An article in the Jan/Feb 2007 of Texas Journey, the magazine of the Texas AAA, proves that the AAA can just as easily be taken in as the average citizen.

The Texas Transportation Commission Chairman, Ric Williamson, is promoting toll roads, built by the private sector, as a way of funding Texas’ highways. But a toll is nothing more than a highway tax, the difference being that the tax is shifted from all motorists to those who, for one reason or another, find that they have to use these toll roads. Giving this tax a new name doesn’t change its character.

Mr. Williamson also implies that using money provided by the private sector to build highways is something new. It is not. Money from the private sector, raised by the state’s issuing bonds, has always been used to build highways. The difference is that when the state issues bonds, it gets an attractive, fixed interest rate, and the interest ends when the bonds are redeemed. But under this proposal, there is no fixed rate and no termination of the debt; the tolls go on forever. In effect, the state is turning over its taxing authority to the private sector, thereby giving up all control over how much will be collected and how the money will be spent. This proposal is just another boondoggle for the people of Texas and a boon to the private sector somewhat like the boondoggle Texans have experienced with deregulation of the electric industry.

In fact, it is even more insidious, because various companies can compete by offering electric service to the same people, while competing companies will not build parallel toll roads and compete for motorists. So what Mr. Williamson is promoting is a giveaway to investors who will take on little or no risk and have to deal with no competition. Good for them but bad for the rest of us.

This scheme is not only bad public policy, it is bad economics. The Texas AAA should not only be doing a better job of reporting on this boondoggle, it should be organizing Texans against it.

©2006 John Kozy, Jr.