"The most consistent and smartest thinking and writing about progressive politics isn't happening in Sacramento, but being churned out day after day on sites and by organizations like Calitics, Orange County Progressive, and the California Budget Project." - CalBuzz
Despite all the cheerleading from the local glibertarian daily newspaper, toll roads in Orange County have proven to be a failure. The 57 extension never developed a workable plan. The San Joaquin (73) Toll Road has been a financial disaster, propped up and kept from insolvency by $120 million in transfers from the Foothill/Eastern roads. The 241 will never be completed, as the cost would preclude any financial stability. Only the 91 extension can claim limited success, but its temporary financial boom was based on a non-compete clause.
So how do we move on from here? Do we learn a lesson and go back to highly efficient funding mechanisms for roads?
Or do we follow the same ideology preached by "think tanks" funded by reactionary billionaires?
Sadly, as you might have guessed, we're still headed in the wrong direction, and you can see it clearly in the discussions now emerging about upgrading the 405 from the 73 to the 605.
Faced with declining usage and declining revenue, the financial geniuses at the toll roads figured out how to fix their budget by doubling the cost for people who don't use the toll roads very much. Yep, their new budget has a 100% increase in the cost for low-frequency users to maintain each transponder - from $12.00 per year to $24.00 per year.
TCA has been aggressively pushing FASTRAK accounts with automatic replenishment for years, because people use the toll roads more readily if they don't really see what it's costing for each individual trip.
The Transportation Corridor Agencies assess a $1 monthly account maintenance fee for each FasTrak transponder assigned. This fee is waived for every $25 in tolls. If you have two transponders, you need to spend $50.00 per month.
Paying $12.00 a year for an occasional convenience was acceptable, but there's a real insult in doubling a cost when the economy is spiraling downward, so I cancelled my FASTRAK account.
Of course the TCA has no "How to Cancel" instructions on their web page, so you have to use their contact form. They will send you a prepaid envelope to return your transponders, and issue a refund approximately 21 days after they receive the transponder. 21 days.
As bogus subsidies end and credit markets refuse to consider untenable loans, the San Joaquin Hills Toll Road moves inexorably towards default.
The news was about the toll increases on the two Orange County toll roads managed by the TCA. It seems crazy to increase prices when your volumes are already falling, but the toll road managers had no choice. They are hamstrung by the covenants on their loan agreements, and must raise tolls to attempt to generate revenue to pay off their ever-increasing debt. So instead of admitting the truth, they chose to produce another fantasy budget and hope that some magical economic recovery or new federal bailout borrowing would prop up their collapsing house of cards.
Last year, the toll roads raised rates and expected more revenue from declining volume. Instead, they got 8% less revenue as drivers chose to use free alternatives. You don't need the concept of marginal elasticity to understand that the choice between free and expensive tilts a little more towards free when the alternative becomes even more expensive. This latest price increase will be counterproductive, and revenues will continue to decline.
The San Joaquin toll road cannot cover their debt now, and is staying above water with the 120 million they borrowed from the Eastern/Foothill Toll roads and a phenomenon called debt accretion.
The justification for the $120 million was as payment for future lost revenue if the 241 South were to be built. Now that the 241 South is dead, the massive debt of the SJC/73 gets another 120 million added to payments they can't afford from tolls, and can't refinance.
It will be interesting to see how Toll Road Jerry Amante explains this financial disaster when he runs for State Assembly. He'll probably blame it on radical environmentalists, gays, and public employees' unions.
For background, feel free to click to The Wreck of the 73. Update:From the SJC/73 budget, projected revenues for this year from tolls, fees, and penalties are $90,843,000. Debt service on existing bonds for next year are $95,602,000. Administration and toll collection costs for next year are 12,900,000. The only thing that has been keeping the SJC afloat has been the $120 million subsidy from the Eastern/Foothill Toll road. Once that money is spent, this Ponzi scheme can't even cover its debt service.
Political history of the late twentieth century will recognize the tremendous impact of a handful of strategic thinkers, a small group of billionaires who spent decades funding a network of propaganda outfits.
The Koch family, owner of the second largest private company in America, joined Scaifes, Mellons, Olins,Bradleys, Waltons and other plutocrats in using tax deductible contributions to foundations to promote groups that campaign aggressively to privatize government and reduce taxation.
So it's not surprising to see FreedomWorks, one of the members of the far-right network, emerge as a sponsor and facilitator of the tea parties held on April 15th.
The rich ideologues have been extraordinarily successful through outlets like the Reason Foundation and the Cato Institute in shifting the terms of debate to piratize public goods like freeways and water systems. But they over-reached and the voters turned on them in 2006 and 2008, so now they're trying a new mobilization.
The OCTA directors talked today about options for extending the 57 freeway including wasting money to study a 3.9 billion dollar Big Dig underneath the Santa Ana River, with Norby and Campbell advocating that we spend money studying stupid ideas to prove that they are stupid.
Campbell wants to do a new arterial at "bridge grade" with absurd ideas about connecting to arterials. Has he ever seen the bridges, or envisioned intersections?
Moorlach makes sense in saying that there's a point where you really have to be realistic.
Amante froths.Does he even know what he's saying?
