Tax Farming

Whatever we choose to call it, it has been a bad idea everywhere it has been practiced and it is as old as history. There was a reason why tax collectors had a bad name in biblical times and if we continue down this road outsourcing one of the most basic public functions we will certainly be reminded. Tolls on public roads are a form of tax and collecting them should be subject to the same political give and take as any other tax, not contracted out to a private enterprise. One politician after another has been advertising this as free money and more than a few pundits have joined in. The basic idea is this. Tollcorp advances billions to the state in return for the right to collect tolls for x number of years. The state uses the funds to build more roads, assuming politicians can be trusted to use them for the intended purpose. There are three obvious questions. Why would Tollcorp do that? Where would the money come from? Would someone please explain to me why the state is otherwise unable to raise money to provide for needed public transportation? Tollcorp isn’t likely to be a nonprofit. They would expect to earn a handsome return on their investment. They would go to the financial markets for the money and anticipate enough revenue to pay interest and other expenses with a profit on top. There is every reason to think the state of Texas could finance the same project with revenue bonds at a lower interest rate and with no need for a profit. There is a very large fly in this ointment and I think we are being purposely misled. People don’t mind paying a toll when it is to cover the cost of the road they are driving on. It is quite another thing when tolls are used to supplement general tax revenues, even if it is to fund other roads. If the other roads can’t pay for themselves then maybe they shouldn’t be built. If they are for the general public good they should be paid for from general public funds. We are using tolls as a painless way to raise taxes and we are making it worse by proposing to spend the money up front while paying over time. Transportation has been a bottleneck in North Texas for all of the thirty five years I have lived here and the state has never been more than a second level player in addressing the issues. As our population has mushroomed we have sent a huge amount of revenue to Austin and gotten precious little in return. When I came here the Dallas North Tollway stopped at LBJ and you couldn’t even get from one to the other without going through a red light. Now funds from the gasoline tax have been diverted to uses unrelated to transportation, tollways appear to be the only way we will get any traffic relief, the North Texas Tollway Authority is intent on using tolls collected in Collin County to build uneconomical roads in Fort Worth, and our legislators restrict their contribution to talking about who will administer the funds, if they speak up at all. It makes me wonder why we even have elected representatives. Let’s do this in a more sensible way. Build toll roads if we must but finance them in the traditional way. Issue specific purpose bonds and use tolls to pay them off. There is no reason for anyone other than bond purchasers to profit from the transaction. When the bonds are retired stop collecting the toll unless it is needed for a major upgrade to the road. If reasonable tolls aren’t projected to cover construction costs either don’t build the road or finance it another way. Use gasoline taxes to pay for maintenance. After all toll road users are being taxed twice, once when they fill their tank, and again when they pay the toll. And let’s see if we can’t get some straight talkers in office.