The Middletown Press (Middletown, CT)
Stefanowski’s no-tolls stance raises questions about alternatives
Bob Stefanowski has staked his entire campaign on a pledge not to raise taxes. That includes tolls on Connecticut’s major roads and bridges — “Tolls are a non-starter with me,” the Republican nominee for governor often says.
His solution on improving Connecticut’s aging infrastructure, which this week received a C-minus from the Connecticut Society of Civil Engineers, is to rely on public-private partnerships. But when private companies build roads and bridges, they look to make a profit, through private tolls or payments from the state that are ultimately funded by taxpayer dollars.
Asked for examples of successful private-sector partnerships that could be replicated in Connecticut, Stefanowski cited Alligator Alley in Florida, during a meeting with the Hearst Connecticut Media Editorial Board.
But the road he referred to — a stretch of Interstate 75 that crosses the Florida panhandle from Fort Lauderdale to Naples — is actually a public toll road. A privatization effort failed in 2009 when the state did not receive any bids for the project that met the state’s specifications.
The Stefanowski campaign did not return multiple requests for comment, and instead took to Twitter on Friday afternoon to reiterate his promise to keep Connecticut’s roads un-tolled.
“For me, it’s simple: No New Tolls. Ned Lamont says he will make building tolls “A Priority from Day 1” — We simply can’t afford more new taxes from #NewTaxNed,” Stefanowski tweeted.
Lamont has voiced support for trucks-only tolling, though that solution is currently being challenged in court in Rhode Island.
States’ advantage
Common in Canada and some European countries, public-private partnerships for infrastructure improvements have yet to take off in the United States, in part because the U.S. is one of a few nations that exempt the interest on local and state bonds from federal taxes, said Jim Thorson, a professor of economics at Southern Connecticut State University. That means it’s often cheaper for states to borrow or bond funding to pay for capital infrastructure projects than it would be for a private company.
“In general, the state does have an advantage in that if it has bonds to build a road, it is going to have interest rates that are at least 25 percent less than the private sector,” Thorson said.
Thorson added that the goals of a state and a private company are often at odds. While states are interested in things like alleviating congestion and reducing pollution, private companies have a more narrow focus: profit. As a result, whether through fees like parking meters or tolls, or through government payments to the contractors, such projects are ultimately supported by taxpayers.
“The only way that could possibly happen is, you would have to basically have the private company own the road and then have the state pay for maintenance and whatever,” Thorson said. “So it is theoretically possible (to have a private road without tolls) but I’m not sure it would be the most politically desirable.”
Stefanowski, a former business executive, acknowledged the desire of private companies to make a profit as a potential problem in August.
“You need to be careful, because the private entities are going to want to make a decent return,” he told the Hearst editorial board. “And I’ve dealt with them for 30 years. I know how to deal with them.”
Private problems
Thorson said the other problem states encounter when partnering with private companies for roadway improvements is that companies don’t want the state to compete. He cited State Route 91 in California, which was originally considered a success.
A private company built additional lanes in 1995, with the ability to charge variable tolls based on the time of day. Drivers could pay to take the express lanes, or drive on the congested, deteriorating, state-owned lanes. But the agreement included a noncompete clause that barred the state from making road repairs and improvements that might lure motorists away from the toll road. The state ended up having to purchase the toll lanes from the company to make road improvements.
Robert Rinker, the retired executive director of the Connecticut State Employees Association, who sits on the state Contracts and Standards Board, said corruption also becomes a greater concern when contracting out public projects.
“When you go out into the private sector, you have the be very rigorous in who you’re employing and who you’re bringing in to do the work,” Rinker said. “There has to be an incredible amount of oversight that has to come into play (to avoid corruption) ... We have a history here of having to pay attention, because we don’t want to go back to the (Gov. John G.) Rowland years of a pay-to-play situation.”
Rowland pleaded guilty in 2005 to federal corruption charges in connection with a $56 million juvenile detention center in Middletown that was built by a company that made improvements on his vacation home, and $90,000 in luxury air charters to Florida and Las Vegas from an Oxford company that was the recipient of milliondollar annual tax breaks. Rowland served 10 months in that prison stint, the first of two for him.
In 2011, the state passed legislation that would have allowed for a small number of public-private partnerships as a pilot program. Rinker said none of the proposed projects — in areas like transportation hubs, that would have allowed private companies to develop the land around a project for commercial use — came to fruition before the program’s expiration in 2015.
“I assume since they couldn’t do it for projects that were feasible, I don’t know how you would do it on a road,” Rinker said. “I guess I’m baffled about how it works with roads and bridges if there’s no generation of revenue for them. Somebody comes in and says, ‘I’ll build you a road, but you’ll need to pay me back over a period of time for that road.’
“That developer is going to borrow that money from someplace, at rates that will be higher than the state can borrow money to do it, and you have to pay that developer back, both in terms of the money that they invested and they’re going to want to profit on it.”