Pulido gets it absolutely wrong, talking about politics forcing technical issues, working with "back of the napkin" schematics. He compares a toll road under the Santa Ana River to the Chunnel between England and France, and thinks there's some economic model that would justify this as a toll road. He thinks $4.5 billion is a realistic number, as OCTA drastically reduces the bus budget because of a $30 million shortfall.
Dixon is intrigued by Campbell's stupid ideas.
Art Brown says it's time to stop buying expensive reports that will never make sense.
We were frankly puzzled by Bobby Shriver's Op-Ed in the LA Times earlier this week. The Santa Monica City Council Member gave gratuitous yet fatuous advice about a new unequivocal mandate for the hapless TCA bureaucracy , when much of the environmental community thinks that a better course would be abolishing the toll road agencies.
Bobby Shriver, the nephew of President John F. Kennedy and brother of California first lady Maria Shriver, is mulling a run for California attorney general next year, according to his political adviser.
The 91 Express is both the biggest success and the biggest failure of the toll road experiment in Orange County. It was "privately" built and the private owners walked away with a profit. Studies boast that its variable pricing improves capacity of the roadway system. And it has certainly been the toll project that maximizes revenue, a model for a new generation of toll lanes that charge revenue based on the time of day and the level of congestion on the roadway system. But the biggest reason for its success was the "non-compete" clause, a form of public extortion that ultimately led to the purchase of the Express Lanes by the Orange County Transportation Authority (OCTA).
It's a perfect example of piratization of our infrastructure. We make a huge gift of public resources to a private company, and later buy them out when they hold a gun to our heads.
What's been amazing are the smaller stories inside the saga that will need special attention by themselves.
For example, OCTA is suddenly studying toll lanes on the 405 between the 73 and the 605 as part of a highway upgrade included in Measure M renewal.(When Do We Vote on That?)
There are still questions regarding the way that the TCA turned a free road paid for by residents of Newport Coast and turned it into a part of the failing 73/San Joaquin Hills boondoggle. (They Stole It Fair and Square). Can you imagine continuing to pay the principal and interest on the cost of a free road that was turned into a toll road?
And we've been in touch with progressives in Texas discussing their piritization schemes. (It's Always Worse in Texas)
Opponents of the extension of the 241 were waiting anxiously for TCA Directors to emerge from their January closed session meeting with their attorneys. "We were looking at the body language, and when they slumped into the room with a beaten look and hang-dog expressions, we knew that their lawyers had given them glum news." The agency attorneys had apparently advised that further legal action would add additional waste to the 40 million plus that had been expended in an attempt to build the final 16 miles of the 241 Toll Road.
Although some directors continued to bluster, for the first time there was talk of reaching out to all stakeholders to put together a new plan. The arguments and logic developed and articulated by toll road opponents had prevailed with the coastal commission, and even the Bush cronies in the waning lame-duck days of the Commerce Department wouldn't buy the cart-load of preposterous arguments concocted by the TCA flacks.
But their willingness to compromise is too little, too late. It's like a late stage alcoholic abusive husband, still unable to face the fundamental addiction. The disease is pathetically obvious to close observers, and in moments of sobriety or remorse, the abuser promises to do better. Until the board members of TCA hit bottom and start working a new program, they'll continue with a pattern of denial, victimhood, and relapse.
Will Jerry Amante symbolically cut up the TCA's over-sized credit card using giant scissors after bond ratings and falling revenues end the toll roads' access to credit markets ?
Sometime there's an incredible arrogance, even hubris, in Orange County politics that's infuriating. Probably no example is better than the ill-conceived SARTRE, the Santa Ana River Toll Road Express, a bad idea that seems to have been killed again and again, yet keeps coming back in an even more frightening sequel.
It's impossible to write about the disastrous results of the San Joaquin Hills toll road without taking a minute to recognize R. Scott Moxley and the OC Weekly, who have consistently gotten to the heart of the story, while the Register kept preaching their dogmatic privatization nonsense. In addition to being a story of financial mismanagement and failed ideology, the story of the failed toll road is a history of journalistic malpractice. From A 2007 article Toll Road to Ruin
In 1997, the Weekly predicted the road would be a financial nightmare while the TCA, local politicians such as Dana Rohrabacher and Chris Cox, the Los Angeles Times and The Orange County Register hailed the project as an international model. At one point, the Times put its advertising banners on all the toll booths as a sign of support. Three years later-after the TCA admitted massive financial woes-the Times and Register finally informed their readers.
The mainstream-media/political/corporate alliance that shilled for the 73-or San Joaquin Hills toll road-in the early days is one of the greatest frauds in county history.
Orange County politicians have managed to bail out this disaster time and again, but the Coastal Commission slap-down and the errant hail-Mary pass to the Commerce Department on the 241 extension may have doomed the San Joaquin Hills toll road to insolvency.
The private Orange County Toll Road experiment now has enough history to be deemed a failure. An examination of the quasi-private toll roads in Orange County shows that toll roads are not a cost-effective way of delivering roads to the Orange County driving public.
Of the four authorized toll road projects, one was never built, one was bought out by the government, one cannot be completed, and the worst one is now insolvent and headed for bankruptcy.
