Want to Lease a Highway?

Ted Landphair
Washington, D.C.
August 2, 2006

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If forecasts hold, America's drivers had better get used to high gasoline prices. And we'd best carry a lot of extra change for highway tolls, as well. Those prices are shooting up and up and up, as well.

Right now, 94 percent of the nation's vast Interstate Highway system is free and open. Like ordinary highways, these roads were built with federal and state money. Revenue from gasoline taxes pays for their upkeep. But politicians have been loath to raise these taxes, so the federal government and the states are scrambling to keep these fast roads in good repair.

To make a lot of money fast, some states are actually selling off entire highways. Or more accurately, they're leasing them long-term to investors in return for a pile of instant cash the states can spend on schools, other roads, or anything they like.

The investors take over the turnpikes, including their maintenance, but they keep all the toll revenue for years and years to come. They can, and do, raise the charges whenever they feel like it.

In June, for instance, the Midwest state of Indiana turned its one toll road over to Australian and Spanish investors, who got a seventy-five-year lease. An enthused Indiana Governor Mitch Daniels called it the "Louisiana Purchase of our time" -- which is quite a stretch. Indiana did get $4 billion dollars out of the deal, but when the United States bought the Louisiana Territory from France in 1803, the purchase instantly doubled the nation's land area!

By privatizing toll roads, building new pay-as-you-drive highways, and raising fees, other states as well -- and cities like Chicago -- are taking the free out of freeways!