I found this article by Washington Post reporters Lyndsey Layton and Spencer Hsu in the Louisville, Kentucky Courier-Journal on the federal Department of Transportation’s historic push for (a) private equity playing a much larger role in financing transportation infrastructure and (b) financing transportation infrastructure with tolls rather than taxes.
It’s an excellent report and well worth a read by anyone interested in learning more about the players in the Department of Transportation who found themselves in a position to push for new policies in transportation funding.
The biggest unintended consequence is that after the Democrats took over the Congress in 2006, one of their top priorities was restraining the use of earmarks — special projects inserted into the budget bill by a particular Member of Congress that were derided as pork — to demonstrate good government. Instead of what was perceived to be a pork-filled budget full of earmarks, the Democratic Congress passed a transportation budget that was relatively ‘clean’ — meaning, the Department of Transportation has the discretion to spend the money as it saw fit, which was presumably a less political manner than if a bunch of Member of Congress each decided to put in money for their project in their district, regardless of what was good for the national interest.
Well, the Department of Transportation decided that was was in the national interest was to take almost a billion dollars that would have been spread out to transit agencies around the nation to buy buses and instead concentrate it in only 5 urban areas if they were willing to implement privatization ideas, particularly fees for driving during congested times.
That was not what the Democratic Congress had in mind, but the Department saw an opportunity and took it. It has generated the biggest debate in transportation funding we’ve had in the nation in a few decades — and just in time, since the federal gas tax that pays for highways and transit is now no longer generating enough money to cover the costs of maintaining our highways and transit systems and something is going to have to change in 2009.
Agencies have an opportunity shape federal policy in a big way in 2009, and thanks to the policy innovators at the Department of Transportation, the debate is already big and broad. It’s time to hear more voices — especially transit — engage in this exciting and interesting debate so that we don’t continue to export our wealth to the oil nations and bleed our economic vitality by staying stuck in traffic for hours every day.
I happen to think we should find the right way to bring more private capital into transportation infrastructure. After all, private companies build highways and transit. For intercity rail, it’s mostly private railroad companies that own the tracks and dispatch Amtrak trains. And the main benefit of bringing in private money for infrastructure is that those private companies get a tax break known as depreciation. That’s just another way of getting the federal government to spend money on transportation infrastructure, only it is in the form of a tax write-off (so it is money that the private company does not have to send to D.C. in the form of taxes) rather than a direct tax of some kind that the government uses to hire a private company to build or maintain a train or bus system or a road.
It sure would be great if we could learn from the Europeans and the Japanese where the government simply gives a license to private company to come in and build whatever train or special bus system they want to build, subject to certain restrictions. Then we don’t have to spend taxpayer money on the capital needs of a new train line — we just get a new train line build by private dollars. There’s a lot more to learn on this policy, but from what I understand, most of the new transit systems that are built in Europe and in Japan are financed privately instead of through the more traditional method of raising taxes and having the government build the expansion. (Of course, that doesn’t solve the ongoing operating subsidy question, since drivers and property owners benefit from riders on transit even more than the riders do, so they should help pay to get riders on transit, but if it does solve a lot of the capital question as to how to build the expansion in the first place, it’s a policy initiative that we transit advocates need to fully understand and champion).
Trackbacks