Government should not compete with the private sector

by Don C. Brunell

President, Association of

Washington Business

One scary thing about federal bailouts and stimulus packages is the large debt we are saddling our grandchildren with. The other is government’s creeping intrusion into competition with the private, taxpaying sector.

Last fall the governors of Washington, Oregon and California applied to the Federal Highway Administration to operate state-owned food and fuel depots at rest stops along Interstate 5 in direct competition with privately-owned travel plazas and truck stops.

The move would violate a 1960 federal law that bans state-operated facilities at interstate rest stops. To get around the ban, the application characterized the proposal as a “Special Experimental Project.”

According to Lisa Mullings, president and CEO of NATSO Inc., a national trade association of travel plaza and truck stop owners, the ban was implemented to encourage private economic development along interstate highways. It worked. NATSO says more than 60,000 interstate-based businesses have been created nationwide, contributing some $31 billion in federal, state and local taxes each year.

Mullings says the proposal jeopardizes more than 3,500 Interstate 5 businesses in California, Oregon and Washington, including 1,600 restaurants and more than 550 gas stations, truck stops and convenience stores.

In a weakened economy when state governments should be cutting back, the proposal from Washington, Oregon and California would further expand their reach and unfairly compete with private employers.

The stated goal of the “experiment” is to provide alternative energy stations for interstate motorists. It goes along with the governors’ desire to electrify I-5 from Vancouver, B.C., to San Diego. The idea is to have a series of plug-in stations at rest stops to recharge batteries for the electric cars they believe will be coming soon, and while drivers wait, they can buy a hot dog, mocha or a meal.

But the proposal provoked fierce opposition from private travel plazas and truck stops who said the state should work with them to place alternative fuel outlets in existing operations. Such an arrangement, they said, would not only give travelers more choices, but competition among travel plaza operators would reduce prices. In addition, private vendors pay taxes and would employ more people.

Jeff Doyle of the Washington State Department of Transportation says the state has heard the concerns and is now working with private businesses to ensure that state efforts to provide alternative fuel outlets along I-5 don’t compete with the private sector.

While Washington has not withdrawn its federal proposal, the alternative fuel depot project is now part of Senate Bill 5735. In a revised version, all references to commercial activities at these sites have been removed, private businesses have a “right of first refusal” to install plug-in or alternative fuel dispensers, and the state won’t install state-owned outlets if private businesses in the same area already have them. To date, private travel plazas and truck stops have not installed alternative fuel depots due to a lack of demand. The state says if the private sector chooses not to step forward, state depots will be developed in as many as five locations along I-5 in Washington, but with no commercial activity.

This compromise is a step in the right direction, but the bill has a long way to go in the Legislature and this issue bears watching. Under no circumstances should the state compete with the private sector. Any such competition is unfair, because state facilities don’t pay real estate taxes and are exempt from many of the regulations imposed on private employers. In addition, private companies produce sales tax revenue and competition reduces consumer prices.

Perhaps most importantly, as it struggles with a $9 billion deficit, the state should be cutting back its reach, not expanding it.

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