Monday, March 9, 2009

The sunshine state sees the light

That's Florida, not South Dakota. (Last weekend I attended a city-wide trivia contest for charity in Ft. Wayne, IN, and one of the questions was which two states' call themselves the "sunshine state". I had no idea South Dakota called itself that, too. But I digress.)

Florida has contracted out the building of a major toll road to a Spanish firm for about $2 billion over 35 years. The private firm is responsible for the building, maintenance, and operation of the road (I-595), while the state pockets the toll revenue. This arrangement makes so much sense. It's how they build roads in France (according to my folks, who lived there for a year). The private company is on the hook for maintaining the road, which means that they'll build it much better the first time around. Currently in America we do the opposite: a private firm is only on the hook for building the road, while the state has to maintain it. Thus, the firm builds the road as quickly and cheaply as possible without worrying about quality, because it doesn't have to maintain the road. Once road maintenance is its responsibility, however, the quality of its original construction shoots up.

I did think it was funny that the US PIRG (Public Interest Research Group) rep. in Florida quoted in this story complains that the road would be cheaper to build and maintain "by cutting out the private middleman." Um, no. It wouldn't. Florida's getting 35 years of road construction and maintenance for less than $2 billion, or what it would probably spend on that road in 10-15 years. The original construction costs would certainly be cheaper, but as explained above, that would only mean that the maintenance costs would be more expensive -- and that the state would be on the hook for all of them. Here it's on the hook for a flat fee of $2 billion (actually, much less when you figure that the Spanish firm will be getting paid in future dollars) and nothing more.

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