By BAR managing editor Bruce A. Dixon
Since EZ Pass has made toll collection possible without stopping traffic. The Obama administration increased the number of interstate highways where toll lanes are allowed, and the Trump administration is expected to rely even more heavily on borrowing from the rich for infrastructure projects rather than taxing them.
EZ Pass -- Tip of the Road Privatization Vacuum Cleaner
By BAR managing editor Bruce A. Dixon
A toll is the extraction of revenue from users of a road or bridge. Unlike manufacturing buses or serving up burgers, extracting tolls is a purely parasitic economic activity which produces no benefit for anybody except the toll collector. Until recently, the problem with toll extraction was that you had to stop the traffic. In recent years the introduction of electronic toll extraction systems, in which vehicle RFID stickers echo transmissions from roadside transponders along with unique identifiers has largely solved that problem for the toll collectors.
Now EZ Pass lanes are now springing up like summer weeds on the interstate highways in and out of every US city. Where is all this EZ Pass money going? When you google EZ Pass, you’ll find the EZ Pass Group.
“The E-Z Pass Group is an association of 38 toll agencies in 16 states that operates the extremely successful E-Z Pass electronic toll collection program. E-ZPass enjoys tremendous brand recognition and high levels of customer satisfaction, and is the world leader in toll interoperability, with more than 30 million E-ZPass devices in circulation.”
It seems that EZ Pass board members all quasi-governmental toll collection agencies, from the Skyway in Chicago to the Maine & Pennsylvania Turnpikes, the Indiana Toll Road, the Port Authority of NY and NJ and so on. Apart from bragging about how much they collect in tolls nationally, and how “interoperable” their system is, you can find no financial information whatsoever on this site.
It turns out that EZ Pass is just the tip of the vacuum cleaner. The EZ pass technology is operated by Affiliated Computer Services (ACS), a Xerox acquisition since 2010. ACS handles all the EZ Pass administrative details, for which it collects a healthy rake-off. The rest goes to the toll agencies.
The toll agencies themselves have a DC based trade group. It’s called IBTTA, the International Bridge, Tunnel and Turnpike Association. Here’s what it says on IBTTA’s government advocacy page…
“IBTTA is THE advocate for the toll industry. IBTTA’s government affairs and advocacy efforts are focused on educating public officials and elected representatives. Our objective is to create a political environment that fosters the growth and widespread adoption of tolling as a viable means to fund and finance surface transportation...”
An example of what this outfit wants to see is in their “Key Issues, Policies and Positions, which include the implementation of something they call Road Use Charging, RUC a scheme to charge drivers for the miles driven on roads and streets. The technology already exists to do this. Imagine EZ Pass networked cameras and computers on your street and every street between here and your school or workplace, and a legal requirement that you pay up or lose your driving privileges. IBTTA lobbying convinced the Obama administration to allow toll lanes on more and more existing interstte highways, which accounts for some of the recent growth in toll lanes.
Assuming IBTTA is like every other “trade association” it bribes government officials, conducts programs of public disinformation, makes self-interested “charitable” contributions and is funded by the dues of its member organizations, the same crowd on the board at EZ Pass. So far, so good but the EZ Pass rake-off and trade association dues are only a small fraction of toll revenues. Where do the rest go?
I live in Georgia, so I checked SRTA the State Road and Tollway Authority. And there, right under “About” I found a page called “Investor Relations”. You can find an investor relations page for the Pennsylvania Turnpike and the Florida Turnpike and many other key roads connecting important US transportation corridors. It’s not universal. Some smaller tolling entities are self financing and their tolls actually cover operations. Some others, like the Indiana Toll Road are wholly owned outright by private investors. But if you live in a big city, and there are EZ Pass lanes sprouting up, you can pretty much bet they’re either wholly privately owned, or financed with money borrowed from the once percent via the device of bond issues.
Directly taxing the rich to maintain the roads or for any other purpose is pretty much impossible in the US. Directly taxing the rest of us is not impossible, but it’s politically unpopular, especially since a whole school of politicians run for office claiming they ought to lower everybody’s taxes. So in the United States the traditional thing to do is to borrow from the rich, often at interest rates that would make pawn shop operators blush. This borrowing is called a “bond issue”, and bond issues are frequently though not always issued with the “full faith and credit” of a state, which means the state will pay the loan if the tolls from the road cannot. Payments on these kinds of bonds are often tax free, and the bonds are negotiable instruments which can be sold and resold.
The business of issuing bonds is deliberately complicated and obscure, to conceal the fact that they great deals for the bond buyers and the law firms that handle the business, and bad business for everybody else. It’s not uncommon for a bond repayment with ancillary fees to be double the amount supposedly borrowed. Worse still, if the bond is guaranteed by a state, it becomes a scared priority obligation of state government, which in the name of “fiscal responsibility” has to be paid before employee wages, pensions and benefits, and other matters. Debts to the rich are always more important than debts or services to the poor.
So that’s where, in many cases, your EZ Pass money goes. Donald Trump’s infrastructure plan will give us lots more toll roads, many directly owned by private investors. Get ready for it. You can expect the opening up of more and more interstate and state highways to tolls as well. Get ready for a toll road between you and work, between you and school, between you and medical care and your ordinary business. This is the 21st century, and in the US, roads are no longer public things, built and maintained by public dollars for the public good. They are investment opportunities, owned and operated for absentee one percenters. EZ Pass is the tip of their vacuum cleaner.