Selling our toll roads: good or retrograde idea?(Commentary)

Decaying roads, rising traffic congestion, and voters distrustful of government and extraordinarily leery about increased gas taxes. What are political leaders to do?

The "hot" new idea is "monetizing" toll roads and bridges--leasing them to a private operator in return for a big upfront payment or guaranteed year-by-year payback.

Chicago's Mayor Richard Daley was a pioneer with a 99-year lease of the eight-mile Chicago Skyway toll road to Spanish and Australian investors for $1.8 billion. Next came Indiana Gov. Mitch Daniels' 75-year lease of the 157-mile Indiana Toll Road for $3.85 billion. There have also been smaller toll road leases, again to foreign investors, in Texas and Virginia.

Now Pennsylvania's Gov. Ed Rendell is aggressively pushing the idea of a 30-year lease of the Pennsylvania Turnpike. And New Jersey Gov. John Corzine is looking into possible lease of the New Jersey Turnpike and Garden State Parkway.

Big global finance firms are clearly salivating over the prospect of long-term revenue streams from toll-road deals. Forty-eight firms have submitted "expressions of interest" in the Pennsylvania Turnpike, reports transportation expert C. Kenneth Orski. The companies range from Bear Stearns to Credit Suisse. Goldman Sachs has announced raising more than $6.5 billion for investment in public infrastructure in North America and Europe.

So critics are clearly right in asking: Are the leases a good deal? The long-term proceeds of the Indiana Toll Road lease to its investors, according to one independent analysis, could run as high as $11.83 billion, not a bad return on their upfront $3.85 billion.

One thing's certain--the voters are turning highly suspicious. Take the case of Indiana's Daniels. He's been obliged to abandon his high-powered campaign (time to "think big and act big," he'd claimed) for yet another toll road a new privately built, $1.5 billion, 75-mile roadway plowing through rural territory south and east of Indianapolis.