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Caltrans: Private Companies Could Build and Run Toll Lanes

Baruch Feigenbaum
March 19, 2012, 3:57pm

With budget deficits, many states are having trouble maintaining their highways, not to mention expanding them. CALTRANS, the California agency that is responsible for highway construction, maintenance and planning, revealed that private companies could build and run hundreds of miles of planned toll lanes on Bay Area expressways. 

According to the Bay Citizen:

The toll lanes — which allow single motorists to use carpool lanes for a fee — are planned for 280 miles of freeways in the East Bay and South Bay. The cost of the lanes ranges from $1.6 to $6.8 billion, a sum that would be challenging for the state to raise on its own, making them good candidates for public-private partnerships, state transportation officials say. In such deals, private investors finance, design and build the roads and recoup their investment by collecting tolls.

The toll lane projects “will need innovative financing," explained Matt Rocco, a spokesman for Caltrans, who said that it is "logical" to have the public-private partnerships "in the pipeline." 

Not surprisingly, the state engineers’ union and their political allies disagree:

Democratic lawmakers and Caltrans engineers have strongly opposed highway privatization deals. The state engineers' union sued to stop the Doyle Drive replacement project, a $488 million deal to rebuild the southern approach to the Golden Gate Bridge that is being financed, designed, built and maintained for 30 years by a group of European investors. The project is now moving forward, after the suit failed last year. But the union’s executive director, Bruce Blanning, said handing over more highway projects to private companies would be a mistake. 

“They don't have the public interest at heart; they have the profit motive at heart,” Blanning said.  

Some of the California PPPs have been problematic. However, this was because the public government signed a poor contract or because of the economic recession that disproportionally affected certain California locations. These specific projects in the 2012 economy will help California pay for highway projects and reduce cost-overruns and delays that often accompany state-run projects.

PPPs have many advantages. They deliver needed additional transportation infrastructure and they raise large new sources of capital for toll roads. Since partnerships are attractive to investors, these projects supply financing not merely funding. PPPs shift risk from taxpayers to investors; they provide a business-like approach; and they encourage innovations. Value pricing, where prices rise and fall based on congestion, was first created and tested in California. 

Why does the state engineers’ union oppose the project? It has little to do with the profit motive and more to do with the salary motive—of the engineers. When private companies undertake the work, they use their own employees. The engineers’ union dislikes this for two reasons. First, it breaks their monopolistic hold on construction work in the state. Second, by opening the process up it reduces the artificially high wages that California state employees receive. PPPs in California should reduce the project costs. Lower costs will reduce the contributions of taxpayers. This will benefit 38,000,000 instead of only 13,000.

Both former Governor Arnold Schwarzanegger and current Governor Jerry Brown support the project. Neither the state nor the Metropolitan Transportation Commission, the metropolitan planning organization, has made a decision but both organizations see many positives in additional PPPs. PPPs are an excellent way to make needed improvements to California highways. 

More details are available from The Bay Citizen.


Baruch Feigenbaum is Transportation Policy Analyst


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