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State governments are transiting away from contributing general funds (taxes) toward a user fee based system. Some may see this as a means to lighten the responsibility for state government. Others, myself included, take the view that burden sharing is required. Some fees can be raised. Some economies achieved. In the end, however, the State must shoulder some of the "burden."
In California, for instance, our 270 state parks return $4.2 billion each year by way of taxes, revenues to the general fund, and economic activity to the local economies. In fact, it is the more rural economies, where high unemployment relative to the state as a whole and low per household incomes are most felt. Local communities rely on their state parks.
TransUrban to dispose of U.S. toll road, profits tank 51%
Transurban mulls disposal of U.S. toll road
FY profit down 51% to A$54.9M, distribution guidance disappoints; shares fall 1.5%
By Ross Kelly
Wall Street Journal
SYDNEY--Transurban Group (TCL.AU) said Tuesday it's mulling the disposal of a U.S. toll road that drove a 51% slide in its annual profit and indicated its robust Australian assets aren't invincible to softer economic conditions at home.
The Pocahontas Parkway in the southern part of Virginia state was constructed in anticipation of...
Read more here (access for subscribers only).
Corporate secrecy in public projects
Link to article here.
15 August 2012
Lift the veil of corporate secrecy on public projects and save the taxpayer
By Professor Vivek Chaudhri
The Conversation
Monash University
The $1.4 billion cost blowout reported by the NBN Co last week has focused attention once again on the seemingly regular occurrence of large government infrastructure projects being delivered late and over budget.
Whether we look at the much touted Public Private Partnerships (PPP) frameworks championed by state and federal governments of all persuasions, or in the NBN Co. case, a government monopoly engaging with the private sector, the cost to the taxpayer invariably appears to be greater than first estimated.
Why might that be? Is it that we are systematically poor (in one direction) at estimating future costs? Or do political realities and parameters change? That there is a lot of risk and uncertainty in the world around us is certainly true, but why must it always be the case that the taxpayer is left with the “bill”?
El Paso's pork: Stadium uses P3 to rip-off taxpayers
NOTE: This is a satirical blog, but highlights some of the anti-taxpayer aspects of this P3 the mainstream media neglects to report. See how this ballpark benefits the well-connected in the downtown El Paso's 'ballpork' graphic here.
Private profit, public risk
Link to article here.
This is yet another shining example of how certain industries, that have the potential to do serious damage to the nation's water supply, have lax enforcement by regulatory agencies and get taxpayer bailouts for their spills/mistakes.
With TransCanada pushing its Keystone tarsands pipeline through Texas over several aquifers, it ought to give Texans pause. Then there's the property rights abuse when these companies have to do is check a box claiming they're a 'public use' pipeline (without ever having to prove it) on a one-page application and walk away with eminent domain authority with no oversight.
Public private partnerships also represent public money for private profits. Taxpayers often secure the private entity's debt, heavily subsidize their profits, and essentially grant a private corporation the power to tax and restrict competition to guarantee their profits.
Private profit, public risk
By J. Mijin Cha
Huffington Post
August 2, 2012
Within two years, the Enbridge tar sands pipeline has managed to release more than 850,000 gallons of oil in two different spills. The first spill in Southwestern Michigan released over 800,000 gallons of oil and cost more than $800 million to clean up. The second spill released 50,000 gallons in Adams County, Wisc., smaller than the first spill but still requiring two homes to evacuate. These spills cause great economic and environmental harm to affected communities, but barely create an inconvenience for Enbridge, which posted quarterly earnings over $300 million in the last quarter.
The Wisconsin pipeline spill is just the latest in a series of environmentally damaging accidents that end up causing significant loss to local communities but barely make any impact on company earnings. BP's profits rose 17 percent to $7.1 billion in the first quarter of 2011, less than six months after the Deep Horizon disaster, even though clean-up efforts continue two years later. Between 1999 and 2010, there were 804 spills from Enbridge pipelines, releasing five million gallons of oil, yet the company continually posts big earnings.
At the same time, Enbridge engages in a pattern of cutting corners on safety measures. A formal investigation into the 2010 leak found that the company was negligent both in proper equipment upkeep and in dealing with the leak once it occurred. The report states, "[T]he rupture and prolonged release were made possible by pervasive organizational failures at Enbridge Incorporated," which included allowing well-documented crack defects to exist in corroded areas until the pipeline failed and inadequate training of personnel, which allowed the rupture to remain undetected for 17 hours.
