Will “Highway Cliff” Allow Obama to Revive “Public/Private Partnership” Infrastructure Scam?

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Your humble blogger may be reading more than is warranted into the synchronistic timing of stories in two different newspapers about financing highway construction. But it nevertheless looks sus.

On Wednesday, Politico warned of a “highway cliff,” that the Highway Trust Fund, which funds infrastructure, is projected to run out of dough at the end of August. That means that projects underway could be stopped or delayed. With this budget need coming so close to an election, grandstanding is even more likely than usual to prevail over common sense. From Politico:

There aren’t many good options for lawmakers — particularly Republicans, who are loath to approve big-money projects, don’t much like shifting money around and are sure to resist even a minimal hike in the gas tax.

Few things rile up voters more than political stumbles leaving them stuck in traffic. Just ask New Jersey Gov. Chris Christie. And the timing couldn’t be worse, with funding slated to run out just months before voters head to the ballot box to vote in a critical election — providing the electorate with a fresh example of congressional dysfunction.

Highway policy is pricey, complicated and fraught with regional tensions, and the process of rebuilding the trust fund could rattle the power hierarchies within the Capitol…

Multiple committees have jurisdiction, and even the most senior lawmakers charged with spearheading transportation policy say the decision-making process is parked in the posh leadership suites in the Capitol.

Senior House GOP leadership aides readily admit that this is one of the main hurdles standing between them and the 2014 elections. The looming debate illustrates that, regardless of their plan to keep this year drama free, Republicans will not be able to avoid some legislative battles that threaten to expose deep fissures in their party.

If you read the rest of the article, the situation is a mess, procedurally as well as practically. One assumes that Congresscritters will grope for a Euro-crisis style kick-the-can-down-the-road-past-the-midterms approach, but even getting to that is fraught.

What struck me as telling was a story the same night, in the Financial Times, on infrastructure deals. Now why would that have anything to do with highway funding gridlock in the Beltway? In fairness, the Financial Times article made nary a mention of the imminent financing shutdown. But in talking about infrastructure deals, it peculiarly spoke only about highway financing, and of financing new construction. As readers likely know, infrastructure deals more commonly involve mature government assets, and range well beyond highways. Airports, tunnels, parking meters and parking garages have also been popular infrastructure plays.

The other element that tripped my “something more is up” detector was the lack of an obvious news hook, yet the feel of the article of being a PR plant. It focuses almost entirely on highway construction deals (the only exception is an in-passing mention of failed efforts to privatize Pennsylvania Turnpike toll roads and some Virginia ports activities). And it is concerned strictly from the perspective of investors, presenting the transactions as if investors were taking on significant risk.

While it is true that some deals have been turkeys, that does not mean that the governmental agency on the other side of the table somehow got a great deal. As we’ll discuss in a bit more detail shortly, the investors typically get strong profit protections. For instance, if a highway lane is taken out of service for emergency reasons, the government entity has to make up the revenue loss. So a deal that went pear-shaped is likely to come at some cost to the government “seller” as well.

The Financial Times account starts by describing how Texas State Highway 130, near Austin, was expected to be a winner by virtue of letting drivers pay for, among other things, the right to drive legally at 85 miles an hour. Turns out most people prefer to drive a little slower for free. Here are some representative sections of the Financial Times story:

The accurate prediction of traffic levels is one of many challenges that confronts private investors in the nation’s infrastructure. They must also grapple with private investment laws that differ from state to state, competition from public sector bodies that can offer tax-free bonds and often political interference.

Such private investment was widely expected, when SH130 was planned in 2007, to square the circle of US infrastructure spending. Private capital, it was hoped, would fill the gap between the shrinking availability of public funds and the growing maintenance needs of ageing 20th century infrastructure.

As the problems of Texas SH130 illustrate, however, there is ample scope for investments to turn sour – and a number of investors have suffered.

“They wanted to bring private capital to bear to relieve congestion on I-35,” one person involved with the SH130 project says. “Between when the project was planned and now, the economy has gone in a different direction. Texas’s [economic activity] is nowhere near what an extension of a 2007 economic forecast would have suggested.” Nevertheless, Anthony Foxx, transportation secretary, insists private markets have a “very useful role” in the US’s infrastructure. Infrastructure investments can also provide steady, low-risk, long-term returns of the kind that most pension funds want…

The US public sector has a financial cost advantage because public bodies’ bonds are generally tax-free.

