Also last night, we talked about tolls on new roads and lanes as a possible answers to congestion and future needs. As my favorite local VC says, "I remain skeptical."
Tolls roads seem to suffer from the same inverted cash flow structure as, say, water. Almost all of their costs are fixed, while almost all of their revenue is variable. This puts the toll road operator in a bind where there are other alternatives, either existing routes or a boost in telecommuting. The operator presumably has set his rates at something close to the optimum level to begin with. Lowering rates will cause the very congestion his customers are paying to avoid, and raising them will either drive off traffic, or create resentment among increasingly captive commuters.
Just privatizing operations doesn't change the basic economics. And it's no good saying that the bonds are market-tested. Markets funded the dot-com boom as well. They may be the best system around, and in the long run, a pretty good one, but markets are still subject to fads, herding, and other mistakes. And don't underestimate the pressure that a financially-strapped government can bring to bear on the underwriting banks.
I remain not hostile, but skeptical.