US road privatization may hurt states

[Robbien]

Source: Forbes

NEW YORK, April 1 (Reuters) - U.S. states considering road privatization as a way to close budget deficits risk losing billions of dollars in long-term toll revenue while ceding too much control to shareholder-focused private investors, a report said on Wednesday.


There were 15 roads in 10 states in private hands at end 2008, and 25 states are considering privatizing another 80 roads, according to the report by the Public Interest Research Group Education Fund, a Boston-based public advocacy group.

'Though these privatization deals seem to offer state officials a 'quick fix,' they often pose long-term threats to the public interest,' said Phineas Baxandall, chief author of the report.

. . .

These deals typically involve long-term leases for new or existing roads that private companies run and collect tolls on. States in return get upfront cash -- but these payments are often too small, the report said.

'The economics of these deals are such that the upfront concession payments are unlikely to match the long-term value of the higher tolls that will be paid by future generations and not collected for public uses,' it said.

For example, Spain's Cintra and Australia's Macquarie will recoup their investment in Chicago's Skyway highway in less than 20 years but collect toll revenue for 99 years, said Baxandall, citing a separate report by NW Financial, a New Jersey investment bank.

Read more: http://www.forbes.com/feeds/afx/2009/04/01/afx6243233.html

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Meanwhile the parking meters Mayor Daley privatized just increased their rates four-fold this week on the day the privatization company took possession.

State and city congresscritters are having a huge problem finding any revenue producing streams to balance local budgets.

[Rabrrrrrr]

1. Geez, they're just now thinking that it's a fucking ridiculously stupid thing to do?

I could have told them that years ago, when I reached a junior high level of intelligence.

[Robbien]

3. What was surprising is that this article was in Forbes

IMO, this is the first article in a mainstream business magazine which puts privatization in a bad light.

[WriteDown]

2. Just the words....

TOLL REVENUE send shivers down my spine.

[DrDan]

4. this is an absolutely horrible idea -

one that will come back to haunt us in the future. Of course, someone will profit handsomely.

[Robbien]

6. Privatization was done with debt, for which we the taxpayer will be responsible

if the private investor cannot come up with the interest payments.

The article states:

A large portion of toll road contracts occurred prior to the credit crisis that struck almost two years ago. Some of the biggest deals were financed with loans that have teaser rates, similar to the risky mortgages that spawned the crisis.

'Some of the biggest deals are financed with interest rates that start low and balloon upwards over time,' the report said.

If private investors are unable to make interest payments, the state can be left with the financial burden.


A lose/lose proposition for us all the way around this practice.

[FiveGoodMen]

5. Why do we even HAVE a country when all our 'leaders' want to do is sell it off!?

[Rabrrrrrr]

7. I can't wait until they let Haliburton buy the "leasing" rights to the Great Lakes

and the country's aquifers, rivers, and lakes.

That'll be a lot more efficient than having every municipality trying to manage our resources and sending water bills.

[FiveGoodMen]

8. We SHOULD be on the brink of civil war when we hear these things.

We're not.

That's why I'm thinking the battle -- and the war -- are already lost.

'Murkins are just too fucking stupid to save themselves.

[Rabrrrrrr]

10. I think you're right. We've grown complacent.

So long as the TV has programs, the grocery store has Doritos and Coke, the mall has enough stores to spend all our paychecks at, and we gas in our cars, the government can do whatever the hell it wants.

Especially when the so-called "Liberal" news media (which are really radically rightwing media) are utterly complicit with the bullshit.

"By privatizing water, you, the taxpayer, will save almost $50 a year in taxes that used to go to monitoring quality, sending bills, paying employees, and so on! This is win-win!!!"

And they don't tell you, "of course, Haliburton Water Works, Inc., is going to charge you a dollar a pint, and they'll complain to the government next year that they're losing too much money doing waste-water 'treatment', so they'll stop cleaning it, and then three years down the road they'll say the pipes are too old and that they can't afford to fix them, so you, the taxpayer, will be stuck with a $500 tax bill when we sell bonds (to Haliburton Water Works, Inc., ironically enough) at 3.5% interest to finance the buying of new pipes, even though the original contract with HWWI, and the original promises we made to you, the consumer, was that HWWI would cover ALL future costs associated with delivering what is now unclean, disease- and pollution-laden water to you at whatever frequency of service they find convenient."

