Latest Post | Last 10 Posts | Archives
Previous Post: We need a capital bill
Next Post: You reap what you sow
Posted in:
* Former state Sen. Jeff Schoenberg writes in Crain’s that a bipartisan legislative panel he co-chaired a dozen years ago found that a partial, 75-year lease of the Tollway could yield between $15 billion and $23.8 billion. Schoenberg, who left the Illinois Senate to advise the J.B. and M.K. Pritzker Family Foundation (not mentioned in the piece), says the issue ought to be reopened. But he has some caveats…
The Pritzker administration’s due diligence must ensure that any plan to bring private capital into public infrastructure not only retains public ownership of those assets, but also insists upon a high standard of accountability and transparency for the tollway’s spending practices and policies. […]
• The bitter aftertaste of Chicago’s parking meter privatization means that after the tollway’s bonds are paid off, any Illinois deal must have an iron-clad provision binding proceeds exclusively to the unfunded pension liabilities. And no slicing off a chunk of the money to increase base spending, either (see 2003 Blagojevich pension obligation bonds).
• In the Chicago Skyway transaction, eliminating union jobs didn’t favorably impact the deal’s financials for prospective investors; the Daley administration’s decision to do so was driven by factors that wouldn’t show up on a spreadsheet. Consequently, it ‘s essential to maintain the collective bargaining agreements for tollway employees.
• A major takeaway from the original Indiana Toll Road agreement crafted by then-Gov. Mitch Daniels was that a portion of the revenues realized by the Hoosier State was set aside for a 10-year stabilization fund to absorb all or part of motorists’ “sticker shock” resulting from toll increases.
• Unlike the Skyway and the Indiana Toll Road, the Illinois Tollway system is much bigger and in far better condition—in concrete and on the balance sheet. Illinois taxpayers therefore should expect a significantly larger upfront payment from the winning bidders.
Your own caveats?
posted by Rich Miller
Monday, Mar 11, 19 @ 12:11 pm
Sorry, comments are closed at this time.
Previous Post: We need a capital bill
Next Post: You reap what you sow
WordPress Mobile Edition available at alexking.org.
powered by WordPress.
I would rather pay a toll surcharge toward pensions than outsource a system that I use multiple times per week, that will not be improved by outsourcing.
Comment by 100 miles west Monday, Mar 11, 19 @ 12:17 pm
The only response to this should be the Chicago parking deal fiasco. Selling off recurring revenue to plug budget holes is the definition of terrible governance.
Comment by Chicagonk Monday, Mar 11, 19 @ 12:20 pm
Besides Article 9 Section 11 of the Illinois Constitution I don’t see anything to add. Though it would be a comical turnaround for the Dems to embrace this after 4 years of saying no to an additional lane on 55.
Comment by Not Again Monday, Mar 11, 19 @ 12:23 pm
Done properly leasing the tollway could be very helpful to the state’s finances.
Comment by Platon Monday, Mar 11, 19 @ 12:23 pm
What about the transportation lock-box amendment? Unless the money went to retire pension debt for transportation related employees only, this proposal has some constitutional issues.
Comment by Roman Monday, Mar 11, 19 @ 12:25 pm
I am a regular user of the Skyway and Indiana Tollway. The tolls on the Skyway dramatically increased at the start of the lease, and numbers of toll collectors shrank to only a tiny handful. When I-Pass was added to the mix, and a device would not register a toll, it would take an employee forever to come and unjam or fix the problem. Higher fees did not result in better service, that includes road conditions.
Let’s not repeat all that by some form of lease of the Illinois Tollway.
Comment by Louis G. Atsaves Monday, Mar 11, 19 @ 12:27 pm
Landmark status for those delightful cup-in-chain-link-fence messages on the 47th Street bridge over I-294.
Comment by City Zen Monday, Mar 11, 19 @ 12:28 pm
=bipartisan legislative panel he co-chaired a dozen years ago=
Assuming there was some reason or reasons why the panel’s findings went nowhere? {Sigh} Not a fan of this idea.
Comment by {Sigh} Monday, Mar 11, 19 @ 12:28 pm
Bad idea.
Comment by DuPage Bard Monday, Mar 11, 19 @ 12:30 pm
=== Done properly leasing … ===
And that is the problem. When are we going to learn that folks don’t pay government a lot of money to run assets without expectations that they will get a big profit. That means cutting corners, raising rates etc.
