Writings and observations

rainey BARRETT


Several weeks ago, some new express lanes were added to the Washington D.C. beltway – not normally a point of interest or concern here in our little burg-in-the-Oregon-woods. Your neighborhood either, I’d guess. But, you might pay more attention if you knew who paid for those improvements and who owns them – private construction companies Flour and Transurban.

“And just why did those two private outfits put up the millions to add to our national transportation system?” you ask. “To make a profit,” sez I. “To own them,” sez I. And that worries me. A lot.

The new D.C. traffic lanes are for carpool use. But, if you’re alone, want to get out of the other four lanes and into the much lighter traffic, go ahead. After you pay the fee. For a few bucks more, you can just whiz to work alone with the carpoolers. And your money goes where? Why, Flour and Transurban, of course. After all, it’s their road now. Or, at least part of it.

One of the tenets of conservatism I’ve long agreed with is government should do the things government does best – private enterprise should do what private enterprise does well. Good balance. Philosophically and often fiscally. But the key is “balance.” And that’s too often hard to achieve.
We look to government for a sound military and conducting our national defense. But, over the last decade or so, we’ve turned over more of the responsibility for our military operations to private business. Housing, food service, construction and a lot of other formerly military-only tasks are now done in many places by civilian contractors.

You might be O.K. with that. But how about the same civilian contracting for security and fighting a war? How about the thousands of mercenaries we hire? Civilians. Is that just the same concept? Firing the bullets instead of cooking food or building a base? Killing on behalf of our government so the military can do something else?

As I said, balance.

In a more mundane way, this privately-owned highway business raises a lot of questions about who should be doing what. Historically, some level of government has always built all our highways. We have city, county, state and federal systems. We build ‘em and we maintain ‘em. We own ‘em.

But, as our various governments are pushed harder against the financial wall, they’re looking for help. Really big construction and engineering companies like Bechtel and Samsung are talking with the big – really big – banks. Merrill Lynch and Goldman Sachs are two – with billions in pension funds and all those insurance dollars just lying around. The idea is they put up large amounts of up-front funding, getting paid back – plus a lot of interest – by owning them and charging us for using them.

But if you and I don’t own the highways – and if those highways need fixing down the road so to speak – what recourse is there to see that private enterprise does its job? What if one of the big corporations – after making a few billion dollars – takes the money and goes out of business? Who does the necessary rebuilding? And who pays?

And just to add a little frosting on this conundrum, they’re talking using this private enterprise deal to build – and rebuild – bridges on our highway system. God knows, they need it. For instance, Bechtel builds a bridge here and a bridge there and a bridge somewhere else, then charges tolls which the company keeps. So, let’s say private companies like Bechtel build – or rebuild – and own 15 bridges from Seattle to Los Angeles. That’s potentially 15 toll collections along Interstate 5 going one way and 15 more going the other. On a route we now drive for free. Free, that is, after we put up the billions in tax dollars to build the whole thing in the first place.

Industry newsletter Public Works Financing (PWF) has identified a dozen projects hat were proposed in 2012 with a value of about $20 billion. Since 2008, 10 others were completed or are still underway. One is a tunnel linking the Port of Miami to an interstate. There are several toll highway expansions in the East. And, in Long Beach, Calif, one company built a new courthouse. And owns it. Charges the taxpayers rent.

PWF has estimated there are now over 100 private funds in place to do more of this kind of thing. But – so far – there’s more money available than there are projects. One reason – whether a courthouse or a road or a bridge – the project has to be high-use and in large populations areas so tolls or rents can exceed construction and operating costs. But, if more governments contract out this sort of stuff, someone will figure out a way to use it for more things – in more places. Even in our little burg-in-the-Oregon-woods.

As I said, “balance.” But there are so many things out-of-balance in our system of government right now -and society in general – that new ventures like these trouble me. While “necessity” may be “the mother of invention,” I’d hate to see our governments at any level jump into this private ownership of highway, bridge, public buildings idea while under today’s extreme financial pressures. Let’s regain our national balance and take some time to examine all the ramifications of these types of ventures.
Somehow, I just don’t think it’ll be comforting to drive across an interstate bridge built -and owned – by the folks who make Big Mac’s.

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idaho RANDY
The Idaho

If you’re an Idaho taxpayer, you may be an Idaho tax scofflaw and not even know it.

Probably few Idahoans know about the use tax, and probably fewer pay all of it that is owed.

The use tax is a kind of counterpart to the much better-known sales tax. When you buy a product in Idaho, you are (in most cases) charged a sales tax, which the seller in turn has to forward to the state. Suppose you buy something in Oregon or Montana (or, for that matter, Alaska, Delaware or New Hampshire) – one of the five states that do not charge sales tax – and bring it back to Idaho? That can amount to significant money in the case of something like furniture or a car. That way, you can avoid sales tax and cut six percent off your cost, right?

Idaho law has considered this, and it imposes a use tax. If you buy it over the border and bring it back to Idaho to “use,” you have to pay the equivalent of the sales tax. The state is fairly rigorous on the car front, since autos used by Idahoans have to be registered in Idaho.

Generally, the use tax has to be “self-assessed,” sort of an honor system. Every now and then the Tax Commission, to which it is supposed to be paid, issues a statement on the subject. Last week, for example, it advised (in advance of income tax filings):

“Check your invoices to see whether sales tax was collected on the following purchases, which may require a use tax payment: Magazine subscriptions; Book and record clubs; Out-of-state catalog purchases; Merchandise bought over the Internet (including digital music, movies, books, games, etc.); Purchases in a state where no sales tax is charged; Untaxed purchases of merchandise from Idaho vendors. If sales tax was not collected, Idaho makes it easy for taxpayers to pay their use tax when they file their annual income tax return, which is due by April 15.  Simply total your untaxed purchases, multiply that total by .06, and enter that amount, rounded to the nearest dollar, on the appropriate line of your income tax return.”

You’ve done all that, right?

The use tax hasn’t gone entirely unnoticed at the Idaho Legislature, but there’s been little move in recent years toward any big overhaul; usually, whatever happens to the sales tax is linked to the use tax. One example, House Bill 12 this session (signed into law), which includes some sales tax changes but also “clarifies that use tax shall not be imposed on military members and accompanying spouses if certain articles were purchased prior to receipt of orders transferring to Idaho.”

There’s also House Bill 13, stuck in the House Revenue and Taxation Committee since early in the session and maybe going no further, which “This bill amends the Sales Tax Act to clarify that every person with a duty to account for and pay over any tax imposed upon or required to be collected by any taxpayer under the act also applies to use tax.” Supposedly, that clarification would add $192,500 to the state general fund.

Seems a little doubtful as matters stand.

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