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Will Perdue privatize Georgia highways?



Earlier this month, Gov. Sonny Perdue led Georgia power brokers on a field trip to Dallas, Texas. He was joined, among others, by representatives of local planning agencies, the state Transportation Board and the Metro Atlanta Chamber of Commerce.

Their mission: to figure out how Georgia could solve the transportation mess that's made Atlanta a poster child of gridlock at a time the state finds its budget $1.6 billion in the hole.

In addition to rides on the city's flashy commuter rail, the dignitaries witnessed the fruit of another increasingly popular – but controversial – idea. The Dallas trip – along with one the governor's scheduled to Spain in early October – has the Capitol buzzing with talk that he may seriously be considering that idea: a privately owned toll road.

Road privatization is a cause celebre for free-market idealists who argue everything government can do, private enterprise can do better. Private roads have long been common in Asia and Europe, and are gaining traction in the United States.

In such a deal, a private company pays the state – sometimes billions of dollars – to take control of an existing road or to build a new one in a congested area. The company agrees to maintain the road, often for as long as 99 years. In exchange, it reaps the revenue from drivers, and in many cases, sets the tolls.

"There certainly is a trend toward more [of these projects] as more states are desperate for money," says Phineas Baxandall of the D.C.-based Public Interest Research Group. "Gas taxes are stagnating while construction costs increase. And it's a well-funded industry, which sees this as a way to have more diversified and reliable investments. Because even if the stock market crashes, people will still drive and pay tolls."

PIRG has questioned privatization's merits, saying the arrangement usurps local transportation planning, commits the state to depending on one road for a long time, and addresses long-term budgeting problems with "short-term budget gimmicks."

Indiana, Pennsylvania and Chicago all have jumped on board the privatization express, often to heady paydays, much controversy and a lot of uncertainty.

In 2006, Indiana Gov. Mitch Daniels floated the idea of leasing Interstate 69, from Fort Wayne to Evansville, to two companies well-versed in operating private toll roads: Spain-based Cintra and Australia-based Macquarie Infrastructure Group. The payout to the state? $4.8 billion. The length of the lease? Seventy-five years. Estimated revenue for the two companies? $11 billion – a figure critics say could've been raised by the state's own toll authority rather than sent overseas.

In 2003, the Georgia General Assembly passed legislation that would allow similar projects, which the bill defined as "public-private partnerships." Financiers and road builders quickly offered to add toll lanes along woefully congested interstates 75 and 575, but none of those plans have come to fruition. In 2004, the state fielded proposals from three firms to convert Ga. 316 between Lawrenceville and Athens into a toll road that would have charged drivers 12 cents per mile. Residents and business along the route successfully fought the plan, saying it would harm commerce and isolate towns – as well as force them to pay a second time for a road their fuel taxes already funded.

The fine print of privatization contracts usually includes noncompete clauses, dictating for example that a government can't build another road or transit system nearby to compete with the toll road. Georgia Motor Trucking Association lobbyist Ed Crowell says some lawyers in Indiana have opined that merely resurfacing a nearby road could be considered "competition."

And with Georgia's newfound focus on rail projects – the "Brain Train" commuter rail, the Beltline, a high-speed line to Chattanooga – the state could find itself in a similar spot to Indiana's should it not vet the contract.

"We have the South Shore rail line that goes to South Bend," says Grant Smith of the Citizens Action Coalition of Indiana, a group that fought private roads. "What happens if [Indiana] wants to increase capacity for passenger rail traffic? You can't. And if it diminishes traffic on the toll road, the taxpayers end up paying for any 'damages' there might be. We're essentially stuck with a mid-20th-century transportation system for 75 years. It makes no sense at all."

The trucking association and its national parent have been unlikely allies of transit advocates and public-interest groups in arguing that the deals could potentially create monopolies for private entities that force drivers into using a single road.

"It's one of those things that seems attractive but there's a whole lot of devils in the details when you put it together," Crowell says, stressing that he's a free-market advocate. "And unless you can bring in the idea of good, strong competition – and I won't profess to tell you how to do that – then I'm more comfortable of the idea that it's a government-produced product that the rest of us pay for at cost, as opposed to something that turns profit for a private entity."

That's not to mention that should the companies go bust, as recent events on Wall Street have shown can happen, the taxpayers might be bequeathed with another asphalt artery they must maintain.

A recent report by PIRG tells horror stories of governments rescuing failed projects, misnegotiated deals and bankruptcies. California had to buy out the remainder of a lease on a privatized road because the no-compete clause barred nearby road expansions and transit .

After initial fears that the 2003 legislation would lead to a feeding frenzy of tollways, Georgia seems to be taking its time. Baxandall and Crowell applauded DOT Commissioner Gena Evans, who shelved privatization proposals when she took the job, saying the contracts require a trained eye and careful deliberation.

"It shouldn't be short-term expediency just to make the budget," Baxandall says. "Especially when you're talking about 75- or 99-year leases. The fact that she was willing to talk about scrapping some of these deals – that took some guts."

Next week, though, Perdue heads to Spain. Along with economic-development officials, DOT board members and the Georgia Regional Transportation Authority's executive director, he's scheduled to conduct a fact-finding mission – apparently about transportation – although officials have been sketchy so far about the agenda.

Calls to DOT, GRTA and the governor's office were referred to the Department of Economic Development, which in turn said scheduling was in the works. But sources familiar with the trip say a jaunt to Spain is likely to include a sit-down with Cintra, one of the world's leading private road companies.

When asked if a meeting with Cintra was on the agenda, a Department of Economic Development spokeswoman said logistics were still being decided.

Perhaps the governor's simply interested in privatizing a single lane. Maybe a new highway. Maybe something better.

"Hopefully the governor's there to look at all the high-speed rail that's there," Baxandall says with a chuckle. "And trying to make a case for the Birmingham-Atlanta-Washington, D.C. line."

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