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Maryland needs more info on toll lane contract; vote must be delayed | COMMENTARY

Treasurer Nancy Kopp, Governor Larry Hogan and Comptroller Peter Franchot listen to testimony at a Board of Public Works meeting in 2019, regarding plans to form a public-private partnership to add toll lanes and widen Route 270 and the D.C. beltway.
Treasurer Nancy Kopp, Governor Larry Hogan and Comptroller Peter Franchot listen to testimony at a Board of Public Works meeting in 2019, regarding plans to form a public-private partnership to add toll lanes and widen Route 270 and the D.C. beltway. (Barbara Haddock Taylor / The Baltimore Sun)

Maryland’s governor sees public-private partnerships (P3s) as the magic way to give Marylanders new roads without significant upfront taxpayer money. But worldwide experience with P3s — including Maryland’s own experience with the Purple Line P3 project — show that there is no free lunch.

Currently, state leaders are being pressured to sign an exclusive 60-year contract for toll lanes on I-270 and I-495 without first undertaking proper financial and environmental review. Bypassing these needed review steps to understand costs is not how to strike a bargain for state taxpayers, much less with a private sector partner, Transurban, that’s been branded an “untouchable, bloodsucking monopoly” in its home country of Australia.

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The toll lanes contract, worth billions of dollars, comes before the Board of Public Works on Wednesday. Previously, Comptroller Peter Franchot wrote that “to proceed, [the project] must do so without unexpected or hidden public expense. … I will not vote to approve any project that unduly exposes them to financial loss.”

Mr. Franchot cannot determine the “unexpected or hidden public expense” of this project, because financial review of the contract has not been completed. The Hogan administration denied the state treasurer needed funds for assistance with contract review, and though Mr. Franchot hoped the Hogan administration would reconsider “the treasurer’s very reasonable request,” no funds were provided so the review remains incomplete.

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In its opening year, the toll lanes would have $50 peak tolls (to go just 12 miles), which would tick up faster than inflation every year after. The high tolls would keep most drivers in the free lanes, dodging 18-wheeler trucks on a roadway with no left-lane shoulder. While an affluent minority get a fast drive into Virginia, travel within Maryland would be delayed by traffic bottlenecks at the ends of the toll lanes on I-270 and I-495.

Those who live in Baltimore or on the Eastern Shore, who get none of the supposed benefits of this project, would get stuck with the bills. Despite the exorbitant tolls paid to a private corporation, the contract’s progressive predevelopment design, numerous compensation events, billions of dollars in utility relocation, and change orders all would require Marylanders to pay up. Most of these costs would fall on the taxpayers of the entire state, not just those living where the toll lanes get built.

Treasurer Nancy Kopp’s July 9 report on the project contract notes “significant uncertainties around the costs, risks and ultimate benefits of the Phase P3 Agreement” and concern over not having the funds for assistance to complete the full financial review within 30 days.

As a result of incomplete review, the report explains, the state’s key decision makers lack: a thorough review of the Phase P3 Agreement by lawyers and financial advisers who specialize in P3s; a comparison of the structure, contractual terms and conditions, and risks of the proposed P3 to similar P3s around the country; and formal, definitive guidance of the potential costs and risks associated with the Phase P3 Agreement.

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Not having these things is the like buying a house without legal review of the contract, without knowing home values in the neighborhood, and without a home inspection to check the house’s structural integrity and potential issues.

A fourth missing piece of information identified by both the treasurer and Department of Legislative Services is a value-for-money analysis, which should be prepared for P3s.

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The governor, comptroller and treasurer, who together make up the Board of Public Works, are responsible for approving the toll lanes contract, and therefore they bear the responsibility to ensure the needed oversight. The BPW is supposed to ensure “that significant State expenditures are necessary and appropriate, fiscally responsible, fair, and lawful.”

Both Treasurer Kopp and Comptroller Franchot know that lack of a full financial review for this project does not comply with state P3 law and is irresponsible stewardship of Maryland taxpayer dollars.

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With so much as stake and very serious questions about the contract unanswered, this is not a moment for hope but for action. The Maryland Constitution gives the comptroller “general superintendence of the fiscal affairs of the State.” Mr. Franchot must use his leverage as comptroller and as the deciding vote on this project to delay the vote on the contract and demand needed oversight.

Josh Tulkin (josh.tulkin@mdsierra.org) is director of the Maryland Sierra Club. Klaus Philipsen (Kphilipsen@archplan.com) is president of ArchPlan Inc.

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