Are Transportation Agencies Paving Roads to Financial Ruin?

Until very recently, the tortured path of the tollway projects had been viewed as a fight between the developers and anti-growth advocates. The June 12 article about a “pungent protest” against the tollways raises a different concern, and one I believe should get more people to stop and think about the long-run financial consequences of the tollways (“Tollway Opponents Conduct Pungent Protest at Meeting”).

Americans have not forgotten the infamous savings and loan debacle and the financial havoc it fostered. The root cause of the S&L; scandal was the greed of developers to keep on building regardless of demand and regardless of normal criteria for sound business. The banks were willing to make the loans because the government was insuring the deposits that provided the funds. Thus with “zero risk” they bowed in favor of “growth,” “jobs,” “American enterprise”--things that normal growth signify. Then the bubble burst, and the developers and the bankers just turned away and left the “pungent remains” for the taxpayers to pay and pay and pay.

In the case of the tollways, the San Joaquin Hills Transportation Corridor Agency spent tens of millions of dollars that it doesn’t have by borrowing from the Foothill/Eastern agency, the Orange County Transportation Authority, and now from the California Corridor Constructors--and anyone else who will lend them money. The banks and financial agencies still have not agreed on underwriting the bond issue needed to finance half of the project. With the tollway costs going up, projected usage going down and legal challenges still to be adjudicated, no prudent person can say the project is financially sound, justified or assured of being completed.

As with the S&L; scandal, we will probably wind up in a year or two reading headlines that the tollway agency is out of money, can’t sell the bonds and therefore is going into bankruptcy. If the tollway agency finds that it can’t complete the project, the taxpayers of Orange County will have to pay off all these other government agencies who are lending the money today. Our elected officials should demand that the tollway agency stop spending money until the project can be shown to be financially viable.

JOHN A. BINGI, Laguna Beach