Toll Road Projects Lose Momentum

California’s flirtation with private toll roads, embraced by lawmakers during the financial hard times of the early 1990s, has lost momentum as its highest-profile project has become mired in controversy.

Angry lawmakers, including some who were early supporters of the concept of using private investment to expand public transportation, admitted last week that the idea had lost its luster. For the first time, some talked openly of scrapping it.

“We were hungry to find new ways to get capital investment in our infrastructure,” said Sen. Kevin Murray (D-Culver City), “[but] in the final analysis this toll road thing is a scam.”

Senate Transportation Committee Chairwoman Betty Karnette (D-Long Beach) takes a less extreme view but acknowledges that the zest for toll roads has waned. “People want to step back. I think they want to be very cautious,” she said.

But supporters of the toll roads contend that if they fall completely out of favor it will close an avenue for financing road construction--something the state will need desperately as it struggles to meet the transportation demands of a growing population. Even with huge tax increases, they say, public money alone will not be enough to finance billions of dollars in needed construction.

Unlike the Eastern United States, where pay-as-you-drive turnpikes became a way of life decades ago, toll roads in the West have a short history. Major tollways were not constructed in California until the 1990s, all of them clustered in Orange County.

Disaffection with the toll road idea first surfaced five years ago, when public criticism killed a proposal for an 85-mile private pay-as-you-drive highway in Northern California. Called the Mid-State Tollway, it was attacked by local government officials and environmentalists who complained that the real motive behind the proposal was to open large agricultural lands to development.

Legislative opposition, however, did not become widespread until recent months, when a little-known clause in an agreement between Caltrans and the owners of the only existing private tollway called the whole concept into question.

To assure investors that the tollway--a 10-mile stretch of express lanes in the median of the 91 Freeway--would be profitable, Caltrans had agreed to forgo improvements to the public highway that would draw customers away from the private toll road.

Yet as congestion along the corridor increased and the number of accidents mounted, Caltrans decided the only way out was expansion of the freeway. The tollway’s owner, the California Private Transportation Co., challenged the plan in a $100-million lawsuit.

Last October, at the request of his staff, Caltrans Director Jose Medina signed a settlement that shelved the improvements. Later, Caltrans staff insisted he had no choice because the noncompetition clause gave the agency scant chance of beating the lawsuit.

“It is obvious . . . that the success of the private toll road is directly dependent on the deliberate gridlocking of the adjacent public highway,” said Assemblyman Tom McClintock (R-Northridge). “This [is] . . . a strong reason to call a halt to this experiment now.”

But for transportation experts like Robert Poole, president of the Reason Foundation, a public policy think tank, the new legislative antipathy to toll roads is distressing.

“We have to be careful about making short-term decisions in response to problems because of the longer term implications for financing highways in California,” he said. “If we make decisions that scare away investment then it will simply go elsewhere to other states and other countries.”

At a time when there is little appetite for tax increases, Poole said private investment in highways may be the only way California’s road system can keep pace with the state’s growth.

For lawmakers to abandon the private toll road idea, he said would run directly counter to trends in other states and other countries. Throughout the world, he said, nations are tapping a global pool of private capital to build roads that could never have been constructed with tax revenues.

As for the tollway that has created all the furor, Poole insists that congestion would have been a lot worse if it had never been built.

“What’s forgotten is that those regular lanes are less congested today than they used to be or would have been if the toll lanes had never been built,” he said. “But I know that’s small comfort if you’re sitting there in horrible traffic.”

A decade ago as the movement to privatize key government services was gaining popularity, McClintock was on the other side of the issue. Like most lawmakers, he had endorsed a Republican-led effort to make California the first state to authorize the construction of private toll roads.

The year was 1989 and the state was reeling from the early assaults of an economic recession. State budget makers were facing a multibillion dollar deficit, the road building account was nearly broke and the highway system was woefully in need of modernizing. Democrats were pushing for a gas tax increase, contending that there was no longer enough revenue from the tax to support the state’s transportation system.

Then-Gov. George Deukmejian, a Republican, said he would only back a gas tax increase if it was put to a vote of the people. For the issue to go on the ballot, a two-thirds vote in the Legislature was required, meaning the Democratic majority needed Republican votes.

But the Republicans had a price; they wanted private toll roads.

“When you looked . . . at the price the Republicans were demanding in order to put $20 billion into a deteriorating transportation system, it seemed to be a reasonable deal,” said former Assembly Transportation Committee Chairman Richard Katz (D-Sylmar).

The new law directed Caltrans to reach agreements with private entities for the construction and operation of four toll road “demonstration” projects, with at least one in Northern California and one in Southern California.

The first project that appeared feasible was the construction of four express lanes along the median of state Road 91. But when negotiations with private investors got under way, Katz immediately saw problems. In a letter that would prove to be prophetic, he questioned a proposed clause that guaranteed the state would not initiate any public highway improvements that would compete with the toll road.

“This arrangement could prohibit the state from building facilities to relieve future traffic that we can’t even estimate at this time,” he warned.

The warning was not heeded. On Dec. 31, 1990, in the last hours of the Deukmejian administration, the agreement was signed.

At a legislative hearing, Greg Hulsizer, general manager of the 91 Express Lanes operation, testified that a noncompetition clause was common in toll road agreements. Unless there was some guarantee that the toll roads would be profitable, he said they would never attract private investment.

“If that is the case,” said McClintock, “then it means to me that the whole concept of toll roads is fatally flawed.”

California Atty. Gen. Bill Lockyer urged lawmakers to buy back the toll lanes and make them part of the freeway system.

“When you make people stop their cars and take their money, I regard that as a polite form of highway robbery,” he said. “I just don’t think it’s the right way to treat people. I think it’s part of the California spirit that we have freeways.”

As debate swirls around the toll road issue, only one major project is still on the drawing boards--11 miles of new highway from state Road 905 near the international border to state Road 54 near the Sweetwater Reservoir in San Diego County. Designated state Route 125, most of the highway would be constructed by a private consortium as a tollway.