Yet, even given private investors’ higher financing costs, many observers say the benefits of tapping their management expertise and of shifting the risks of cost overruns to the private sector can make deals worthwhile.

Yves again. This is a remarkably one-sided account, given the history of infrastructure deals. And I wonder whether such a sanitized version is being road tested (pun intended) in the Financial Times in case the “highway cliff” negotiations give Obama and the Republicans the opportunity to revive one of Obama’s pet ideas, that of “public/private partnerships” to finance infrastructure. It was only a bit more than a year ago that we last had to rouse ourselves to explain what was really afoot. From a March 2013 post:

Apparently Obama’s idea of a Holy Week sacrifice is to feed American citizens to rapacious bankers, this time through the device of “public/private partnerships” to support infrastructure spending. Some NC readers were correctly alarmed by a speech by Obama on Friday on using public/private partnerships to fund infrastructure spending. This is not a new idea; Obama first unveiled it in his Statue of the Union address. But it is a singularly bad idea, that is, if you are anyone other than a promoter of or investor in these deals.

As we’ve discussed at length earlier, these schemes are simply exercises in extraction. Investors in mature infrastructure deals expect 15% to 20% returns on their investment. And that also includes the payment of all the (considerable) fees and costs of putting these transactions together. The result is tantamount to selling the family china and then renting it back in order to eat. There is no way that adding unnecessary middlemen with high return expectations improves the results to the public. In fact, the evidence is overwhelmingly the reverse: investors jack up usage fees and skimp on maintenance. And their deals are full of sneaky features to guarantee their returns. For instance, Truthout noted:

Infrastructure privatization contracts are full of “gotcha” terms that require state or local governments to pay the private contractors. For example, now when Chicago does street repairs or closes streets for a festival, it must pay the private parking meter contractor for lost meter fares. Those payments put the contractors in a much better position than the government. It gets payments, even though Chicago did not get fares when it had to close streets…..

Highway privatization contracts also often include terms that forbid building “competing” roads or mass transit. Some even require making an existing “competing” road worse. For example, the contract for SR-91 in Southern California prohibited the state from repairing an adjacent public road, creating conditions that put drivers’ safety at risk. A proposed private highway around the northwest part of Denver required that local governments reduce speeds and install speed humps and barriers and narrow lanes on “competing” roads to force drivers to use the privatized road….

Virginia decided to promote carpooling to cut down on pollution, slow highway deterioration and lessen highway and urban congestion. As a result, Virginia must reimburse the private contractor for lost revenues from carpoolers, even though not all of the people in a car would otherwise have driven individually….

Now there is some hope in this depressing news. First, the Republicans may overplay their hand. They insist they won’t allow Obama to get any funding for these deals unless they get corresponding tax cuts. Second, with Obama’s poll ratings flagging, he’s looking more and more like a lame duck. Infrastructure is not one of his top priorities, and he may well wind up concentrating his dwindling chips on other issues.

Nevertheless, some “pragmatists,” otherwise known as the Vichy Left, may insist it’s better to have some sort of infrastructure deal, even if it means enriching financiers, than none. That’s spurious. A new post at VoxEU addresses the issue of infrastructure spending in the European context, where austerity is the order of the day, which means a lack of funding for important needs. The authors considered and rejected the idea of having private investors fill the gap. They instead argued for smarter investing, focusing more on investing to improve the productivity of existing infrastructure than costly new projects (which are often construction boondogles).

So brace yourself for this “public/private partnership” idea being pulled out of the mothballs. The good news is that Obama failed the last time he tried getting this idea implemented and he has less political capital than he did a year ago. Moreover, a public/private partnership scheme would almost certainly have even more moving parts than other ways of dealing with the “highway cliff” which also reduces the odds of it getting done.

But never forget that the proponents of these scams are playing a long game. Even if they lose this round, the more opportunities they have to pitch these looting mechanisms as reasonable policy options, the greater the odds they have for pushing them over the line eventually. That’s why it remains important to keep focusing on who wins in these deals in practice, and it certainly isn’t ordinary citizens.

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  1. Kim Kaufman

    Obama started talking about private/public partnerships in his first or second year, along with Geithner. It’s just another hustle, benefitting bankers. Where else is there money left except to privatize schools, roads, water, seeds for food?

