If It Sounds Too Good ... What You Need to Know, but Don't, About Privatizing Infrastructure

[highplainsdem]

http://archive.truthout.org/if-it-sounds-too-good-what-you-need-know-dont-about-privatizing-infrastructure68185

If It Sounds Too Good ... What You Need to Know, but Don't, About Privatizing Infrastructure
Saturday 05 March 2011
by: Ellen Dannin, t r u t h o u t | News Analysis

-snip-

Flash forward to the present. States and cities are being told that they can fix their budgets and have money left over by leasing their infrastructure for 50, 75 or even 99 years. It sounds great, even miraculous. But we all need to slow down and do our homework, because the rule "If it sounds too good to be true, it is" still applies, and there are good reasons why state and local governments should not want any part of these deals.

The truth is that, rather than making money on just tolls and fees, private contractors make their money through big tax breaks and by squeezing state and local governments for payments for the life of the contracts.

In fact, tax breaks explain why the deals last generations. One tax break for leases that last longer than the useful life of the infrastructure allows investors to write off their investment in just over a decade. A second tax break lets private companies issue tax-free bonds to finance their deals. While tax-free bonds and tax breaks make it less expensive to finance these deals, the downside is that governments lose tax revenue. Losing tax revenue puts government budgets deeper in the red and worsens problems privatization was supposed to fix.

But that's not all. Infrastructure privatization contracts are full of "gotcha" terms that require state or local governments to pay the private contractors. For example, now when Chicago does street repairs or closes streets for a festival, it must pay the private parking meter contractor for lost meter fares. Those payments put the contractors in a much better position than the government. It gets payments, even though Chicago did not get fares when it had to close streets.

-snip-

Please read all of that article at Truthout, and bookmark it, and send it to anyone you know who thinks privatizing government property and infrastructure would be a good idea.

I wish I could quote the entire article here.

There are great examples of what privatization has done to communities. For instance, Denver is being forced by those contracts to install speed bumps and narrow lanes on any "competing" roads that might divert traffic from the privatized roads. Virginia is being forced to reimburse a private highway contractor for revenue lost when the state encourages carpooling to reduce pollution and urban congestion.

And the example of what happened to Auckland, NZ, after it privatized its electrical service is really eye-opening.

[reggie the dog]

1. If i dont pay my parking when i go to chicago

does the city still write a ticket? or does a private company write me a ticket for having parked on a public street and not paid?

[jwirr]

2. The only words I need to know I do not want privatization are: For

Profit.

[DCKit]

3. There are also numerous examples where the infrastructure was allowed to collapse...

just in time for the taxpayers to take it back for a 100% replacement investment.

Some things just don't belong in private hands.