[phantom power]

9. These people have lost their fucking minds.

Road privatization, by the way, was one of Ayn Rand's more lunatic pure-private-market proposals.

[Raster]

32. Someone should have strangled that bi*** as she lay in her crib.

[avaistheone1]

11. Privatization of public roads is a bad, bad ideas.

Is there any end to some people's greed?

[benld74]

12. TEXAS is still going through with the idea - Must be their water

http://www.texpirg.org/in-the-news/transportation-solutions-for-texas/transportation-solutions-for-texas-in-the-news/texas-lawmakers-to-weigh-private-road-deals-against-tax-increases

[Mithreal]

13. Rec this so others can see it. nt

[Deja Q]

14. Maybe shareholders will whine when they have to replace broken axles 6 times per year?

[iamthebandfanman]

15. wtf? tell me this is an april fools joke...

privatizing the roads?!


wtf?!

[Delphinus]

18. If they're talking toll roads,

Republican Mitch Daniels did it a few years back in Indiana - and everybody bitched and moaned, but he's back in the governor's mansion for four more years.

[skyounkin]

16. Has privatization EVER helped make things cheaper???

[gulfcoastliberal]

17. K&R - Privitization exposed for the scam it is for the trillionth time.

It's certainly costing us trillions, anyway.

[natrat]

19. what , the mighty zero is selling of our infrastructure, i'm shocked

[unkachuck]

20. TAX....

....the damn corporations instead of leasing these fascists OUR property (at bargain-basement prices, no less)....

....public roads were built with public money and are public property....these corporate ass-sucking elected officials have no right to sell, lease or give away our property for any reason....there should be at a minimum a public referendum to relinquish control of public property....

....the political leeches must make more graft off shaking-down corporations than they could possibly steal through their budgets....every slimy elected official that turns over public property to private interests should be voted out of office, run out of town, then charged with obstruction of democracy....

....I hate the way this system works....

[fascisthunter]

21. Americans allowing politicians to sell what belongs to them

stupid...

[dpbrown]

22. This is why Republicans squeeze the government until it's underfunded

Then they can swoop in and privatize everything, while further gutting the government.

Then before you know it, we're living like serfs and they're all in castles, and we get a new dark ages.

[wroberts189]

23. In other news there is now a solid consensus that fire may be used to burn stuff. nt

[AwakeAtLast]

24. No thanks to Mitch Daniels

I think he's the one who started this. He privatized the Indiana Toll Road around four years ago, maybe longer.

[MrModerate]

25. My company used to build the toll roads handed over to these private entities . . .

But got out of the business because it's bad public policy and we no longer want to be associated with it. Basically, the owners of the company decided that impoverishing our customers (counties and states) was a bad business model. No soft sentiment there, just a rational business decision.

[Vidar]

26. Privatization is simply welfare for the robber barons.

[crimsonblue]

27. Why the hell would Chicago privatize parking meters?

How much can it cost to pay people $8-12/hr to go around and ticket people for not paying the meters? Chicago needs to get rid of the Daley political machine stranglehold on the city.

[Robbien]

28. Chicago has privatized just about everything its citizens owns

Daley got a big chunk of money which he put in his slush fund. The rule here is that this privatization money cannot go towards balancing the budget.

So far we have privatized our Skyway, our city parking lots, our parking meters and are in negotiations for privatizing our second airport.

[crimsonblue]

29. Dear God.. Chicago needs radical reformations...

First of all, they need to remove the hundreds of redundant departments, glut the Ward bosses, perform a complete audit of all City books, legally bar any Daley from holding a position of power, and fix O'Hare so it isn't the world's worst airport... Or the cubbies could win the series and everybody would forget about the rampant corruption in Chicago...

[Robbien]

30. Which you could say

for just about all US cities. Corruption is running rampant throughout US politics. Chicago just gets more press.

[hollowdweller]

31. To me this is just like Blackwater and Halliburton

Roads need to belong to the public. If we put a toll on them then the money should to to the taxpayers and all the toll collectors should be paid well and have health insurance and a pension.

[ProudDad]

33. Let's see if I understand

Iraq/Afghanistan - Privatized war
Katrina response - Privatized disaster response

And now, economic meltdown - Privatized Ponzi Scheme

And now roads --

What next? Police and Fire. You've gotta pay your firepersons or prove that you have private, for-profit home fire insurance that will pay them before they'll put the fire out.

Great ideas :sarcasm: