Tackling the time tax

Posted on February 16, 2007 | Type: In the News | Author: Noah Clarke
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In an 1865 New York Tribune editorial, Horace Greeley wrote the famous words Go West, Young Man. Well, plenty of people have taken his advice. The West is booming.

Arizona has added nearly one million people since 2000 to reach its current total of just over six million. With a 3.6 percent growth rate, it is the fastest growing state in the nation. Not surprisingly, over the same six year period, the number of registered vehicles in the state ballooned. Not only are there a lot more Arizonans in our midst, but now five million cars and SUVs cruise the highways.

Unfortunately, this influx of vehicles has brought with it long waits and traffic jams. On average, drivers in Phoenix spend 49 hours a year stuck in traffic. The Texas Transportation Institute estimates congestion costs Phoenix commuters $1.3 billion a year in lost productivity. Governor Napolitano refers to this as the time tax.

The Arizona Department of Transportation is attempting to keep up with this increased demand for space on Arizona's highways. This year it will spend upwards of $3 billion to build and maintain roads. But even with this multi-billion dollar expenditure, ADOT is years behind in highway construction.

The conventional solution to this problem is increased public funding. But this isnt our only and certainly not our best option. Texas, Indiana, and even Canada are tapping the creative power of the free market to solve their highway woes.

One example of this creativity is in Texas, where a private developer is investing $1.3 billion to complete the Trans-Texas Corridor. In return for financing, designing, building, and maintaining the new road, Cintra-Zachry will receive a 50-year contract to collect tolls. To the benefit of taxpayers, once the road is finished, only those using it will have to pay for it, but the highway will remain state-owned.

In addition to relieving Texas of a $1.3 billion construction expense, Cintra-Zachry agreed to make an up front payment of $25 million which the state will use on other infrastructure projects. The company also agreed to split an increasing portion of toll revenues with the state over time. In other words, the company is paying the state for the privilege of building its highway. Not a bad deal for Texas taxpayers.

Another model can be found in Indiana. For a lease price of $3.8 billion, the state recently turned over operating responsibilities on a toll road to a private company for 75 years. In addition to the lease price, the company agreed to spend $400 million for other road repairs. Indiana will use this new money to expand and improve roads all across the state. Taking a cue from the private sector, Indiana took advantage of one asset to finance the construction of another. Pennsylvania and New Jersey are both looking to repeat Indiana's success.

One criticism of private roads is that toll booths will create long lines and make traffic even worse. But this doesn't need to be the case in Arizona. In Canada, the privately managed 407 Express Toll Route near Toronto uses transponders to collect tolls, eliminating the need for old-fashioned stop and go toll booths. Over the last five years, the company has invested over $600 million to improve travel times and safety on the road.

Rather than raiding rainy day funds or going further into debt, the state should turn to the vast resources of the free market and allow private companies to finance road construction profitably, efficiently, and safely.

The traffic crunch in Arizona is getting severe, and our growth shows no signs of letting up. Now is the time to harness the power of the private sector to meet our transportation needs.

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