Commentary

Let Investors Finance the Highway

By Peter Samuel
November 7, 1996

The recent decisive defeat of a $9.6 billion highway tax and bond proposal may indicate that Arkansas voters do not trust the political system to allocate highway funds. Too often politicians treat highways as “pork” — payoffs to campaign contributors or special interests, or ways of currying favor with particular constituencies. That explains in part why the nation has 9,542 miles of interstate highway carrying fewer than 10,000 vehicles per day and 21,422 miles of sub-expressway rural roads carrying more than 10,000 vehicles per day.

Taxpayers do not have to bear the burden of building and maintaining major roads or depend on politicians to site them. Increasingly investors are financing toll roads for which motorists will pay in accordance with their use of the road.

In northern Virginia investors financed the Dulles Greenway, a $320 million 14-mile expressway from Washington Dulles International Airport to the town of Leesburg. It is not attracting the volume of traffic that its investors expected and may go broke. But if it’s sold off by creditors at a fraction of the cost, it will easily pay for itself. In any case Virginia taxpayers have not spent a cent, and bear no liability, while they have the choice of an excellent expressway at a $1.75 toll between Leesburg and Washington.

More successful financially is State Route 91 Express Lanes, a fully investor-financed toll facility just opened in Orange County, California. Making use of electronic tolling, this 10- mile $125 million four-lane facility gives motorists caught in Los Angeles’s commuter backups the option of paying a $2.50 toll for an express ride down the middle of a congested eight-lane “free” freeway.

Arizona, California, Minnesota, Michigan, Georgia, Virginia and the Carolinas are all discussing more investor-built highways. State-owned turnpikes in Florida, Pennsylvania, New Jersey, New York, Pennsylvania, Massachusetts, Illinois, Indiana, Ohio, Kansas, Maine and Oklahoma are arguably an improvement on so-called “free” highways. But unfortunately the politicians get to appoint the turnpikes’ boards of directors and otherwise interfere with decisions.

Investor-built highways are politically clean, so long as they are given no taxpayer backing and are the result of competitive bids.

The most exciting major new interstate highway project is Corridor 18, designed to provide a high-grade highway link from Canada through the U.S. Midwest to Mexico — sometimes dubbed the NAFTA highway. It will cost between $5.5 billion and $13 billion, depending on whether it is built to regular interstate expressway standards or as a special high-speed (100 mph) long-truck route with provision for automated hands-off-feet-off driving. That important facility will be built only with a large share of investor funding — based on the prospect of tolls.

Corridor 18 offers substantial economic promise to southeastern Arkansas. The highway would come south from Indianapolis, cross the Mississippi River near Memphis and head across Arkansas toward Shreveport.

Even a complete outsider like myself can look at the road map and see that the Arkansas highway system is politically dictated. It is completely centered on Little Rock, which leaves the state with very poor and circuitous road connections to economically important nearby centers such as Atlanta, Shreveport, Houston, Baton Rouge, Jackson, Mobile, St. Louis and Kansas City. And how does a trucker in Arkansas get to anywhere in Florida, a huge and growing market?

The Little Rock hub-and-spoke plan of Arkansas freeways has obviously been designed by politicians seeking to reinforce the dominance of the capital. Investor-built roads would more likely emphasize upgrading the state’s links with major ports and industrial cities in nearby states, enhancing Arkansas’s economy and competitiveness and benefiting its industries and citizens — rather than its politicians and bureaucrats.

Peter Samuel is a free-lance writer specializing in transportation issues and author of Cato Institute Policy Analysis “Highway Aggravation: The Case for Privatizing Highways.”