One of the benefits of this economics crisis is that it may help decrease the size and scope of government, at least in some areas. Politicians almost never voluntarily give up control over anything, but with deficits getting deep, 44 states are taking a look at selling off state assets to help raise some desperately needed cash. Some of those assets are state roads.
Most politicians are against the idea of privatizing roads, despite the fact that privately run roads are generally better maintained and more efficiently run; but in some cases, the price is just too good to pass up. Massachusetts lawmakers are facing a $1.4 billion deficit, and are considering selling the Massachusetts Turnpike to help deal with that. And New York Gov. David Paterson appointed a commission to look into leasing some state assets, including the Tappan Zee Bridge and some toll roads. That commission will report it’s recommendations next month, but they’ll probably be in favor of selling, since privatization is usually helpful to everyone involved. Check out some reasons why:
Right now, the pricetag for infrastructure projects like bridges and roads is high, since private investors and public pension funds are looking for “safe places” to put their money. Toll roads and bridges are seen as recession-proof, and can offer a steady source of income. As for the state and the taxpayers, selling or leasing public assets can produce that big influx of cash right away, and takes a huge burden off the states since they no longer have to deal with the maintenance of those roads or bridges. Also, privatization takes the economic decisions about out of the hands of politicians and puts them into the hands of the free market which is much more efficient and better reflects the desires of consumers.
Some states actually made privatization deals before the economic crisis. For example, in 2006, Indiana made $3.8 billion by leasing the Indiana Toll Road for 75 years; and Chicago raised an additional $3.5 billion since 2005 through deals for the Chicago Skyway toll road, parking ramps, and parking meters. Unfortunately, here in my home state of Pennsylvania, politicians botched one of the potentially largest deals of it’s kind in the country: Investors were willing to pay $12.8 billion to lease the Pennsylvania Turnpike for 75 years, but lawmakers didn’t act on it, and the investors walked away.