee didn’t waste any time taking privatization to task after Subcommittee Chairman Rep. Peter A. DeFazio, D-OR, called the meeting to order.

“I have real doubts about the conversion of existing infrastructure – essentially the monetization, sale or long-term lease of that – and what the benefits might be,” DeFazio said in his opening remarks.

“And how, if you do that, do you protect both the public interest and assure that we are not fragmenting the national interstate system?”

DeFazio said he hopes the hearings on public-private partnerships and the highway funding crisis would, in part, lead to the feds developing some sort of education and guidance programs for state officials considering entering into these types of agreements.

He said he doesn’t want to see states that seem to be rushing these projects through get taken to the cleaners.

“I think we’re seeing that in a couple of the previous agreements in Indiana and Chicago, most notably,” he said.

In what had to feel like a tag-team wrestling move to supporters of public-private partnerships, DeFazio turned the floor over to Ranking Member John J. Duncan Jr., R-TN, who didn’t waste any time in slamming certain aspects of public-private partnerships.

In short order, he challenged many public-private partnerships as being “sweetheart deals”

“In recent years, we’ve been seeing that some very large corporations have been hiring so many retired federal employees or retired admirals and generals and they’ve been getting sweetheart deals with just ridiculous profits,” he said.

“We have to see whether some of these are good deals for the people or not. Some are and now, unfortunately, some are not.”

The first witness to testify before the subcommittee was Tyler Duvall, assistant secretary of transportation policy with the U.S. Department of Transportation.


The initial panel of witnesses also included the secretary of transportation for Wisconsin, Frank Busalacchi – a strong opponent of public-private partnerships. He said the two groups have very different goals and meeting all the goals would be a delicate balancing act, to say the least. “The public interest is different from the private interest and, in this case, it will be extremely difficult to assure a win-win solution,” he testified. “The private sector’s legal responsibility to its shareholders is to make money – profit is their purpose.” Busalacchi also pointed to the problem of these deals being brokered behind closed doors. That secrecy, coupled with the obvious desire for profit by the private sector, has the public leery of these types of deals. “The public sector needs better tools to evaluate the deals and share that evaluation with the public,” he said. “It’s not clear the deal in Indiana would happen if it were being considered today. Last news report I saw, half the citizens polled in New Jersey think the (public-private partnership) approach to the Turnpike is not in their best interest. Why wouldn’t we listen and consider the strong public reaction to these deals?”

Here’s the statement of the Subcommittee Chair Rep. Peter DeFazio:

“The Bush administration has been warning state governments about the growing gap between infrastructure needs and resources. Unfortunately, their only suggested solution is to privatize the existing infrastructure. In pushing this ideological policy, the administration has failed to disclose the potential downfalls as well as possible gains of privatization. Under questioning, a witness from the Department of Transportation (DOT) agreed that, in addition to issuing model legislation for privatization, the DOT should also disclose potential problems with privatization, like monopoly pricing and noncompete agreements. Dennis Enright, principal of the NW Financial Group, a witness who has analyzed recent public-private partnerships, made a strong case that there’s no inherent advantage to privatizing existing assets. In fact, the public sector could monetize assets to generate an up-front payment while realizing a revenue stream from the facilities. Capital is readily available to states for these projects.

“Overall, the hearing raised questions about the appropriateness of many of these anticipated agreements, especially those involving existing assets like the Pennsylvania toll road, and others.”

Please contact Rep. Defazio and tell him to keep up the good work. Also there are two Texans on this subcommittee, Ted Poe and Kenny Marchant, both Republicans. There are two Democrats on the Transportation and Infrastructure Committee, Eddie Bernice Johnson and Nick Lampson. Please contact all of these representatives and let them know how bad these deals are for Texas and the United States.

1 Comment »

  1. Eye on Williamson » Sen. Carona Announces Special Hearing On Transportation Policy said,

    February 20, 2007 at 12:17 pm

    […] One of the expert witnesses will be Dennis Enright of NW financial Group. If his testimony is anything like what he delivered last week (.PDF) at a Congressional sub-committee hearing we’re in for quite a treat and so are all the TTC and toll road supporters. In it Enright goes through the history of public-private partnerships (PPP’s or P3’s), what works, what doesn’t, and why. The basic answer is that there is a much cheaper way to pay for roads - a higher gas tax, or tolls to pay off the road and/or to pay for future transportation projects. Not tolls for corporate profits. […]

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