What now for Pennsylvania transportation funding, turnpike lease?
As we pointed out a few weeks ago, without I-80 tolling, Act will provides only $450 million to the state each year (one addendum: as Grata points out, the PTC will pay $850 million this year and $900 million next year – all on borrowed funds – the $450 million annual payment begins in 2010).
Based on this figure, an expected return of 7.5% on the $12.8 billion lease payment (less the amount payed to retire Turnpike debt) and with additional cost savings, a lease generates almost $37 Billion in additional funds to the state. Click here for a chart of annual payments compared.
Turnpike tolls will increase 25% in January 2009, regardless of a lease – a fact John Micek seems surprised to learn this morning. The Turnpike Commission plans on increasing tolls 3% annually thereafter, but Fitch Bond ratings projects higher increase, based on all the new debt the PTC is issuing. Under a lease, future tolls would be capped at 2.5% or the rate of inflation.
A spokesman for the Senate Republicans thinks the General Assembly should wait until January and rebid the Turnpike, perhaps leading to a better deal. In theory, this might be advisable, except the Turnpike Commission continues to issued more debt on future revenues they won’t receive in the meantime (something the House Republican Leader thinks should end).
Furthermore, how many bidders would truly spend the time and money on another bidding process, when the first bidding process was ignored. It looks more like the Senate Republican leadership is less concerned with a better deal than maintaining a close relationship with the Turnpike Commission and its lobbyists.