Commentary

Texas’s Proposed Toll Road Ban and Gas Tax Holiday Won’t Help Commutes

Legislature's "do as I say, not as I do" approach to transportation planning is troubling

There is a high stakes game of Texas Hold ’em poker going on at the State Capitol. Some of the players want to ban privatized toll roads for two years. Some want to kill such toll roads altogether. There are veto threats from the Governor and perhaps a special session on transportation in the legislature’s future.

I don’t know who will win, but when politics and gamesmanship overtake the needs of commuters in setting transportation policy, it’s easy to see who the loser is: Texas drivers.

You can debate the amount of money needed to alleviate traffic congestion, but you can’t dispute that the state and its major urban areas need more roads than they can afford.

Gas taxes aren’t providing enough to maintain existing roads, let alone build new ones. So what’s the state legislature’s plan? The House just passed a bill that would completely eliminate the gas tax for the summer, pilfering $700 million from the state’s transportation coffers. That should help build more roads!

And then there’s the legislature’s “do as I say, not as I do” approach to toll roads. The House recently approved a 30-month moratorium on privately built toll roads. The vote was an astounding 139 to 1. A vote margin like that sends a clear signal: Texas doesn’t need the private sector’s money to build our roads because we have other solutions ready to go.

So what is the legislature’s solution: toll roads. Yes, the same toll roads they just banned.

Politicians in Dallas-Ft. Worth wanted to make sure the toll roads the private sector is planning to build for them can move ahead, so they sliced out a special exemption in the moratorium allowing new toll roads. San Antonio did the same. So did El Paso. All the exemptions leave the moratorium looking more like a piece of Swiss cheese than a piece of well thought out policy.

Instead of pandering to voters with gas tax holidays and toll road bans, state leaders should be tweaking the public-private partnership laws and contracts to ensure that they address taxpayers’ concerns about toll roads.

Taxpayers worry that by tapping the private sector to build and operate roads that Texas is “giving away” critical infrastructure for 50 or more years. Texas isn’t giving anything away. It owns the roads. And the lease agreements can be as long, or short, as taxpayers want. In Australia, many toll agreements last just 35 years, not much longer than today’s existing long-range plans. The tradeoff for shorter agreements is the state receives much less cash upfront in the deal.

But why should these toll companies get rich off Texas drivers at all?

There’s no guarantee they’ll get rich. The private company is assuming all of the financial risk in building multi-billion dollar roads the state is struggling to find financing for. If traffic levels don’t meet expectations, the companies, not taxpayers, lose money. But if the government is convinced the toll road will be profitable, it can and should negotiate to share future profits in exchange for smaller upfront payments.

Other critics say we shouldn’t give “control” of our roads to foreign companies. The leading toll road companies may be foreign, but they can’t take the roads back to Spain or Australia. They are building and operating immovable infrastructure in Texas, spending billions in Texas and creating jobs in Texas.

Another common concern is that the government won’t be able to build needed roads anywhere near the toll roads. But that isn’t the case. Competition clauses do not prevent any new roads from being built. The contracts allow all roads in existing long-range plans, including frontage roads right alongside the new toll roads. If a major highway or road not in those long-range plans is needed at a later date, it can be built too. It is up to the private company operating the toll road to prove that a new government-built road is causing a direct loss of revenue. Then, and only then, will the state and company work out a financial compensation agreement.

Toll roads aren’t the only answer to Texas’ traffic jams; they are just one tool in the box. Transportation officials should choose the tool that is best for each individual job. But don’t throw away your tools. You don’t ban the hammer or wrench when you know you have a lot of projects to build.

Robert Poole is director of transportation policy and Searle Freedom Trust Transportation Fellow at Reason Foundation. Poole, an MIT-trained engineer, has advised the Ronald Reagan, the George H.W. Bush, the Clinton, and the George W. Bush administrations.

Surface Transportation

In the field of surface transportation, Poole has advised the Federal Highway Administration, the Federal Transit Administration, the White House Office of Policy Development, National Economic Council, Government Accountability Office, and state DOTs in numerous states.

Poole's 1988 policy paper proposing privately financed toll lanes to relieve congestion directly inspired California's landmark private tollway law (AB 680), which authorized four pilot toll projects including the successful 91 Express Lanes in Orange County. More than 20 other states and the federal government have since enacted similar public-private partnership legislation. In 1993, Poole oversaw a study that coined the term HOT (high-occupancy toll) Lanes, a term which has become widely accepted since.

California Gov. Pete Wilson appointed Poole to the California's Commission on Transportation Investment and he also served on the Caltrans Privatization Advisory Steering Committee, where he helped oversee the implementation of AB 680.

From 2003 to 2005, he was a member of the Transportation Research Board's special committee on the long-term viability of the fuel tax for highway finance. In 2008 he served as a member of the Texas Study Committee on Private Participation in Toll Roads, appointed by Gov. Rick Perry. In 2009, he was a member of an Expert Review Panel for Washington State DOT, advising on a $1.5 billion toll mega-project. In 2010, he was a member of the transportation transition team for Florida's Governor-elect Rick Scott. He is a member of two TRB standing committees: Congestion Pricing and Managed Lanes.

Aviation

Poole is a member of the Government Accountability Office's National Aviation Studies Advisory Panel and he has testified before the House and Senate's aviation subcommittees on numerous occasions. Following the terrorist attacks of Sept. 11, 2001, Poole consulted the White House Domestic Policy Council and the leadership of the House Transportation & Infrastructure Committee.

He has also advised the Federal Aviation Administration, Office of the Secretary of Transportation, White House Office of Policy Development, National Performance Review, National Economic Council, and the National Civil Aviation Review Commission on aviation issues. Poole is a member of the Critical Infrastructure Council of the Los Angeles Economic Development Corporation and of the Air Traffic Control Association.

Poole was among the first to propose the commercialization of the U.S. air traffic control system, and his work in this field has helped shape proposals for a U.S. air traffic control corporation. A version of his corporation concept was implemented in Canada in 1996 and was more recently endorsed by several former top FAA administrators.

Poole's studies also launched a national debate on airport privatization in the United States. He advised both the FAA and local officials during the 1989-90 controversy over the proposed privatization of Albany (NY) Airport. His policy research on this issue helped inspire Congress' 1996 enactment of the Airport Privatization Pilot Program and the privatization of Indianapolis' airport management under Mayor Steve Goldsmith.

General Background

Robert Poole co-founded the Reason Foundation with Manny Klausner and Tibor Machan in 1978, and served as its president and CEO from then until the end of 2000. He was a member of the Bush-Cheney transition team in 2000. Over the years, he has advised the Reagan, George H.W. Bush, Clinton, and George W. Bush administrations on privatization and transportation policy.

Poole is credited as the first person to use the term "privatization" to refer to the contracting-out of public services and is the author of the first-ever book on privatization, Cutting Back City Hall, published by Universe Books in 1980. He is also editor of the books Instead of Regulation: Alternatives to Federal Regulatory Agencies (Lexington Books, 1981), Defending a Free Society (Lexington Books, 1984), and Unnatural Monopolies (Lexington Books, 1985). He also co-edited the book Free Minds & Free Markets: 25 Years of Reason (Pacific Research Institute, 1993).

Poole has written hundreds of articles, papers, and policy studies on privatization and transportation issues. His popular writings have appeared in national newspapers, including The New York Times, The Wall Street Journal, USA Today, Forbes, and numerous other publications. He has also been a guest on network television programs such as Good Morning America, NBC's Nightly News, ABC's World News Tonight, and the CBS Evening News. Poole writes a monthly column on transportation issues for Public Works Financing.

Poole earned his B.S. and M.S. in mechanical engineering at Massachusetts Institute of Technology (MIT) and did graduate work in operations research at New York University.