This pattern shows the fundamental problem with the argument that corporations can police themselves: It is still cheaper to pay for the occasional fine and clean up than pay for the continued maintenance and upkeep of equipment that would prevent spills. Corporations protect their profits while the public shoulders the risk and cost of their actions. Enbridge was fined $3.7 million by pipeline regulators -- the largest fine they had ever given, yet it was equal only to roughly 1 percent of the company's last quarterly earnings. At that level, fines are just a nuisance and not a deterrent for future bad behavior. Without having to internalize the costs imposed on the public by their behavior, corporations have no financial incentive to prevent environmental harms.
But it's not just corporations that are at fault. The Enbridge investigation also found that weak regulations and poor oversight contributed to the problem. Not only were the pipeline regulations inadequate, they were poorly enforced, which directly contributed to the accident. Yet, even though regulations provide strong health and safety protections, they are continually under attack. The Obama administration launched "Advise the Advisor," which asks people to submit what regulations they think should be eliminated. How many environmental and health regulations do you think will be submitted? On top of this, the House GOP introduced HR 4078, which would suspend all regulations until the unemployment rate fell below 6 percent.
The fact is the benefit of regulations far outweigh the costs. A recent OMB study found that between 2001 and 2011, the benefits of federal regulation ranged from $171 to $700 billion, while the costs range between $43.3 billion and $67.3 billion. Moreover, regulations have a benefit that is difficult to quantify. We know how to price the cost of cleaning up oil, but we are still far from being able to value the benefit of water sheds and natural resources that are not tainted with oil.
Strong regulations and proper enforcement can prevent these disasters from happening. The cost of regulatory compliance should be born by the companies engaging in these activities and not by the public. It should be public profit, private risk, not the other way around.
Public private partnership to build new courthouse in Austin
Taxpayer funded lobbying at its finest. The Travis County Commissioners paid for a panel to come up with a way to bypass voters and build a new courthouse using an anti-taxpayer, anti-property rights sweetheart deal known as a public private partnership (P3). P3s involve eminent domain for private gain and public money (in this case $205 million in public subsidies) for private profits in long-term concession deals that amount to government-sanctioned monopolies.
Italy looks to sell public 'assets' to solve debt woes
Italy eyeing public asset sale to slash debt
AFPJuly 15, 2012
Italy's new finance minister said the government could raise up to 20 billion euros a year in public asset sales, and accused the markets of failing to recognise Rome's efforts to bring its finances in order.
Vittorio Grilli, who was appointed just last week, also lashed out at rating agencies, in comments to the Corriere della Sera published Sunday in the wake of the decision by Moody's to downgrade Italian debt.
"The government wants to secure, through a multi-year programme, the sale of public assets for between 15 and 20 billion euros ($18 billion to $25 billion) a year, or one percent of gross domestic product," he said.
He said such a programme could reduce Italy's debt, which is currently approaching two trillion euros or 123 percent of GDP, by 20 percent in five years.
"I would be happy to reduce it to 100%, it would be wonderful. Unfortunately... there are no longer as many saleable assets belonging to the state and public enterprises as there were 20 years ago."
Grilli also said that relations with credit rating agencies had "become difficult", in the wake of the decision by Moody's last week to downgrade Italian debt from A3 to Baa2 -- just two notches above junk-bond status.
"Before the subprime crisis, they gave the top triple A rating to entities (that posed) that real public danger, such as special purpose vehicles," he said, referring to complex financial instruments that packaged toxic debt.
"Since the bubble burst, the rating agencies -- private companies that have a potential conflict of interest with their clients with an exposure to an exclusively American culture -- are always late.
"They amplify the effects of events rather than anticipate them," he said.
Turning to financial markets he said they "do do not yet recognise the quality of our country's efforts to put the accounts in order. A balanced budget is at hand, structural reforms are being undertaken."
"No other country has done so much in so little time," he said.
He also said the government was reaping the rewards of its fight against tax evasion, that would bring an extra two billion euros into the treasury coffers.
Cintra blames its shoddy road work on the drought
Seems Cintra doth protest too much...they blame the cracks on the yet to be opened privatized portion of SH 130 tollway (segments 5 & 6) on last year's drought, and yet I-35, I-10, and a host of other Texas roads fared just fine. It begs the question, what cost-cutting measures did Cintra take to boost its own profits that led to its materials cracking under stress without so much as a single car traversing it yet?
