The success of the US Economy is due in no small part to our highway system. It has allowed for the delivery of goods and services at reasonable prices to virtually anywhere in the country.

Critics decry urban sprawl and the exodus of some populations, but the fact of the matter is the net result is that cities benefited from the competition when they learned to adapt to it.

The investments in the interstate highway system and the funding of the system through user fees (primarily fuel taxes) was a sound practice. The only real problem with the system was the failure to maintain funding levels and diversion. The latter is probably the most troubling in terms of continuing current funding schemes or adapting new ones.

The American public has for the most part been supportive of user fees in the form of fuel taxes and registration fees. Like buying a postage stamp they knew where the money they spent would be used. But, like any source of funds there are special interest groups and politicians who can fashion some pressing social need to divert these funds from their original intent – to build and maintain highways and bridges.

It is certainly not my intention to denigrate the value of any of these diversions, but rather to point out that if they had that much compelling social value they should be able to secure funding from general tax revenues.

There is heightened public resistance to any increase in the fuel tax in part due to increasing fuel prices, but also because we can no longer make the case that these funds will be used for their intended purposes. Rather than facing that reality we have seen alternative financing schemes under the heading of privatization.

Unfortunately, for the most part, this scheme is to lease existing facilities and their toll collecting ability to private firms in return for a capital infusion. The closest analogy I can think of is this: You have finished paying off your home mortgage, but someone else is able to take out a home equity loan which you must pay. The loan proceeds, of course, you have no say in the use of it.

In other words, it’s another shell game. Privatization could potentially have a place in our highway system – new construction and management contracts come to mind, but the examples we see represent the misappropriation of user fees at a whole new level.

Unlike user fees which have a constant revenue stream, these lease contracts have a huge capital infusion. That sort of pot begs to be raided. Users now must pay for the use of the highway, unrelated projects and profit for the private operator.

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