Saturday, December 14, 2019

Alabama Policy Institute op-ed on the toll bridge misses the point

Earlier this week, an op-ed from Phil Williams, Director of Policy Strategy at the Alabama Policy Institute appeared in Yellowhammer News. In it, Mr. Williams touted the effectiveness of tolls as a conservative-minded approach to solving transportation infrastructure issues in the state of Alabama. Unfortunately, he misses the point.

First, API is a conservative think tank based in Birmingham and says it is "dedicated to influencing public policy in the interest of the preservation of free markets, limited government and strong families." As a founding member of the "Vast Right Wing Conspiracy" and a strong libertarian-ish conservative, I applaud such contributions to policy debates. We need more common sense in our town halls, state capitals and Washington, DC.

Conservatives should be advocating for fresh, market-driven ideas to solve public policy problems like transportation infrastructure. The solutions can only be market-based, not market-only, because infrastructure projects like bridges and interstate thoroughfares meet all of the economic criteria for the definition of  public goods. Without devolving into a sophomore economics lesson, a "public good" is something of value that is scarce enough for people to be willing to pay for it, but for which traditional free exchange markets do not exist.

There are means of estimating willingness to pay for public goods that come reasonably close to establishing a market-like value for them. When the public good's benefits are weighed favorably with its costs, the transaction occurs and a public need is met in the least inefficient way. It's not perfect, but it works for flood control, environmental stewardship and police & fire protection.

Unfortunately, the proponents of the Mobile River Bridge & Bayway Project failed to competently employ any of the proxy valuation methods, despite spending more than two decades and an estimated $60 million of the taxpayer's money in developing their plan. Indeed, a two-week review of the decision documents offered by the Federal Highway Administration and the Alabama Department of Transportation revealed that proponents and their contractors incompetently or perhaps even fraudulently presented the project as the most economical, least-cost solution to a perceived future congestion problem on the I-10 corridor.

You can read a report of that review by clicking here. You can read a "Fact Sheet" summary of the likeliest economic effects of the proposed project by clicking here.

Mr. Williams writes this in his op-ed:
For the purposes of THIS discussion you can set aside for a minute whether a bridge is necessary. You can also set aside whether or not the original plans for a $2.1 billion bridge were reasonable. No opinion is offered here on those two salient points. What is at issue in the broader scheme is: how can one who claims the mantle of “conservativism” pay for regional infrastructure? There are very few options. To be sure, bridges cost money. There is no free lunch and there is no free concrete. If the existing revenue does not match the existing need then the only options are to raise revenue through taxes on all, or tolls on some. Throughout this whole melee it was interesting to hear public officials and well-meaning citizens rebuke the idea of a toll as somehow being a violation of conservative principles.

Here’s a news flash: research by the Alabama Policy Institute clearly indicates that one of the most conservative approaches to funding regional infrastructure is what is often referred to as “a user pays system,” or more commonly “a toll.”
It's not possible to set aside project need or project scope because exaggeration in those factors were responsible for the price tag we ultimately rejected. But it wasn't just the price tag.

Here's another news flash: South Alabama motorists and their interstate brothers and sisters can smell a boondoggle coming before it even crosses the state line. The economic consequences of that bridge project were intuitively obvious. No research was needed. It wasn't that a toll violated some innate sense of right and wrong. It was the fact that an exorbitant toll was to be put in place for a minimum of 50 years along with no-compete provisions that would have eventually forced near-term future motorists to use a very costly bridge & bayway system that was loaded with unnecessary extravagance. That project wasn't needed to meet the expected transportation needs or address the expected annual risk of storm surge damage. That project was an over-engineered and over-priced debacle that would have resulted in economic disaster for the region and the state. But it would have guaranteed a tidy return on investment for the monopoly private sector concessionaire. That cannot possibly comport with any notion of conservative principles.

Mr. Williams is engaged in a battle to the death with a strawman. No one is arguing that a toll bridge isn't an effective way of financing a needed project. Projects with an easily identified need have economic benefits that are just as easily identified. A toll is simply a means of monetizing that benefit for the purpose of financing it. We are arguing that this project was demonstrably incapable of producing a monetized benefit that was worth its cost. And in this case, we simply did what rational, free market-minded people should do when confronted with such a choice. We walked away from the transaction.

In other words Mr. Williams, the market worked.

What Mr. Williams may not realize is that the Block the Mobile Bayway Toll Facebook Group counts among its membership a formidable array of talent and experience that is more than capable of addressing the shortcomings of the ALDOT/FHWY plan. There are scientists, engineers, (raises hand) economists, transportation experts, attorneys and policy wonks that might be willing to assist the open-minded in Montgomery in developing a plan that the market-minded folks around here can buy. Perhaps API would be willing to engage with and make use of that talent and advance the cause of influencing public policy "in the interest of the preservation of free markets, limited government and strong families."


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