Alabama's Politicians Dig Taxpayers a Big Hole

Alabama's budget has been a mess for years, and an increasing burden for the state's downtrodden taxpayers. But if some local politicians have their way it could get even worse.

The case in question this time involves a desired new bridge meant to alleviate traffic congestion over the Intracoastal Waterway, and into the Gulf Coast and the its booming cities of Orange Beach and Gulf Shores. The question isn't so much whether there is a need for a new bridge that would boost capacity over the Intracoastal, but how. No one doubts that a new bridge is desirable to reduce congestion.

The major sticking point is who should pay. There is where the problems start. Both the Alabama Department of Transportation and the Mayor of Orange Beach, Tony Kennon, have expressed a desire to dip into taxpayer pockets either through borrowing, or through the use of the state's road repair fund.

Recently, Mayor Kennon delivered an ultimatum to privately owned Beach Express, which operates one of the existing spans across the Intracoastal: Expand your existing bridge and cut your tolls in half, or I'll build a "free bridge" myself and put you out of business.

The problem is, Kennon's "free" bridge (along with operating and maintenance costs) would be paid for with tens of millions of dollars of new debt. The mayor isn't wrong to ask a private company to finance an expansion of its own bridge, but he errs in his attempt to dictate the toll rates they pay. He's pushing politics instead of economics, and demonstrating a lack of understanding about the roll tolls play in protecting taxpayers and drivers who want smooth traffic flows. Either threat from Kennon is bad for Alabama because the result would be the same: A bigger burden for taxpayers.

The sad thing is that it doesn't have to be this way. There are many ways that are simpler and more fair that would lead to a new bridge without squandering scarce resources. Taxpayers are already strapped as it is. Higher tax rates were signed into law last year as a result of an already-massive fiscal mess.

Here are the key points:

If Mayor Kennon is successful in building a taxpayer-financed third bridge, the citizens of Southern Alabama will be paying for something that is overwhelmingly used by people from out of state. Close to four-fifths of drivers traveling to the Gulf Coast came from outside the Alabama, according to a July 2015 report prepared for Gulf Shores and Orange Beach Tourism.

Why use government resources when there are other alternatives? There is a potential private sector partner, waiting in the wings, that may be willing to build and maintain a new bridge. The bridge can, and should, be located between Route 59 and the Beach Express. That's the location where Mayor Kennon threatens to build a bridge on the backs of taxpayers. But there's a reason toll rates are set by operators, not politicians: Operators know what rates the market will bear that allow them to make a return on their investment. Politicians know what rates (hint: always lower) will help them win their next election. The toll rate should be similar to that levied on the existing, but crowded Beach Express, not toll free as suggested by Kennon.

And it's not as if the $3.50 rate for out-of-state drivers is cost prohibitive. Really, what person travelling to the coast for a holiday wants to be stuck in traffic when a few dollar toll would solve the problem? It should be clear that vacationers renting a $328 a day condo would be more than willing to pay $3.50 to cross the Intracoastal Waterway as the price of reduced congestion. That's a similar rate to the Beach Express.

The private sector alternative can solve the bridge congestion problem without putting the state further into debt, or depleting the transportation department's road repair reserves. This would eliminate Orange Beach's share of the Beach Express tolls paid, which amounted to roughly $1 million in income for the city last year. The money has better uses since Alabama's existing infrastructure is already in bad shape with a rating of D+ for its roads by the American Society of Civil Engineers. The decision really comes down to whether local officials want to eliminate a revenue stream and increase debt load, or use private dollars to expand infrastructure in a way that reduces congestion and keeps taxpayers off the hook.

There's a simple rule that those outside the political class already know: "If you find yourself in a hole, stop digging."
And here's the simple message to Alabama's politicians: Stop digging. Instead, let the private sector take up the slack. The voters will thank you.