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Study: Governor's Budget Shows State Needs New Way to Pay for Highways

Private companies would assume financial risk and build roads; taxpayers would pay tolls to use

January 20, 2005

Los Angeles (January 20, 2005) — Gov. Arnold Schwarzenegger's latest budget once again shifts gas tax revenues to cover non-transportation shortfalls and does not include any money for new highway projects. With the state falling into an ever-deepening transportation crisis, a new Reason Foundation report proposes changing the way California finances highway projects and demonstrates how large-scale projects, funded entirely or largely with toll revenues instead of taxpayer dollars, could be developed to add highway capacity that the state cannot otherwise afford.

"Our freeways are already gridlocked, and due to cash problems our long-range transportation plans are aimed at repairing our deteriorating infrastructure, not adding the capacity needed to handle the 16 million new Californians expected by 2030," said Robert Poole, lead author of the report and director of transportation at Reason Foundation. "As our population grows, traffic jams are only going to get worse because the state can't afford to do anything more than add a few lane miles here and there. The reality is that new toll roads are dramatically better than no new roads at all."

Reason calls for a new state tolling and public-private partnership law that would authorize both Caltrans and local/regional levels of government to initiate toll-funded transportation projects and allow them to partner with the private sector to carry out such projects. The Reason study includes several case studies illustrating how the law would enable toll-revenues and private financing to build multi-billion dollar projects that would ease congestion and add capacity on the state's busiest highways.

For example, in the Los Angeles area, a toll tunnel linking Palmdale with Glendale would dramatically shorten the commute time to Pasadena and downtown LA, while also paving the way for Palmdale Airport to attract major airline service. With a cost of $3 billion, toll revenues would cover all of the costs if the project was completed in two phases, or 83 percent of the costs if built all at once.

A second major LA-area project would build truck-only toll lanes from the twin ports of Los Angeles and Long Beach through San Bernardino and up I-15 to the Nevada state line. The truck lanes would dramatically increase trucking productivity while easing congestion on existing freeway lanes. Despite a $10 billion price tag, Reason�s feasibility study found that toll-revenues would make the project completely self-supporting, requiring no taxpayer money. A similar $9 billion truck-only toll lanes project in the Bay Area that would link the Port of Oakland and Silicon Valley with I-5 would also be self-supporting through toll revenues.

In San Diego, Reason suggests expanding the region's Mobility 2030 plan that calls for $2 billion worth of managed lanes. Reason recommends a much larger network of connected, managed lanes that would guarantee congestion-free lanes on a greater portion of freeways and permit high-speed bus service throughout the densest portions of the San Diego metro area. Toll revenues would cover 63 percent of the $10 billion project cost.

"We have seen that other fast-growing states, and world-class urban regions such as Paris, Sydney, and Toronto have addressed the urban highway infrastructure challenge in creative new ways," stated Poole, who has advised the last four presidential administrations. "They have found that the global capital markets are ready, willing, and able to invest billions of dollars into urban toll roads and tunnels to relieve congestion. They have also found that carefully designed long-term public-private partnerships can get such projects built sooner, and with fewer cost overruns than conventional highway procurement methods."

Full Report Online

The full report, Building for the Future: Easing California's Transportation Crisis with Tolls and Public-Private Partnerships, is available online at www.reason.org/ps324.pdf.

About Reason

Reason is a leading libertarian think tank that has been advancing free minds and free markets since 1968. Reason's policy analysts, considered among the nation's premier privatization experts, have advised the last four presidential administrations, California Gov. Arnold Schwarzenegger, Florida Gov. Jeb Bush, and numerous other state and local governments.

Contacts

Robert Poole, Director of Transportation, Reason Foundation (310) 292-2386
Chris Mitchell, Media Relations, Reason Foundation, (800) 582-2245 ext. 3037



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