Christopher Swope was GOVERNING's executive editor.E-mail: email@example.com
Edwin Harrison is director of financial services for Harris County, Texas. Last year, Harris County looked into selling or leasing its 83 miles worth of toll roads to a private operator. Despite estimates of a windfall that ranged as high as $20 billion, the county council (known in Harris County as the Commissioner's Court) decided not to sell. Harrison and I discussed why.
Why did Harris County look at selling its toll roads last year?
As good public stewards, we're constantly evaluating ways to make better use of taxpayer dollars. The purpose was to make sure that it was what we thought it was. You can't say I don't like something without knowing the facts. Now we know the facts. And from knowing the facts we were able to make an intelligent decision based on our situation.
Chicago and Indiana decided to sell their toll roads. Why did Harris County reach the opposite conclusion?
You're right, these things have been done around the country, and continue to be the soup of the day. But it doesn't work for everyone. I'm not saying that leasing or selling toll roads or other publicly run or held operations is a bad thing. I just think it depends on the situation one is in.
Chicago had a situation where they had a bridge that was not doing too well--the bonds had gone into default for a time. So it might be a good thing for Chicago. Another thing to note is that the people who pay to ride on the Skyway are from Indiana. So you've got a political situation where the people who made the decision don't stand to lose anything because the people who pay for it don't vote for them. It doesn't make a difference if the tolls on the Skyway are $99--you can't vote me out of office. It's different when the people can vote for you.
Back to our deal. We felt that it was better public policy for the transportation needs of Harris County for the county to continue to operate the system. And to operate it at reasonable rates--or let's say, rates that are lower than what a private firm would come in and do. A private firm has to come in and charge higher rates in order to pay back the money that they have borrowed to make that tremendous up-front payment. We also know that a private entity is not in business to lose money.
They're in business to make money. And the way we look at these deals is that you're accepting short term pleasure in exchange for the stream of income you could get over a long period of time. It has to be quite obvious. If anyone comes and gives you a billion dollars, they certainly expect twice or three times that. They're not doing this because they want to do a public service.
I liken privatization to a man who's under water and drowning, and there's a boatful of snakes he can pull himself into. If he's drowning, he's going to get into the boat, even though it's full of snakes. He knows he'll die in the water. He may or may not die in the boat. If you don't have the money to provide the services you're supposed to provide, then you take what you can get and worry about something else later on.
Studies that Harris County paid for put the potential windfall of selling the toll roads at as high as $20 billion. Is the county leaving all that money on the table?
No, we're not leaving that money on the table, we're taking it over time. And we're going to enjoy 100 percent of that money, instead of enjoying only a portin of it. Remember, if you were going to get $10 billion then the private company was going to get $15 billion. So why should I take the $10 billion if I can have all 15?
Or maybe a better way to look at it is why not take the 10, and leave toll rates at a rate that is more palatable for my constituents -- rather than to raise the rates so that I can give $5 billion to a private company who's not even from America? The commissioners' court [that's what Harris County calls its county council] decided it'd be in our best interest to continue to operate the system as we have.
You mention the foreign companies that have, until recently, dominated this sector. Was the political diciness of foreign ownership part of the county's decision not to privatize?
I don't know how big it was, but it was a part of it. When we do things here in America, we hire American companies and American engineers who hire American workers and the money stays here.
And all I'm saying is if they give us $10 billion, I can assure you the road must be worth at least $15 billion. And the way they can get the extra $5 billion is by raising the tolls. So why should I have my people -- Americans, Texans, the people who live here in Harris County -- pay tolls to somebody in Spain or Australia?
Some of those foreign companies have a lot of experience running toll roads. They say they can run roads more efficiently than government can.
Our toll road system is well run. Government does not inherently have to run the thing poorly. That's a big misconception that government runs things poorly. You can't paint everybody with the same broad brush.
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