Highway retailers see road to future

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Public highways across the U.S. will be auctioned to the highest bidder, if a growing trend of privatizing state roads gains traction.

Supporters of such deals told a House Transportation and Infrastructure subcommittee yesterday that states can earn millions of dollars without having to raise gasoline taxes by leasing toll roads to private entities.

"There is a series of interest [from states] across the country," Tyler Duvall, Transportation Department assistant secretary for transportation policy, said during a hearing of the House highways and transit subcommittee.

But opponents worry such deals are reckless and shortsighted, and might end up costing states, and taxpayers, more in the long run.

"I am not convinced that 50 states, each pursuing their separate transportation priorities with their respective private-sector partners, will, in the end, produce a coherent, integrated, national [highway] system," said Rep. James L. Oberstar, Minnesota Democrat and chairman of the Transportation and Infrastructure Committee.

Virginia in 1988 became the first state to enact legislation enabling private development of highways. Seven years later, the 14-mile Dulles Greenway opened -- one of the first private toll roads built in the U.S. in more than a century.

Other states and local governments followed suit.

The city of Chicago in 2004 agreed to lease the Chicago Skyway toll road to a joint Spanish-Australia venture for $1.8 billion for 99 years. The same group last year leased the Indiana East-West Toll Road for $3.85 billion for 75 years.

But Wisconsin Transportation Secretary Frank Busalacchi is no fan of privatizing roads.

"The private sector's legal responsibility to its shareholders is to make money -- profit is their purpose," Mr. Busalacchi testified.

Democrats say the Bush administration is pushing public-private highway deals as a way to avoid increasing the 18.5 cents-per-gallon federal gas tax.

Mr. Oberstar said it is disingenuous to promote privatization of toll roads as a way of keeping taxes down.

"I spell toll t-a-x," he said. "Don't sugarcoat it or say it's something else."

There is no federal legislation regarding highway privatization, but with the current federal highway spending law, known as the SAFETEA-LU Act, set to expire in 2009, members of Congress have been studying alternative funding sources.

Critics also say allowing foreign entities to operate U.S. highways unfairly siphons profits out of the country, and could pose security risks.

"People don't like the idea of their roads being owned by foreigners," Mr. Busalacchi said.

But privatizing roads, if done properly, shifts risks and liabilities, such as cost overruns, to the private sector, said Virginia State Sen. Ken Cuccinelli, a Centreville Republican and a longtime proponent of highway privatization.

"I think that getting the private sector in here building facilities available to all of us is just spectacular policy," Mr. Cuccinelli said. "Government doesn't compete -- private sector does."