    1. casino implosion

      If I were advising a young graduate of the growth industry of the future, it would “air”.

  2. John

    What Obama is really trying to say is Private Partnership. He intentionally will leave out Public. We’ve grown accustomed to Beltway code words. Say one thing but do something else.

    We also know his plan will benefit only the 1%. Good government is a thing of the past.

    1. Dan Kervick

      Right, for neoliberals like Obama, “public-private partnership” just means the public subsidizing of private capital accumulation. Not only should the rich get richer, but the public should help them.

      Americans need to tell their public servants that the country needs new infrastructure, but the public should own most of it after we build it. Otherwise it’s just a scheme to help the landlords build the very plantations on which we will then all pay rent..

  3. mmckinl

    Excellent piece Yves … you are so right about a privatization long game … They know if they keep trying they will succeed once they get their players in position. Many states will take up this offer as they are already in complete corporate control. Neoliberalism like ballots to join the EU will keep happening until they succeed and once they succeed it is game over forever.

  4. diptherio

    We’re running out of money for infrastructure…but somehow the Fed manages to find enough scratch to buy $10 billion in bonds every month (iirc from yesterday’s WSJ). Where do they get the money? Oh yeah, they keystroke it into existence.

    At some point, the insanity of this situation has got to sink in, doesn’t it? At some point, people have got to start asking, “why does the government have endless purchasing power to buy bonds from banks, but not enough to maintain our infrastructure?”

    1. worker-owner

      The Sale of the United States of America to the highest political contributor continues. Ignoring your good point about the money, it is hard to ignore the fact that our political cartel is happy to sustain high unemployment and simultaneously let the country’s infrastructure slowly deteriorate as if the people don’t want it fixed. The best political-elite money can buy serves their masters well.

      1. Banger

        So why does the U.S. population tolerate this stuff? It doesn’t have to be this way–you know that right? You know that people used to fight this kind of thing in the old days and sometimes won–why not now? We have a cultural problem that is far deeper and far sicker than our corrupt institutions.

        To start with we are a nations of hustlers and chumps–most are chumps who will buy into every con that comes down the road–Obama for example–but you can also look at the whole MIC and its phony wars from Vietnam onwards (including the Cold War).

        1. tim s

          Several reasons I see why it is “tolerated”, although to tolerate something implies being aware of it initially, which I don’t see as the case in general:

          1. The bread and circuses have become more pervasive. Many people just aren’t looking, even if they are hurting significantly. I used to think that humans were very different from the slowly boiling frog, but I no longer do.
          2. Propaganda has become much more persistent and effective. Many of us still have no idea and the barriers to understanding are substantial
          3. Self sufficiency has fallen off. It’s difficult to stand up for yourself when you wear so many chains.
          4. If you actually do overcome #1-3 and begin to take strong actions, you are likely to meet with state/establishment violence against yourself or your family in some form or fashion (physical police violence, employment blacklisting violence, etc., etc.). This largely due to you being in the minority and there being a majority still in #1-3 who will be willing to do damage to you or remain silent while it happens

          Many of those aware are not yet desperate enough to overcome our fears of the reality of #4. We’ll get there one day, sooner rather than later most likely, I’m fairly certain.

          1. Lord Koos

            There is another factor — I think most people (especially those with children) are so busy trying to make ends meet that they do not have time or energy to seek out the truth behind the headlines and spin. Hamsters on a spinning wheel to nowhere…

            1. tim s

              true as well.

              I forgot to include in the 1st post the fact that we have become increasingly separated from our families and others in our communities. The breakdown of the family is considered here in the states to be the breakdown of the nuclear family, but I see a nuclear family removed significantly from an extended family already as one that has broken down.

              There is so little community in our “middle class” lives that we hardly know each other and are not available to help or be helped.

              Being atomized in our communities and in our families leaves us easily divided and conquered.

              1. Synopticist

                There’s also outrage fatigue.
                We’ve all seen so much outrageous sh*t in the last 5 years that new stuff just washes right over us.

              2. jonboinAR

                Those are cogent points with which I agree, maybe with small quibbles. We are somewhat overworked, perhaps. Both traditional family heads now must hold jobs and a lot of family raising is farmed out. Still we make or find time for quite a lot of leisure activity: vacations, movies, TV escape shows, sports, video-games, etc. Somehow civic activity gets badly short-shrifted. We’ve been dumbed down, mentally corrupted by our consumerist culture, I think, is a good part of the problem.

