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Privatization Issues

Privatize Highway Projects

A number of states and several countries around the world are using private capital to design, build and operate highways, recovering the investment through tolls charged to users. Such public-private partnerships have provided the major motorway systems of France and Italy, and they are being used for major urban expressways in Australia, China, Hong Kong, Malaysia and Thailand. In 1990, there were 9,006 miles of tollroads in Europe compared to 4,657 miles in the United States. Since 1988, 12 states and Puerto Rico have authorized public-private partnerships for highway projects, and two new tollways of this type opened to traffic in 1995. A recent study recommends that Wisconsin use such a method to rebuild its interstate highways. Besides avoiding more than $3 billion in costs, the proposal would generate several billion dollars in additional revenues over a 25-year period that could be applied to local roadway costs or used for property tax relief. Because current federal law permits tolling interstates only under certain conditions, a portion of previous federal aid might have to be repaid if Wisconsin privatized and tolled its entire interstate system. But even taking into account such repayment, tolls on the rebuilt system would be comparable to those charged on other recent rural and urban toll projects. Source: Robert Poole, "Private Tollways for Wisconsin," Wisconsin Policy Research Institute Report, Vol. 9, No. 2, February 1996, Wisconsin Policy Research Institute, 3107 North Shepard Avenue, Milwaukee, WI 53211, (414) 963-0600.

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