This is what happens when we sell-off our public highways to foreign toll operators who put private profits over the public interest. Also of note, Chris Lippincott used to work as TxDOT's media relations guy, now he's hopped on the revolving door and working as the same for Cintra.
Drought causes $30 million in damage to Texas 130 tollway under construction
Austin American Statesman
Published: 8:48 p.m. Sunday, July 15, 2012
Last year's drought caused cracks to form in the asphalt in several sections of the still-to-open southern 41 miles of the Texas 130 tollway, causing millions of dollars in damage.
The private consortium that is building the road — and will run it for the next five decades as part of an agreement with the Texas Department of Transportation — has been tearing up and repaving stretches of the road between Mustang Ridge and Seguin. The rehabilitation work, under way since the spring, will cost as much as $30 million, said Chris Lippincott, a spokesman for the State Highway 130 Concession Co., but it will cause minimal or no delay in the road's opening.
The lease contract with TxDOT requires that the road be open by November, Lippincott said.
"We'll be open ahead of that," he said. The company, still working on frontage roads and toll facilities as well as the rehabilitation work, is probably a month away from announcing an opening date, Lippincott said.
The consortium and TxDOT signed the long-term lease in 2007, and construction began in 2009. The four-lane tollway is flanked by two-lane frontage roads between Mustang Ridge and Lockhart because it overlays what was U.S. 183, and then does not have continuous frontage roads as it runs around Lockhart's west edge and then onto Interstate 10 near Seguin.
The construction cost, which the company had said late last year would be $968 million, now will be about $1 billion, Lippincott said. The overall cost of the project, counting engineering, right of way costs and an initial $25 million concession payment to TxDOT, will be a little more than $1.3 billion, he said.
The consortium, led by Spanish toll road company Cintra and a subsidiary of San Antonio-based Zachry Construction Corp., is paying all of those costs, including the added $30 million. It will split toll revenue with TxDOT over the life of the lease, with TxDOT's share increasing from a few percent to as much as half as traffic grows on the road over the years.
Texas 130 lies over the Blackland Prairie section of the state, known for its clay-rich soils and their tendency to expand in wet periods and contract in drier times.
The problem, Lippincott said, "was neither faulty workmanship nor faulty design. What happened was a historic drought."
The company's inspectors first detected the cracks last fall, he said. The work involves not only replacing broken pavement, but also changing the substructure of compacted soil beneath to create moisture barriers with impermeable layers.
"We're going to keep the wet parts wet and the dry parts dry at the subsurface level," Lippincott said.
The company in some cases is reworking soil and pavement where no cracks had been found because pre-construction soil sampling had indicated those areas have heavy clay content and could be prone to similar damage in the future.
"For us, this is the stitch in time that saves nine," Lippincott said. "We're making these changes now so that in a year or three from now we don't have to put up orange barrels, slow the traffic down and go fill the cracks."
State hwy employees lobby against toll restrictions
When you look at the total kitty government is making off tolls in this country ($11 billion/yr), is it any wonder that highway officials are lobbying for unrestricted ability to impose toll taxes without accountability? One-third of all highway improvements were tolled last year, more in Texas and Florida. Watch the cost of transportation and the cost of goods to explode in these states.
AASHTO opposes federal power grab on tolls
By Peter Samuel on April 20, 2012Toll Road News
In testimony this week on Capitol Hill the states' highway lobby AASHTO (Association of American State Highway and Transportation Officials) argued against Senator Frank Lautenburg's so-called Commuter Protection Act, S2006. Speaking for AASHTO North Carolina DOT head Eugene A Conti said enactment of the bill would add great uncertainty to financing of toll projects and discourage states and local authorities from advancing projects that would have to gain federal clearance for toll rates.
"(T)he loss of tolling agencies’ ability to set their own rates would have a deeply unfavorable effect on their credit ratings, increasing the cost of capital and making it harder for such agencies to borrow money through issuances of bonds for much needed capital improvements, maintenance and other essential services."
In addition S2006 would discourage use of toll-financed public-private partnerships (PPPs):
"Instead of granting maximum access and flexibility to a mix of funding and financing tools most appropriate for each state including toll-based PPPs, Congress would create new impediments to private investment through this legislation."
Conti said the states agree that "federal limitations should be removed" that hamper use of tolls for reconstruction within the tolled corridor. At present only three states of 50 are able to use tolls in this way under the very limited "pilot program" outside of bridges and tunnels.
