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Rendell cautioned over turnpike lease
Friday, May 25, 2007

WASHINGTON -- A top House Democrat yesterday expressed skepticism about the benefits of Gov. Ed Rendell's proposal to lease the Pennsylvania Turnpike to the highest bidder.

Rep. Peter A. DeFazio, D-Ore., chairman of the House Transportation and Infrastructure Committee's subcommittee on highways and transit, warned that huge revenue predictions were often overly optimistic and dependent upon significant toll increases.

The governor vowed that any auction for the turnpike would be fair and open.

Mr. Rendell also said the state wouldn't go forward unless it receives at least $700 million a year, a figure approaching the approximately $965 million needed annually for bridge and road repairs.

"The only way we're going to be able to find out is to test the market," Mr. Rendell said.

He was on Capitol Hill to address prominent critics of such partnerships between local governments and the private sector, including Mr. DeFazio, who has slammed deals made in Chicago and Indiana, where the governor negotiated a $3.8 billion, 75-year lease of the state's toll road.

Mr. DeFazio and Rep. James Oberstar, D-Minn., chairman of the full transportation committee, have both said they would undo an arrangement if they view it as conflicting with the public interest.

This week, the investment firm Morgan Stanley estimated that Pennsylvania could earn as much as $12 billion to $18 billion from a private operator that would run the turnpike for the next 30 years.

The higher estimate could generate $1.62 billion a year for the state, enough to tend to Pennsylvania's roads, bridges and possibly some of its financially strapped public transit systems.

Mr. DeFazio said Pennsylvania officials should be wary of Morgan Stanley's estimates. He said such figures often include hugely profitable toll "floors" for private companies, and they could quickly drive up costs for drivers.

"There's a disturbing consistency in these sorts of evaluations that are done for states," he said.

Mr. Rendell acknowledged that regular, but moderate, toll increases likely would be part of any deal. But he said they would be less onerous than gas tax increases.

The governor also promised that the state Legislature and the public would be involved throughout the process. Yet some Republican legislators in Harrisburg are complaining that the governor has given little information about 47 groups that already have submitted "expressions of interest" in a turnpike lease.

Pennsylvania's transportation problems are vast: More than 5,900 bridges and 8,528 miles of roads are in poor condition and local transit systems are facing major budgetary shortfalls.

The price tag for covering those problems is about $1.7 billion annually over the next 20 years, according to state's Transportation Funding and Reform Commission.

If the state Legislature moves quickly on allowing Mr. Rendell to begin the auction process, he hopes to have a deal completed by the end of the year.

But if proposals from the private sector don't produce enough money, the state will look at other options, including creation of a new public corporation that could leverage tax-exempt bonds for fixing transportation. The Morgan Stanley report estimates that such an approach could bring in $900 million to $1.4 billion a year.

The Pennsylvania Turnpike Commission, which is strongly opposed to the turnpike leasing plan and is fighting for its own survival, says it could raise $965 million a year by increasing tolls on the turnpike, introducing tolls on Interstate 80 and imposing a $1 "congestion charge" at some exits.

First published on May 24, 2007 at 10:44 pm
Harrisburg Bureau Chief Tom Barnes contributed. Jerome L. Sherman can be reached at jsherman@post-gazette.com or 202-488-3479.
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