Some argue that it is unfair to leverage toll facilities to provide short-term benefits while future generations of drivers are left to pick up the tab. Ultimately, the veracity of this argument depends on how the proceeds of the PPP are used by the public authority. Like any public revenues, concession payments can be used for short-term benefits, but they can also be used for sound investments that provide benefits for future generations. Indiana used the proceeds of the Indiana Toll Road concession to fully fund a 10-year transportation work program. Not only does this help ensure that the next generation in Indiana will enjoy the benefits of a robust transportation system, including all of the indirect economic benefits provided thereby149, but also it helps ensure that the next generation in Indiana will not face transportation funding shortfalls that slow project delivery, expose projects to increased costs, and stifle the State's ability to compete in the global economy.
A large percentage of the money raised by Chicago in the Chicago Skyway concession was used to fund a long-term reserve account, which is earning interest and will not be used in the short-term. The City's use of proceeds improved its credit ratings150 which makes it easier and less expensive to fund important projects - savings that will benefit future generations at least as much as they benefit the current generation, if not more. The direct and indirect benefits that residents of Indiana and Chicago will receive from these concessions in future years (and the long-term benefits of other, similar PPPs) should not be lightly discounted.
This argument also fails to take into account the inequities of the current transportation funding model in which the public sector collects and spends taxes on a "pay as you go" basis. In this model, current taxpayers pay for a facility's upfront capital costs while future generations enjoy the benefits without paying any share of the capital costs. With toll facilities, anyone paying to use the facility, now or in the future, is doing so because the benefits of that use outweigh the costs, and as long as increases in toll rates are subject to an equitable cap, such as inflation, there should be no inter-generational inequities.
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149 In July 2006, shortly after the Indiana Toll Road concession closed, Honda Motor Company announced that it would build a $500 million plant employing nearly 4000 Indiana residents in Greensburg, Indiana. Honda cited Indiana's commitment to infrastructure as a deciding factor in locating its plant. See www.in.gov/indot/2276.htm (last visited July 7, 2008).
150 See Daley's Way, Not Skyway: Money From Lease Won't go for Bailout, Chicago-Tribune.com, October 25, 2007, which reported that "[r]educing debt and creating the long-term reserve prompted all three major credit rating firms -- Moody's Investors Service, Standard & Poor's and Fitch Ratings -- to improve the city's bond rating. The result has been lower interest rates and cost savings on borrowings."