Canada to fund Michigan bridge

Michigan Governor Rick Snyder and Canadian Prime Minister Stephen Harper have gone around the Michigan legislature to build a new bridge connecting Detroit and Windsor, Ontario. The statehouse has been blocking the plan for years, now under the terms of a new memorandum of understanding, Canada will put up the money to cover Michigan’s side of the bridge allowing the project to go forward.

Under the terms of the agreement, the money for Michigan’s half of the bridge will be repaid to Canada through tolls collected when vehicles cross the border. The project, known as The New International Trade Crossing will open up a second pathway into Canada through the state. Governor Snyder says the bridge is vital to increasing the export capability of Michigan and will improve the ailing economic situation in the state.

The existing bridge- the Ambassador Bridge – is one of the busiest in the United States, supporting 1.3 million truck trips over the past year, according to a report from the Public Border Operators Association. Those truck and trade trips represent more commerce than the trade relationship the US has with Europe. The project has the support of the car industry as well as trucking associations on both sides of the border.

The Ambassador bridge is privately owned and the owner with the help of Michigan lawmakers have been blocking new bridge construction for years, creating a boon for the owner but increasing congestion for bridge users. Prime Minister Harper has been emphatic in his support for the bridge and the capital injection signals that he is unwilling to let the project fail again.

However, the Governor and Prime Minister Harper will now face a new challenge from Manuel Moroun, the owner of the Ambassador bridge. Mr. Moroun has started his own political action group, called The People Should Decide, through this group Moroun has collected 420,000 signatures to try and force the bridge decision into a ballot measure. The group is also working to amend the state constitution to force a public vote on all future bridge construction. Even if successful the Governor has said that the ballot measure will not be able to undo the existing bridge agreement.

Beyond local concerns, the fight over the second Michigan to Canada bridge may serve as an object lesson on privatizing infrastructure. As the owner of the Ambassador bridge, Mr. Moroun acted as many other private sector special interests do – he influenced legislative decisions through campaign contributions in order to maintain his bridge monopoly and now he is working to force a ballot measure. These tactics are common in other areas like broadband or farm subsidies.

States and big state institutions like public universities have been looking to private sector partnerships more and more to cover costs and make up for lost revenue from increasingly lower taxes, but at what cost? In a recent paper from transportation expert Robert Puentes, at the Brookings Institution, he notes that, “public/private partnerships (PPPs) are complicated contracts that often differ significantly from project to project and from place to place. As the challenges to infrastructure development throughout the United States become more complex, there is a constant concern in the United States that public entities are ill-equipped to consider such deals and fully protect the public interest.”

The Ambassador Bridge deal is one of the older examples of private infrastructure and how the situation in Michigan plays out may show other states what can happen when private owners control the pathways of interstate and international commerce. The American Society for Civil Engineers puts the current unfunded infrastructure liability at $2-3 trillion. In a recent paper, the organization writes that in addition to unfunded needs, “if present trends continue, by 2020 the annual costs imposed on the U.S. economy by deteriorating infrastructure will increase by 82% to $210 billion, and by 2040 the costs will have increased by 351% to $520 billion (with cumulative costs mounting to $912 billion and $2.9 trillion by 2020 and 2040, respectively.)”

As CivSource has reported, other measures like Build America Bonds from the federal government or the infrastructure bank plan being floated in several circles have been put forward as partial solutions to this growing problem. However, many states with legislatures that stand in firm opposition to any federally funded project may choose to opt out of those programs.

The Center For Automotive Research said in a study that the new bridge will create 6,000 new jobs for each of the four years that the project is going – a notable number in a state like Michigan with an 8.5% unemployment rate. Public works projects have historically been a means of job creation, although that could also be challenged if infrastructure goes private and – like with broadband – companies and shareholders benefit more from creating artificial scarcity.

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