Relic of the past
“Most of our budget is going to pay principle and interest on bonds that financed some work done several years ago.”
So commented the manager of a city road department on a Better Roads survey of highway departments a few years ago.
His words came back to me in March as I read several industry reports about the growing enthusiasm among elected officials for financing congestion-relief measures through bond issues.
Bond issues that raise funds for tollways or toll lanes or any other project that produces revenue to pay the principle and interest on the bonds are fine — provided you can get the public to go along with tolling.
Bond issues that simply allow a government to build now and pay with tomorrow’s traditional public funds are a folly carried out by opportunistic politicians who hope to advance to a higher office before the tab comes due. Their victims are a public that has been taught to believe it can have anything it wants without paying for it.
As our reader pointed out so clearly, borrowed money isn’t a solution for a chronically inadequate operating budget. It can, in fact, create more harm than good over the long haul by leaving an agency unable to perpetuate even bare bones programs when the loans come due.
In this election year, Republicans and Democrats alike are putting forth a variety of infrastructure renovation plans, none of them involving increased taxes. Some would create pools of money to underwrite bond issues for regional projects; others would create federal funds for infrastructure through a bond issue that would be financed by the federal government’s general revenues. The federal government is, itself, nearly $10 trillion in debt at the moment, and adding debt at the rate of a half-trillion dollars a year.
Hopefully, these proposed solutions are being offered simply to indicate that the authors recognize the country’s infrastructure crisis and also recognize that you can’t talk about new taxes in an election year. Not in this America.
As for bond issues to launch revenue-producing roadways, there is a serious question as to whether or not they make sense any more. Transportation Secretary Mary Peters claims there is more than $400 billion in private funds available for transportation infrastructure. Even if she’s off by $100 billion or so, that’s more than enough money to launch dozens of congestion-relief projects around the country, and working with private equity might be far less confining to a state or local agency than working with an arm of the federal government.
Public-private partnerships and tolled roads or lanes are not a cure-all for the pavement and bridge demons America faces, but they could be an important slice of the pie. A state DOT official once told me that to solve our Interstate highway problems, America was going to have to separate the road problems of large population centers from the rest of the system and fight the war on two fronts. His comment makes sense because the solutions for each “front” are so radically different, and because the solutions for cities will be different from one city to the next.
Public-private partnerships seem to lend themselves to city solutions: they can offer congestion relief to those willing to pay for it, while those who can’t or won’t pay extra still have the use of public-road alternatives.
As for bond issues, you have to wonder if they aren’t fast becoming a relic of the past in the road industry.