                Well, I guess you covered that in Point 1, but it’s my big emphasis. I don’t quite agree with the overworked excuse. I think there’s been other people worked harder than us.

                While I may quibble with WHY Americans fail to pay attention, and a lot of my argument if for the sake of argument, ’cause I don’t know, I do agree that much of the reason we’re being gradually boiled IS because we allow it.

                They’re organized and think long term. We’re not, and don’t. Bad for us.

  5. Anonymous

    Toll roads are pretty common in Malaysia. The big rip-off difference being that many of them have their revenue guaranteed by the Government – which pays them top ups if they fall short. One of the toll highways, PLUS, has been given a guaranteed rate hike of 28% every three years, compounded, for the life of the 35 year concession. These privatization schemes are a massive hand-out. (Sorry for the anonymous handle, but I am a foreign resident in Malaysia).

  6. rjs

    WaPo, a couple days ago:
    White House opens door to tolls on interstate highways, removing long-standing prohibition – With pressure mounting to avert a transportation funding crisis this summer, the Obama administration Tuesday opened the door for states to collect tolls on interstate highways to raise revenue for roadway repairs. The proposal, contained in a four-year, $302 billion White House transportation bill, would reverse a long-standing federal prohibition on most interstate tolling.

    1. F. Beard

      Yep, let’s get those pesky poor people off our roads. Only the rich should be allowed on the Interstates the poor built. /sarc

      Obama, you’re a joke! A bad one.

    2. F. Beard

      And it’s a regressive, non-stimulative tax.

      Obama, you’re a dolt wrt economics too.

      Legacy? Forget about it unless being the only black President for the next 100 years is what you consider a legacy,

      1. Synopticist

        When Bush finally left, I wasn’t sure I’d ever see a worse president.
        Now I’m not certain he was even the worst of the decade.

  7. F. Beard

    Public-private partnerships = fascism, government for the rich and special interests.

    And it’s hypocritical too! Why should the “efficient” private sector need help from the “inefficient” public sector?

    There’s a place for hypocrites who don’t repent.

  8. OIFVet

    Infrastructure PPP is already a reality in Chicago, with the Infrastructure Trust Fund created in 2012. It is overseen by five stooges handpicked by Rahm Emanuel, and is unaccountable to the public and if one is to believe Emanuel, not subject to FOIA. It’s a scam, just as any other PPP, rent extraction devices designed to enrich the already rich and connected by skimming public funds raised by the hoi polloi.

    1. Ned Richards

      The Infrastructure Trust Fund has the potential to make the parking and Skyway deals in Chicago look like minor inconveniences. IMO the first big piece of infrastructure to go PPP is the water department. City water fees will have doubled from 2011 to 2015. The rate hikes are ostensibly for infrastructure, but really to increase the revenue stream in preparation for privatization/PPP.

  9. ep3

    “focusing more on investing to improve the productivity of existing infrastructure than costly new projects (which are often construction boondogles”

    Yves, I have heard stories about the boondogles when new schools are built. One story specifically involved the purchase of a hinge & lock set for the enclosure of a dumpster. A quick visit to the local hardware store for one would cost at most $200. The billed price of the one for the project was $1,200. Please note that contractors receive “volume” discounts for projects. What we have based on this example, is the salesperson marking up the item so that his commission is larger, the contractor marking up the item to increase his margins on the project, and a community overpaying for an item. And, school administration officials receive benefits by providing the work to relatives.
    So what I see on top of the general fleecing thru these contracts that you mention is additional gouging. We have the extraction I mention AND the extraction you mention. So the only “growth” or “improvement” made with these projects is in the level of gouging.

  10. TarheelDem

    The “user fee for public service” approach to individualized infrastructure is an individualist philosophy of taxation that kills “infrastructure for all” approaches. It used to be that the information problem of assessing high-frequency, large-volume transactions of infrastructure use made infrastructure for all approaches unavoidable. Information technology changed this. Now you have E-Z Pass collecting revenue for toll roads, states taking the risk of construction and using the eminent domain powers, and Wall Street doing the financing to get the cash flow running. And you have the mandated free alternatives allowed to deteriorate for “lack of funds”. Absolute-cents gasoline taxes are stuck at artificially low levels all over the country, when the tax should be tied to the price of asphalt and concrete.

