Friday, November 2, 2012

Michigan Taxpayers to Pay the Price for Canada’s NITC Power Play?

When it comes to the proposed New (government-run) International Trade Crossing (NITC) between Detroit and Windsor, it now appears rules are being skirted to get the bridge built at any cost.

On October 18, Conservatives in the Canadian Parliament introduced the “Bridge to Strengthen Trade Act.” This unprecedented legislative maneuver would exempt the NITC from securing major approvals and adhering to the Environmental Assessment Act, the Species at Risk Act, and the Fisheries Act, among others.

But perhaps most importantly, the legislation asserts these exemptions would apply to the Michigan portion of the project as well.

Canada’s willingness to go to such extraordinary lengths begs the question: What are they getting in return? And, is this new bridge worth giving up our state’s sovereignty and financial security? I strongly believe it is not. 

First, according to the Crossing Agreement, Canada will control the entity that oversees the design, construction, financing and operation of the bridge. As a result, it’s likely to favor Canadian suppliers and workers. Governor Snyder further ensured Canada’s advantage on NITC-related jobs when he gave in to Canada’s demand for a waiver to “Buy America” requirements, which mandate the use of American steel on construction projects eligible for federal highway matching funds.

Second, under the Crossing Agreement, Michigan won’t collect any toll revenue from the NITC for approximately 50 years, or until the $550 million government loan from Canada to cover construction costs is repaid. Interest on the Canadian “contribution” begins to compound from day one. Meanwhile, a new analysis from O’Keefe & Associates casts serious doubt on whether Michigan will ever directly benefit, as cost overruns and traffic shortfalls could make total debt owed skyrocket to more than $8 billion. So long as Canada hasn’t recouped its initial investment, Michigan won’t see a dime.

Finally, if at any point Canada no longer has an interest in shouldering the financial burden of this enormous project, the Crossing Agreement clearly spells out that they can amend the agreement (page 40) or terminate it (pages 36-37) at any time. In a startling recent interview, even Governor Snyder admitted there is absolutely nothing in the Crossing Agreement that says Canada is obligated to cover cost overruns. If this project exceeds its budget, as large infrastructure projects often do, who pays?

The claims of a “free” bridge for Michigan taxpayers are based entirely on politicians’ promises. It’s an enormous gamble — our state’s financial future — to be taking their word for it.

The bottom line is that the proposal signed by Governor Snyder this June creates an uneven playing field for a Canadian government-subsidized business at the expense of Michigan taxpayers and private-sector competitors, both in Detroit and nationwide. It gives Canada control over most of the jobs and all of the revenue associated with the bridge for the foreseeable future. And they can walk away at any time.

It puts Michigan taxpayers in debt to a foreign government for years to come and needlessly enlarges the size of our government. In the process, some of our liberties are being taken away. I find that unacceptable.

Fortunately, by voting yes on Proposal 6 this November, Michigan citizens have an opportunity to tell the governor that it is unacceptable to cut them out of the equation when attempting to entangle their tax dollars in a shaky financing scheme with a highly uncertain outcome.

Taxpayers on both sides of the border would also be wise to question the prudence of a project that requires both countries to ignore their own laws, and the opposition of their own people, in order to push it through.

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