Comment by Norseman Monday, Mar 11, 19 @ 12:31 pm
Don’t skimp on hiring people to negotiate for the state. The other side will have skilled and experienced negotiators. This is not the time for learning on the job.
Run the numbers on what toll increase under state control would provide comparable benefits. One reason for the Chicago parking deal was that the City Council would not raise rates. The parking deal took the Council out of the rate decisions.
Comment by Last Bull Moose Monday, Mar 11, 19 @ 12:32 pm
Desperate times for desperate politicians.
Comment by Wylie Coyote Monday, Mar 11, 19 @ 12:33 pm
What about the bondholders?
Comment by NoGifts Monday, Mar 11, 19 @ 12:37 pm
Unlike the Indiana Tollway, the Illinois Tollway is mostly used by people who live in the State. (Indiana’s is mostly used by people just crossing through the State, so the higher tolls don’t matter at the ballot box.)
Comment by Just Me 2 Monday, Mar 11, 19 @ 12:37 pm
When has outsourcing saved money over time? Not resulted in iffy service? Also, why were millions paid out in bonuses in the road fund in the last few years, is that part of outsourcing.
Comment by Anon Y Monday, Mar 11, 19 @ 12:37 pm
That huge bridge collapse in Italy was a privatized road - Europe is always held up as an example for this policy but the experience in Italy should be a warning (turns out their privatized roads are terribly managed).
Between that and the Chicago parking meter debacle, I’m a strong ‘no’ on privatizing the tollway.
Comment by ChicagoVinny Monday, Mar 11, 19 @ 12:43 pm
I like the idea only if it is a game changer on pensions. Given that, I was hoping for a higher price. A downpayment of $25B+ would allow reamortization that would help stabilize the state budget, but more is better, and only $10B or so is not worth the costs.
This is not impossible to get done, with a lot of performance standards, inspections, clawbacks, and bonds.
The biggest drawback is that the Tollway is a key builder of infrastructure in Illinois’ biggest economic engine. We would lose a mechanism for helping Chicagoland grow (example: new O’Hare western access, IL53, etc.).
Comment by Jibba Monday, Mar 11, 19 @ 12:43 pm
Many European highways are privately operated and owned. They are much better than US highways. The Genova bridge of course being an exception.
Comment by Anonymous Monday, Mar 11, 19 @ 12:46 pm
Is it just us? Or does a12 year-old Schoenberg idea not have the ring of happy days are here again?
Comment by Annonin' Monday, Mar 11, 19 @ 12:47 pm
No company will lease the Tollway without a toll increase.
Not one.
Comment by Fuel For the Fire Monday, Mar 11, 19 @ 12:52 pm
does Schoenberg still work for that foundation?
Comment by Amalia Monday, Mar 11, 19 @ 12:56 pm
Not OK. We would end up with higher tolls, and the private company could let the whole system deteriorate and then declare bankruptcy. The state would get back a system needing complete rebuilding.
Comment by DuPage Monday, Mar 11, 19 @ 1:07 pm
The first warning we should not sell is if someone is willing to buy it.
Comment by Groucho Monday, Mar 11, 19 @ 1:10 pm
No caveats, because it should not be privatized at all.
Public infrastructure has initial capital, operational, and ongoing/future planned maintenance costs. Because it’s not the government’s business to run a profit, the toll/revenue streams should be structured to result in a zero net present value.
Comment by HIeronymus Monday, Mar 11, 19 @ 1:12 pm
Let’s see, how did that work out for the City of Chicago when it privatized parking?
Comment by Steelersfan Monday, Mar 11, 19 @ 1:17 pm
Anyone driven the Indiana Toll Road recently? They privatized the whole shebang. Absolutely delightful road conditions and amenities. Definitely did not keep the engine running and ready to go while visiting one of the post-apocalypse rest stops. 10/10
Comment by lakeside Monday, Mar 11, 19 @ 1:22 pm
Treat tollway like the utilities: require approval for rate hikes, set a reasonable return on investment, and pray that the tollway privateer doesn’t control its own destiny like the utilities run the Illinois Commerce Commission and Legislature.
