Session: State Capitol, Room 24 Juneau, AK 99801-1182 Phone: (907) 465-2186 Fax: (907) 465-3818 Interim: 600 East Railroad Avenue Wasilla, AK 99654 Phone: (907) 373-1842 Fax: (907) 373-4729

The Monopoly Road

As Chairman of the Legislature's House Transportation Committee for the last two years, I have watched the entire transportation road building and political process unfold before me like a giant blob. Nothing can touch it, nothing affects it. The State Department of Transportation (DOT) is unique. Unlike other departments which get a lot of publicity and the commissioner is a household name, DOT, one of the largest agencies in the state, is large, dull, methodical and I'll bet very few people reading this can even name the commissioner.

Yet DOT is vitally important and slugs along. Roads and transportation-related infrastructure are considered a basic function of government. Year after year, it gets more money to accomplish its job-$342 million this year alone. We drive over roads and bridges, use ferries, fly out of airports, and don't think much about it. Taxes pay for them, and yet, the Glenn Highway from Anchorage to Eagle River, the Parks Highway through Wasilla and the Palmer-Wasilla Highway all are comparable to Winter Olympic luge runs.

The highway ruts are so bad it's difficult to maintain control of your car. On the Glenn Highway, the "luges" developed in less than a year and the conditions have now become a safety hazard. Why the ruts formed so quickly is a matter of debate. One possibility is DOT's requirement that contractors use North Slope oil instead of higher quality overseas oil for manufacturing asphalt. This "Alaska preference" requirement creates a more malleable and lower quality pavement. The result is very unimpressive. For example, on the Glenn near Eagle River, resurfaced last summer, it took only nine months for twin "luges" to appear. Someone's making money on this deal, but of course, the taxpayer loses big.

DOT, like the federal post office, is a classic inefficient government monopoly. Since it has no competition, with a few minor exceptions, it has little incentive to be efficient and provide the best possible service to the public. If you ran a business and your customers had no choice but to use your services because you were the only player in town, you might get a little complacent too. It's the nature of the beast. Such a scenario almost always proves costly to the public, just as when two traffic signal lights were installed on the Glenn Highway in Palmer, costing taxpayers $1.2 million...ten years ago!

My moles inform me that DOT operates in permanent "slow mode". Because roadwork is seasonal, they do most of it in the summer and early fall. Does it then layoff most of its work force until the next season? No, instead, they create "make work" just to keep them on the payroll for the winter at a high cost to taxpayers. This is good for unions, but it rips off taxpayers.

In too many instances, there are charges of politics edging into the equation. There are two projects in the Mat-Su area with dubious backgrounds that come to mind. Years ago, a country road accessing Hatcher Pass on the Willow side was re-built into a paved, high speed roadway. The trouble was, there was only a handful of people who lived in the area, certainly not enough traffic to justify the millions spent. Did an influential politician have connections with the area? More recently, in 1994, at the end of Knik-Goosebay Road outside Wasilla, an eight mile extension of road was built and paved, going virtually nowhere. I remember watching a report on Valley News about it at the time. The reporter asked the DOT official on location what justified spending all this money on a road that went to defunct dairy farms at Point McKenzie? The answer was classic bureaucratese. The man talked for a full minute and said nothing.

This phenomenon is not new. Every so often there will be a hew-and-holler for "reform." A new commissioner will be appointed. New methods of management and accounting will be put in place only to have the same old problems crop up like potholes every spring. If the Legislature attempts to put DOT on a financial diet, the response is predictable. They'll often intentionally select a highly traveled road, like Knik-Goose Bay, allow it to fall into dramatic disrepair, and then cry, "The Legislature cut our department, and now look what happens!"

So what to do?

The goal is to make DOT a lean, mean, road makin' machine. As customers of the transportation system, we Alaskans must demand the most for our hard-earned tax dollars. The answer is finding new ways to manage how facilities are built and maintained. Since DOT often contracts out to the private sector to build roads, why not have them do maintenance as well? That way, if roads aren't kept to high standards, the contract could be canceled and they could be replaced with another firm that would do a better job.

The idea is to create competition. Not just in the area of construction and maintenance, but in a way that creates a real financial interest for companies involved. If construction contractors both built and maintained roads, they would have the incentive to do so in a way where roads would last well into the future. Imagine if the present disgraceful conditions on our highways were the result of management of private companies. They would be run out of town! Not so with a government monopoly. It's like Uncle Jasper who came for a week and stayed for seven years...in the basement. Government hangs around with few new and innovative ideas.

Consider the effect if private entities managed Ted Stevens Anchorage International Airport. Millions of dollars were offered to expand it, including building a railroad terminal and spur to connect with downtown-even though few except a small number of big tour operators will ever use it. A private manager would have to ask, "It's great that all of this money is available to spend, but who will pay for the upkeep and maintenance in five or ten years?" If such projects have no objective demand, they should be brought to a halt. My point is, we should not accept federal dollars and encumber future generations with additional costs if a project is not economical, just because money's available.

The principle of competition I've outlined should govern all areas, not just maintenance. If it could be shown there's enough demand for the proposed Knik Arm Crossing, then why not encourage a consortium of private corporations to build it and make a profit with the tolls it would collect? Why do we almost always assume only government is capable of doing this, underwritten by taxpayers? If there were more than one route for motorists commuting to Anchorage, fees would be kept to a minimum because of competition.

The effort to privatize when possible would also keep the costs of the Alaska Ferry System to a minimum. Routes could initially be contracted out on a trial basis, and eventually the entire system could be run privately-the same as air transportation. Of course, the entrenched bureaucrats would strongly object and argue that the "earth would rend itself and the end would soon come upon us." This is to be expected.

We ought to sell the Alaska Railroad outright. No more government infusions of a few million here and a few million there. A government-owned railroad should not compete directly with the private trucking industry, especially with taxpayers' money. It should be a free market process where a railroad earns its way like everyone else. If it fails, entrepreneurs could acquire it and turn it into a profit making entity through competition. No more big, expensive, cumbersome union-controlled bureaucracies.

In every instance I've mentioned, from the Olympic "luges" in our major highways, to the political pork at the airport, to the railroad and the ferry system, all represent inefficient government monopolies that soak the taxpayer and do not provide the best service possible. That would change with competition. To visualize this, all we have to do is remind ourselves of the last time we painstakingly stood in line at the post office while the same number of clerks helped customers, regardless of how many people were waiting. Thanks to a government created monopoly, the post office has no real competition with the exception of express mail. If it runs in the red as it has for over a century, Congress simply steals more from taxpayers to make up the difference.

Compare this with Fred Meyer or Safeway when they become inundated with customers. New checkers and lines spring up immediately as if by magic. Only it's not magic. The private storeowners are keenly aware that if customers are unhappy waiting in lines, they will spend their money elsewhere.

That's the main idea. Government could continue its role as guarantor that roads be built and maintained. But it can also create an atmosphere of competition that will make our roads a pleasure to drive on instead of making it feel like we're competing at the Olympics in the luge event.

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Vic Kohring is a 4th term Republican who was first elected to the Alaska Legislature in 1994. He represents Wasilla and Peters Creek and is Chairman of the House Transportation Committee.

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