The AASHTO submission says the traditional highway trust fund financing is "at a crossroads" with flat or declining revenues and increasing difficulties obtaining other funding. The deficit relative to existing inadequate federal grants of $90b/year is put at $13b/year by the Congressional Budget Office. National Surface Transportation Policy and Revenue Study Commission had projected future federal investment needs at $225b/year, almost three times the yield of current gas tax revenues.
Conti: "In recent years, with the growing gap between highway investment needs and available revenues as well as the development of easy-to-use automated toll collection technology, toll roads and toll lanes have once again become an important means for financing investment in new highway capacity—in the last decade about one-third of all new limited-access lane miles built in the United States were tolled; in states such as Texas 
and Florida, the share is even higher."
The AASHTO submission said currently, there are more than 270 state and local toll roads, bridges, and tunnels in 32 states, totaling 5,541 miles of roadway.
Toll revenues nationally are around $11b/year.
In the hearing the Republican ranking member Roger Wicker (Mississippi) also expressed opposition to federal involvement in tolls. It should remain the "prerogative" of states and local authorities, he said.COMMENT: Federal involvement in toll 'oversight' - a euphemism for control - will expand the opportunity for political mischief, increase uncertainty, add to costs, diffuse responsibility, and slow everything down. It is a sure formula for worse roads. Far from "protecting" commuters and other travelers it would do great damage to them.
States look to PPPs to get roads fixed
CHICAGO — As Indiana spends down $3.8 billion generated by its 2006 lease of the Indiana Toll Road, the state has a series of new public-private partnerships in the pipeline that underscore its continued reliance on the technique to provide financing for transportation infrastructure projects.
As of this year, all of the remaining cash from the toll road lease to a private consortium — $1.7 billion — is earmarked for ongoing projects, and officials plan to rely on other P3s to help finance transportation projects in the future.
The Hoosier State has three major privatization deals in the works under a P3 program launched by Indiana Department of Transportation for the state’s largest infrastructure projects.
The transactions include the state’s participation in a bi-state effort with Kentucky to build a new $2.4 billion bridge spanning the Ohio River, a planned 47-mile expressway that connects to Illinois, and a major revamp of a highway that runs north of Indianapolis.
On the local side, the city of East Chicago, Ind., recently inked a deal with a private company that will create the state’s only privately owned toll bridge to replace a failing span that was shuttered in 2009.
“Indiana has tried to position itself as being innovative with regard to leveraging private capital for infrastructure,” INDOT spokesman Will Wingfield said. “It’s very important in the current economic climate that Indiana makes it clear to the private sector that Indiana is open for business and interested in engaging in these types of innovative deals that help improve transportation for Hoosiers.”
Gov. Mitch Daniels, who will leave office in January, has been one of the biggest cheerleaders for P3s throughout his years in office.
Read more here.
TxDOT execs bump in pay raises eyebrows
How tone-deaf can a taxpayer-funded public agency be? Mind-bogglingly so when it comes it the Texas Department of Transportation (TxDOT). When Texans are tightening their belts and the Governor is asking state agencies to cut their budgets and future budget requests heading into the the legislative session next year, how is that TxDOT can expand its executive team, its executive salaries, and continue to promote the MOST expensive, most controversial means of building roads - public private partnerships (PPPs)? Because Rick Perry is still the Governor, much the taxpayers' detriment. The Legislature is to blame as well. They gave TxDOT a permission slip to jack-up its salaries during a recession taking the Executive Director's salary from $192,000 year to $292,500 and that permission extends to all five top execs. Meanwhile, private sector salaries for the average American continue to drop.
Congress passes new federal highway bill
Bingaman: Taxpayers paying for roads - TWICE
In the coming weeks, Congress is likely to be scrambling to meet another deadline: once again deciding how long to extend a law that funds the maintenance of our nation’s highways. When Congress does take up that bill, I hope that we decide to correct a flaw in the law that allows states to fleece federal taxpayers.
Indiana seeks more PPPs after blowing through first pay-out
Public private partnerships have become like crack cocaine for politicians. They're addicted to sticking it to commuters by selling-off our public roads to private toll operators who not only charge motorists outlandish toll rates, 75-80 cents a mile, they get control over surrounding free routes in a government-sanctioned monopoly. Unless voters hold these criminals, err politicians, accountable and fast, there won't be any 'public' infrastructure left to drive on.