Delay on Turnpike Lease Is Bad Policy
Commonwealth Foundation Urges Action on Lease Legislation
HARRISBURG, PA—Today, the Commonwealth Foundation called on the Pennsylvania legislature to consider Turnpike lease legislation before the end of the current legislative session.
“Allowing the lease to die without full consideration by both houses of the legislature would be irresponsible and would put political patronage before the needs of the taxpayer,” said Matthew Brouillette, president of the Commonwealth Foundation.
The push from some legislative leaders to kill or delay a Turnpike lease puts taxpayers at greater risk. While some lawmakers have speculated that “re-bidding” a lease might result in a higher bid, given the current strain on financial markets, such an act is likely to generate a lower offer. Given the games played by legislative leaders, potential bidders will be less likely to view Pennsylvania as a good place to invest, meaning less competition and lower bids.
Delaying action on a Turnpike lease will also put Pennsylvania in greater debt. Despite the rejection of I-80 tolling, the Pennsylvania Turnpike Commission (PTC) continues to issue bonds tied to future toll revenue. This bonded debt will likely require steeper toll increases or a taxpayer bailout of the PTC. Short of leasing the Turnpike, legislators should at a minimum repeal Act 44 and the limitless borrowing scheme of the PTC, as recommended by House GOP leader Sam Smith.
In addition, failing to lease the Turnpike would result in over $37 billion in lost revenue vs. Act 44 over the next 50 years, even as Turnpike tolls increase. “With the rejection of I-80 tolling the turnpike lease is clearly the best option,” said Brouillette. “Leasing the turnpike would limit the government’s disruption and intervention in the economy and bring the efficiency and innovation of the free-market into transportation infrastructure.”
To fill this funding gap, Governor Rendell has suggested a gas tax increase because of the refusal of legislative leaders to fully consider the lease option, which would obviate the need for higher taxes on drivers.
“If legislators are serious about solving the state’s transportation funding crisis they will consider the only proposal that avoids putting further burdens on state taxpayers. It is not often that Pennsylvania lawmakers can choose between raising taxes and fees, and reducing costs and improving services,” said Brouillette. “The old funding model of raising taxes, hiking fees, and going into bonded debt is no longer a sufficient and efficient means of financing and operating our transportation infrastructure.”
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The Commonwealth Foundation (www.CommonwealthFoundation.org) is an independent, non-profit public policy research and educational institute based in Harrisburg, PA.
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