    Obama has been put in a bind (arguably self-imposed) by the GOP strategy of absolute obstruction and, some would argue, the Congress’s success in eliminating earmarks. He has definitely painted himself into a corner by agreeing to Kent Conrad’s demand for opening the door to austerity. And the state- and local-level austerity and financial failure have made infrastructure maintenance even more difficult. Using infrastructure to goose the economy through direct appropriations has been taken off the table.

    Thus the public/private approaches being discussed, those in which public bodies provide land, existing infrastructure, eminent domain, and the private provides the funds and gains some sort of licensed operating benefits.

    What this does do is take some of the cash on the table and create construction jobs.

    What it also does is take us down the development of a two-tiered infrastructure, which prices out use by people with less than median income.

    Worse, it continues the philosophy of user-fee infrastructure introduced in the Reagan administration thinking.

    Infrastructure done right collectively benefits individuals by benefitting all of the people and entities within the networks of economic support of individuals and not just the individual themselves. The United States used to be a country that understood that–until the conservative and libertarian derangements. Sad to see that become part of the Washington consensus.

  11. E.L. Beck

    Methinks there’s some afoot. The road to interstate privatization:

    1. Allow toll roads to be established on existing interstate highways.


    2. Lease out toll roads to private concerns.


    3. Raise tolls precipitously, cut maintenance, or a combination of both to maximize profits.


    4. Allow investors to get rich.

    And for added stimulus, a fire on the horizon helps:


    But the benefits to the State of Indiana are???


  12. NotTimothyGeithner

    I don’t see it. The lack of prosperity and the thieving of Wall Street are part of the zeitgeist, and the Senators not up for reelection won’t want their names on any deal where they can be bludgeoned with giveaways for companies failing to deliver.

    The Teabagger element will run on this, partially because their people won’t be the chosen companies and they are believers in their non sense as opposed to being crooks. The GOP congressman, Morgan Griffith, despite being a regressive pig has himself framed mairujana as a cheaper alternative to drugs peddled by big pharma. If anyone remembers the scuffle at UVA two years back, the instigator was an heir to a large construction firm and donor to both parties except the lefties and teabaggers. Unless they get a piece, I don’t see support for the recycled trash of a lame duck.

    1. Yves Smith Post author

      Please re-read the piece. I said this was unlikely to get done as a “highway cliff” solution because it would be more complex than other solutions. But I warned readers that the more times this sort of remedy gets treated as a legitimate approach by the media, the more it helps the promoters get these deals done in the long run. Go read that FT article. You’d think the only problem with these deals is sometime that investors don’t make as much as they’d expect, which is an argument for cutting the pie even more in their favor.

  13. curlydan

    The federal gas tax has been stuck at 18.4 cents _per gallon_ since 1993. See a time series of the gas tax here:
    Yet, the price of a gallon of gas has risen from about $1.15 in 1993 to $3.50 today where it’s been suspiciously stuck for a couple of years.
    So in 1993, the effective federal tax on a gallon of gas was 16% of the price. In 2014, it’s 5%. The CPI has risen 64% since 1993. This is a Grover Norquist dream come true, aided and abetted by Democrats since they don’t have the guts to address the real problem–we’ve knowingly starved “the baby”, so now we need to bring in private companies to save the baby. Sheesh!
    This isn’t a hard fight to win. Anyone who drives on tolls knows what a pain it is. I drove to Chicago around New Year’s and oops, no exact change? Guess what, you’re license plate is on record for not having paid the toll sucker. And you want a human being to collect the toll? HAH! That’s a major cost. We need a stupid machine to do that for you.

  14. Dean

    If the Highway Trust Fund is almost bankrupt, then the US Government as a whole is what exactly? I digress

    One of the basic functions of government (I thought anyway) was to maintain public things (eg parks, roads, bridges, etc). Now it seems to be managing the mortgaging of public assets to private interests.

    Does this mean I can stop paying my 18.4 cents/gallon tax in lieu of tolls I’ll be forced to pay?

    1. LifelongLib

      Of course the U.S. government could simply print (actually, spend into existence) whatever money it needed to pay people to fix our infrastructure, fund social security, provide health care, and anything else it wanted to do. All without taxing or borrowing. As long as the economic resources exist for this money should never be a problem for a government that controls its own currency.

