Just a few late night questions

#1.  The Republicans on Capitol Hill appear determined to oppose reduction of the student loan interest rates without some “pay for.”  First, why was there no “pay for” when they passed tax reductions for the richest among us? Secondly, Bankrate.com is reporting that 30 year fixed mortgages cost 3.82%, a new car loan for 48 months has an interest rate of about 3.28%, and a home equity loan for $30,000 carries 5.78%, so why must student loans be more expensive than just about any other major form of credit?

#2.  Why did House Speaker refer to the Affordable Care Act provisions for cancer screenings for women as a “Slush Fund?”   Republicans would like to cut the $17 billion set aside for breast and cervical cancer screenings, child immunizations, and wellness education.

#3. Which is ultimately more important to the health and well being of our entire nation: (a) tax breaks on multimillion dollar estates, or (b) feeding school lunches to 280,000 children for the next ten years?

#4. What is more important to national commerce, protecting the Bush Tax Cuts for millionaires and billionaires, or doing something about the 69,220 highway bridges in this country that are structurally deficient?  [DoT, RITA table I-28]  Isn’t there something of a disconnect when we consider that bridges are generally built to last 50 years, but at the rate we are repairing and replacing them it may take 100  years to fix the problems we already have?

Just asking…

>For Whom The Road Tolls

>Thanks, but no thanks, to U.S. Congressman Jon Porter (R-NV) for pushing a bill to create public/private toll roads to ease traffic on Interstate 80 from Reno to the California line. [RGJ] Colorado looked at this option, and the result was a three part series in the Denver Post “Truth be Tolled.” The Post reported that 86% of the toll roads in 8 states failed to meet revenue expectations in their first full year of operation. Why? Perhaps because the the consultants doing the revenue and traffic projections had an interest in the construction of the road, or were later awarded additional work on the road. There are cases in which the road’s revenue forecasts “were used as a negotiating tool to secure favorable financing terms rather than as an impartial scientific study.” “…a review by The Denver Post of tolling projects in eight states finds there is no incentive for the estimates to be accurate. Even when wrong, the bonds are simply refinanced and the consultants are paid again for their work on new studies to support the new bonds.” The examples of E-470 and the Northwest Parkway are very instructive.

Will Nevada be using any of the three main forecasters? (Wilbur Smith, Vollmer Associates, or URS Corporation) Problems with South Carolina’s “Southern Connector” illustrate the inflated projections by Wilbur Smith which received $12 million of the initial $200 million for a pair of contracts the road authority promised the company if the bonds were sold. [DP] The Seminole Parkway in Florida missed its revenue projections by 54%. What “saved” Florida from a meltdown may have been a statewide system in which established roads were able to cover the shortcomings of the newer projects. The Camino Colombia Road in Texas had no such luck, and actually had to close for five months in 2000. [DP]

Nevadans may also want to look carefully at the controversy surrounding the construction of the Colorado Tolling Enterprise’s first major project, an “expensive approach to congestion that favors a minority of motorists who can afford high tolls, leaving most drivers mired in clogged lanes…” [DP]

Another wrinkle in the privatization scheme is the HOT lane, operating on the principle of “congestion pricing.” In the case of SR 91 in California the price is, of course, the highest during rush hour. The bottom line is the bottom line: “The real purpose of public-private partnerships is to transform the public into a source of venture capital for the private sector. In theory, the profits that private firms make from these partnerships will generate enough tax revenue to pay back the public with interest. Unfortunately, capitalism rarely works this way in practice, particularly in its latest globetrotting incarnation. Some of the money raised by a public-private partnership will make its way back to the public, but it’s unlikely that the public will make a profit on its investment.” [BdSub] The profit, not surprisingly, went to Citicorp, Banque Nationale de Paris, Societe Generale, Deutsche Bank, and CIGNA Investments.

Touted as a way to ease congestion, the privatized SR 91 HOT lanes in Orange County, are more likely the road of choice for those able and willing to pay for the privilege of using the toll lanes without having to carpool.

A proposal by Indiana Governor Mitch Daniels for a toll road bypass east and south of Indianapolis was pulled when opponents noted the drastic changes it would make in some rural and residential sections included in the plan, and that the money would be better spent improving the mass transit system. [IndyStar]

In contrast to the push for privatization plans, New Jersey dropped a proposal that the Turnpike and Garden State Parkway be leased to a private entity with a lump sum front load to pay down debts. This “gimmick” would not correct the financial problems in the system and was perceived as leading to higher tolls and less maintenance on the highways. [THNT]

Any proposal for toll road operations in Nevada needs to reflect consideration of the issues already surfacing and noted in other states:

(1) Are the projections for use and revenue generation realistic, and the product of truly independent, unbiased, studies?
(2) Does the proposal truly provide options to overcrowded highways, or does it merely provide a means for wealthier drivers to avoid carpooling and other means of reducing congestion.
(3) Does the proposal leave the state’s taxpayers with the bill for highway maintenance of a private corporation’s toll road?
(4) Does the plan mitigate the possibilities of higher tolls and less maintenance as the private company seeks to maximize the return on its investment?

Congressman Porter would do better proposing federal legislation to (a) enhance public transportation and mass transit services; (b) promote the declaration of HOV lanes; and, (c) assist states with highway construction and maintenance funding that doesn’t require trucking companies and private citizens to shoulder the bill for the likes of Citicorp and CIGNA.

Update: More information on toll road problems

Planetizen “The Problems with Toll Roads” June 2006
And with thanks to a commenter –
Unbossed “Part 1: Toll Roads Privatization, and Taxes” July 2005
Unbossed “Part 2: Toll Roads, Privatization, and Taxes” July 2005
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Nevada news also at Blue Sage Views