For the past several years, the Rendell administration and the Pennsylvania General Assembly have been examining how to finance repairs to the state's transportation system caused by years of deferred maintenance and decay.
We've heard about local or state governments across the country filling budget gaps by leasing or selling public transportation assets to the private sector, most recently in the commonwealth with discussion about leasing the Pennsylvania Turnpike. The question is, would a private, for-profit entity put Pennsylvania roads before its own profit margins?
Gov. Ed Rendell has proposed leasing the turnpike for 75 years to Abertis Infrastructures, a Spanish toll-road company, which is launching a multi-million-dollar public relations effort, including radio spots, direct mail and field team promotion, to win favor with the public and the General Assembly.
Why is Abertis spending millions on a statewide public relations campaign? If it has so much money to spend, why didn't it offer more money for the lease? This reminds me of the adage about "sending good money after bad."
To its credit, the General Assembly has expressed little interest in selling or leasing our premier state asset. In 2007, when the idea was first raised, the General Assembly instead enacted Act 44. This law authorizes the Pennsylvania Department of Transportation to lease the Pennsylvania portion of Interstate 80 to the turnpike commission and convert it to a toll road. It requires the commission to pay $83.3 billion to the commonwealth over the next 50 years.
To date, under Act 44 the turnpike commission has provided PennDOT with $750 million, in anticipation of tolling I-80. It is expected to provide an additional $850 million over the next year.
Last month, the House of Representatives voted 185-12 against an amendment offered by Rep. John Maher, R-Upper St. Clair, which would have authorized state officials to execute the proposed lease between the commonwealth and Abertis. The House Transportation Committee also held public hearings to receive testimony from stakeholders and financial experts analyzing the bid submitted by Abertis. Several key findings emerged, including:
The net economic value of the proposed bid is about $8.5 billion, not the advertised $12.8 billion.
The Abertis proposal is based on an "unrealistically high" 12 percent rate of return for the state on the money earned from the lease.
The current funding law (Act 44), with or without the tolling of I-80, provides more money for transportation than the Abertis lease would.
Based upon historical Consumer Price Index increases, future turnpike tolls under the Abertis proposal could be 159 percent higher than under Act 44.
Transfer of the turnpike from public to private hands would eliminate important aspects of public-sector accountability.
The dollars Abertis spends on consultants and lobbyists are not going to benefit our transportation infrastructure. They won't fix the roads and bridges which carry our children to school, our families to vacations or emergency personnel to our hospitals. Rather, private industry has a responsibility to its shareholders.
As Deputy Chief of Staff to the Governor Roy Kienitz stated during public testimony on June 19, "They're profit-making companies, and their goal here is to get this project into their company and hopefully make a profit doing it."
Act 44 expanded the purpose of the turnpike commission by allowing it to toll I-80, which would allow the highway to become self-sufficient. The commission soon will seek preliminary approval from the Federal Highway Administration to toll I-80. These tolls, along with additional dollars generated from the mainline turnpike, would provide money to maintain other state roads and bridges and to stabilize our mass transit systems.
For nearly 70 years, the safety, security and service given to the users of the Pennsylvania Turnpike have been better than that of any other highway in the state. This was illustrated in 2007 during the snowstorm that stranded hundreds of motorists on Interstate 78 for more than a day as the turnpike remained open for travel.
I will continue to work with my colleagues in the House and Senate, along with the governor, PennDOT and the turnpike commission, to explore further funding opportunities, including public-private partnerships that do not include the Pennsylvania Turnpike. We must challenge ourselves to find alternative ways to make transportation improvements that would avoid the costs, risks and impact on governance which underlie the current proposal to lease the turnpike.