      Now, why doesn’t it do these things?

      1. MyLessThanPrimeBeef

        When the people can spend $ into existence, the government should yield money creation to you, me and the rest of us.

        1. Lambert Strether

          Again, in case I missed the response, it’s easy for me to create money. It’s not so easy to get others to accept it. How does that work? And if it hasn’t happened already, why not? It would seem there’s every incentive for people to do this, if it is indeed possible.

  15. scraping_by

    Ah, a highway cliff. David Stockman came to the realization creating deficits in the Federal budget was solely a political ploy by anti-government terrorists. The supply side con job was the pretext for the general fund, the trust funds usually need some obvious trick to accomplish. See the pension payments at the Postal Service.

    The absence of artificial deficits as a political meme by the so-called Democrats is one of the strongest indications of a captured opposition. Even with the 40 years of anti-government propaganda, the great mass would tumble to the trick and act on it. But, all we hear is crickets chirping.

    Is this a Pete Peterson con job, or does he just lie about Social Security?

  16. Paul Tioxon

    Most of the infrastructure that is critically in need of immediate attention falls in the oldest industrial states with high population density and heavy industry capacity that was built up first during the New Deal national reconstruction and the massive WWII buildup. Pennsylvania has so many assets that both parties, but none more than that state Rs have coveted for the free market. The Turnpike, which is monopolized from NJ to Ohio with Sunoco Gas and Rest Stations, the Lottery, the State Store system, which runs the world’s largest liquor wholesale operation which feeds the state monopoly of state owned and operated liquor stores. Beer is handled by mom and pop beer distributors, another monopoly, and six packs and bottles are handled by bars, restaurants and corner fast food joints with proper beer licenses. The City of Philadelphia has announced a winner in the bidding for its city owned Gas Works utility, an outright offer to buy for $1.86. The eye on the liquid natgas at the port seems to be the real prize there as an operating outlet for Marcellus Natgas exports.

    A republican controlled state legislature, a full time, well paid bicameral and republican governor can’t seem to pull off any outright sales of the socialist commonwealth’s money making enterprises. Have I mentioned the full blown casino operations that are killing Atlantic City, raking in a fortune for the state and the locality that they are in? So much for the Moral Majority. They have required voter ID, which were struck down by the state courts. Oh, and yes, nothing vaguely republican stopping the socialist cash flow of the state store system, or the turnpike, or the lottery, completely owned and operated by the state with a commission given to the sales outlets, non of that has been privatized. But, the republicans did manage to pass a huge gas tax and driver fees increase to fund MASS TRANSIT and other bridge repairs and road maintenance that has been deferred due to lack of funding.

    The previous D Gov, Ed Rendell, who you can see regularly on TV, is a big time private partnership proponent for governments hard up for cash and can’t pass a tax or fee increase if their lives depended on it. But the Republican Gov Tom Corbett somehow did what Rendell could never accomplish in getting mass transit dedicated funding from the gas tax and increased state funding!!!! How did that ever happen? The supposition is that the current state governor wants to get re-elected and then not massacre thousands on collapsed bridges connecting us to NJ and then have to face the wrath of Chris Christie who knows a thing or two about payback involving bridges to large metropolitan neighbors. But I digress. Sometimes, the things get done simply because they have to get done and it helps pols get re-elected. The other thing to consider is that road work, bridge painting and steel beams do not come from socialist factories or steel mills. The jobs are sent out with request for proposals and open bidding. The Koch bros have a number of large scale asphalt businesses in the Mid West and the state of PA has their favorite sons who quarry rock and crush stones and make the asphalt. The NorthEast has great winters to make the road repair business as regular as a rent check to a slum lord running Section 8 housing. At some point, the construction companies and their suppliers and the trial lawyers and the mass based citizens groups put enough pressure on to raise the money and keep tragedy form happening, even with a republican controlled state, a gas tax increase can happen with the right pressure.

    November 11, 2013
    Seniors, transportation groups back gas tax increase

    John Finnerty jfinnerty@cnhi.com

    HARRISBURG — A controversial bid to increase the gasoline tax to pay for road and bridge repairs has little opposition from the most powerful special interest groups in the state, including those representing the elderly and commuters.

