Private Highways: Road to Riches – or Ruin?

Study says taxpayers lost out on “very large” revenues in Indiana deal.

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As James Ridgeway and Daniel Schulman note in a Mother Jones investigation, in the rush to privatize the nation’s aging roads and bridges there have been very few independent assessments of whether these projects are good for taxpayers — or just for the corporations and bankers who structure the deals. One of the few such efforts to have been examined from a variety of angles is the privatization of the Indiana Toll Road. In November, NW Financial, a New Jersey-based municipal finance firm that advises governments on public financing projects and includes “privatizations and regionalizations” among its areas of expertise, released a study of the deal. The analysis was spearheaded by Dennis Enright, one of the firm’s founders and the former planning and development director for Jersey City, New Jersey.

The study concludes that because of the Toll Road deal, Indiana will lose out on significant revenues, and that the state could have easily financed the road itself. “Indiana’s sale of the Toll Road,” it says, “while helping fund transportation projects for the next ten years, will result in depriving the public transportation funding network of very large and much needed future revenues in the final 65 years of the concession agreement to pay for publicly needed capital projects both on and off the toll road. Instead these revenues are directed to private corporate profits and shareholders. If road users are willing to pay higher tolls, these funds should be captured for the public good.”

The study goes on: “Public financing at the same (or even greater) monetization levels would have been very feasible for the Indiana Toll Road transaction and should be considered as a public policy alternative to privatization.
Public monetization produces the upfront economic benefit but leaves the control of the road and the future cash flows in the hands of the public sector to fund transportation needs.”

Read the full report here.

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