First Turnpike Bid Is In! Only $5.3 Billion

PA Turnpike Commission plan will provide only $450 million per year for state’s roads, highways, bridges, and mass transit

HARRISBURG, PA — As Gov. Rendell and the General Assembly await bids from private-sector companies to lease and operate the Pennsylvania Turnpike, the Commonwealth Foundation revealed the effective “bid” placed by the Pennsylvania Turnpike Commission to maintain control of its 537-mile toll road.

Under Act 44, the Pennsylvania Turnpike Commission (PTC) must receive approval from the Federal Highway Administration before it can begin tolling drivers on Interstate 80. If the application is denied, the Commission will provide only $450 million annually for the state’s roads, highways, bridges, and mass transit.

The PTC would be effectively providing the state an upfront lease payment of $5.294 billion—the amount necessary to generate $450 million per year, assuming an 8.5% annual return on investment.

“We need an apples-to-apples comparison in order to fully consider the forthcoming bids on the Pennsylvania Turnpike,” said Matthew Brouillette, president of the Commonwealth Foundation. “The only means by which we can adequately compare these bids is to contrast them with the Turnpike Commission’s effective lease payment to control and operate the toll road.”

Brouillette emphasized that these private-sector companies are not bidding on Act 44, which includes the tolling of both the Turnpike and I-80 with unlimited power to increase toll rates. “These companies are bidding on the Turnpike alone with strict limits on toll rates, mandates for investments, penalties for failures to perform, and requirements to keep current employees,” Brouillette said. “The effective ‘bid’ of $5.3 billion from the Turnpike Commission provides lawmakers and the general public with a good benchmark from which to consider all other bids.”

Brouillette said another way to make an apples-to-apples comparison would be to request private-sector bids on the tolling of Interstate 80, as well as the Turnpike. “The Turnpike Commission’s monopoly of Pennsylvania’s major east-to-west highways under Act 44 would produce even larger lease payments from the private sector,” he said. “If the state is intent on tolling the currently free I-80, then that stretch of road should also be put out for competitive bid to maximize the taxpayers’ value in their roads.”

The granting of tolling authority of Interstate 80 to the PTC, without seeking bids from the marketplace, likely left billions of dollars on the table. In addition, Brouillette said that giving more power and control over Pennsylvania’s transportation funding and infrastructure to the Turnpike Commission—which was recently ranked the third least-efficient toll road authority in the nation—will cost taxpayers and toll payers larger sums of money in the future.