    The strongest support has come from construction, engineering and transportation groups, who stand to profit if the state pours billions into additional spending.

    But the AARP has backed the plan, mainly because it provides money for shared-ride services for seniors.

    And for the most part, so has the Pennsylvania AAA Federation.

    Key components of the plan will lead to higher prices at the gas pump and potential increases in registration fees and fines for moving violations.

    Those details loom large as leaders huddle behind closed doors while trying to pull together a funding plan that will pass in the state House before the end of the year.

    Advocates argue that the impact to drivers of lifting the cap on the Oil Company Franchise Tax would be equivalent to about the cost of a cup of coffee.

    Based on federal data on average fuel consumption and the average miles driven by motor­ists, it would cost motorists an average of $2.60 a week if lift­-ing the Oil Company Franchise Tax drives up costs at the pump 25 cents a gallon.

    A survey earlier this year found that 59 percent of Pennsylvanians said they would support a plan that fixed roads and bridges if it cost them an additional $2.50 a week.

    Pennsylvania already collects 31.2 cents of tax on every gallon of gas, seventh highest among states.

    The bulk of funding to repair Pennsylvania’s crumbling transportation infrastructure would come from that increase in gas tax, said Ted Leonard, executive director of the Pennsylvania AAA Federation.

    The advocacy arm of AAA favored the transportation plan put forth by Gov. Tom Corbett more than one approved by the state Senate. Corbett’s plan would have generated $1.8 billion a year and phased in the gas tax increases over five years. The Senate bill would generate up to $2.5 billion a year by increasing the cost of vehicle registrations and phasing the gas tax in over three years.



    “Fuel companies will determine how much of the tax increase to pass on to consumers,” said PennDOT spokesman Richard Kirkpatrick. “If entirely passed on, the change would be about 9.5 cents a gallon.”

    By early 2017, the new tax rate could add more than 25 cents a gallon, pushing Pennsylvania’s gas taxes higher than any current level in the nation, according to American Petroleum Institute figures.

    California is now No. 1, with 53.2 cents a gallon for state taxes, with only Hawaii, New York and Connecticut above Pennsylvania’s imminent total of 41.8. By early 2017, Pennsylvania will be collecting at least 58 cents a gallon.

    The current national average is about 31 cents a gallon just for state taxes, not counting the federal 18.4-cent bite.

    The new revenue will directly fund much-needed repairs and improvements to Pennsylvania highways and bridges, and is part of a comprehensive transportation package that will also greatly help mass transit, Kirkpatrick said.

    Read more at http://www.philly.com/philly/news/Pa_gas_tax_to_rise_Jan_1_again_in_2015_and_17_.html#ARizhmaAfwsp16bE.99

  17. timotheus

    Take a long look at how the Chileans privatized their stretch of the Pan American Highway and the gouging that now occurs daily for anyone having to drive on it. Struggling suburbanites in the greater Santiago region pay crushing tolls to for-profit entities for the privilege of suffering through horrendous traffic. Because market-based solutions! Mind you, all cooked up under “socialist” presidents.

  18. rob

    The whole public/private partnership thing?
    Personally,that is the definition of fascism.When certain private entities have carte blanche to proceed with profit taking as usual,no matter what… ad infinitum.For what is a “public” use.by the public,for the public.No ongoing bid process even…to let others try at the game ,or feed at the trough,as it were,once in a while.
    While this relationship is obviously,inherently corrupt. Even to a casual observer….
    Why is this relationship of the federal government and the banking sector any different in the creation of our money.We all use the monetary system every day…. Well guess what. It is controlled by the private intrests that are the federal reserve.And guess what… we don’t get a good product. they use the “full faith and credit” of the US government, while they print the money and monetize the debt and “give the treasury” the “leftovers” after they effect every thing under the sun with their perverse form of capitalism.While using that relationship to leverage out anything they aren’t making money on.
    What do we get? screwed… we get this political system. we get this trade system, we get these energy options, we get these telecommunications companies, we get all these wonderful nails for our coffins….. yippee!

    1. skippy

      “The whole public/private partnership thing? Personally,that is the definition of fascism”

      What do you think “A War Economy” is [?!].

      Nearly 70 years of protracted war on everything does have profound consequences, people are born – into it – as a normative sociological paradigm and everything seen, read, or heard is observed through that mental filter.

      skippy… Ideology is the precursor to it all.

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