Comment by Suburbanon Monday, Mar 11, 19 @ 1:26 pm
I have always wondered why you have to sell it. Lets just bond out part of the tolls collected. If they want to hire private management that could still be done (and debated) at the board level. If Daley had just done that with the meters we probably would not have received as big of upfront dough but the meters themselves were a plus and making changes to the deal would be a lot easier.
Comment by Been There Monday, Mar 11, 19 @ 1:33 pm
=Landmark status for those delightful cup-in-chain-link-fence messages on the 47th Street bridge over I-294.=
Was that snark? The message is a memorial for a teen who was murdered only a few yards away from the bridge.
Stay classy.
Comment by JS Mill Monday, Mar 11, 19 @ 1:35 pm
Up and downside risk protection for the state, i.e., limit profiteering and cap the upside for the winning bidder - extra income would have to be invested in the system or returned to the state. Obviously with that, there have to be open books as well. Finally, negotiated and/or limited opportunities to increase tolls.
All that said, I’m still a hard no.
Comment by Joe Bidenopolous Monday, Mar 11, 19 @ 1:39 pm
Just no. Privatizing publicly-owned infrastructure is a terrible idea. Just because the state needs money doesn’t mean it should go doing something which yields money in the short-term while costing us in the long-term.
Comment by Techie Monday, Mar 11, 19 @ 1:42 pm
I thought the tollway was one of the few programs in Illinois that actually doesn’t lose money. Is the goal of privatizing to get around the lock box? If so, that is a horrible reason to privatize. If the private company can manage it enough cheaper to pay the state billions of dollars and still feel it is a worthy risk, where are they cutting those costs? Either they have to raise tolls to make up for the extra cost, or they need to skimp on maintaining it. Or they can find a way to get cheaper labor? That doesn’t sound good for the current toll workers.
I assume I’m missing something here.
Comment by Anon1234 Monday, Mar 11, 19 @ 1:45 pm
Detailed performance specs e.g. pavement roughness/friction, striping, lighting, sign reflectivity, toll collection, congestion/delay, safety. Annual assessment of asset conditions e.g pavement, bridges, signs, guardrail, sound barriers.
Comment by Res Melius Monday, Mar 11, 19 @ 1:49 pm
My own caveat is no, no, no.
Comment by Chicago Cynic Monday, Mar 11, 19 @ 1:57 pm
==The message is a memorial for a teen who was murdered only a few yards away from the bridge.==
Wrong bridge, dude.
Comment by City Zen Monday, Mar 11, 19 @ 2:00 pm
Would the private company still pay for ISP District 15? If it was leased, would the public be OK with a private company working that closely with the police?
Would they still have free help trucks for flat tires, etc.?
Comment by 40 cents Monday, Mar 11, 19 @ 2:11 pm
“does Schoenberg still work for that foundation?”
No. Not for several years.
Comment by Anonymous Monday, Mar 11, 19 @ 2:14 pm
Make I -55 and I -57 toll roads so the entire state shares the pain, especially on the ride down to Springfield
Comment by Lucky Pierre Monday, Mar 11, 19 @ 2:22 pm
====
- Groucho - Monday, Mar 11, 19 @ 1:10 pm:
The first warning we should not sell is if someone is willing to buy it.
====
succinctly put and exactly my feelings as well.
Comment by drew Monday, Mar 11, 19 @ 2:45 pm
While a quick and easy answer to the pension shortfall is inviting, quick and easy is never the answer. That’s in life, and that’s in this case.
You always have to do the work.
Comment by Lincoln Lad Monday, Mar 11, 19 @ 2:53 pm
And the former senator knows “Just the right firm for the job” ! Sell the JRTC first. Don’t mess with things that actually work in the once great state of.
Comment by theCardinal Monday, Mar 11, 19 @ 2:59 pm
Richard M. Daley (or, as they call him on Second City Cop Blog, “short shanks”) poisoned that well for generations. Unless we can reanimate Henry Horner, Adlai Stevenson, Richard Ogilvie, Paul Simon, and Dawn Clark Netsch.
Comment by Smitty Irving Monday, Mar 11, 19 @ 4:03 pm
=====The message is a memorial for a teen who was murdered only a few yards away from the bridge.==
===Wrong bridge, dude.===
Yes I think its the Plainfield Road bridge that her friends still do the memorial.
Comment by Been There Monday, Mar 11, 19 @ 7:31 pm