Pennsylvania lawmakers should reconsider the money it left on the table earlier this year after rejecting Gov. Rendell’s initial plan to lease the Pennsylvania Turnpike to a private-sector partner. Such an agreement could generate billions of dollars needed for transportation infrastructure and transit systems without raising taxes, erecting new tolls, or incurring more taxpayer debt.
Amid increasing doubts about the viability of Act 44 of 2007—the law which permitted the Pennsylvania Turnpike Commission (PTC) to raise transportation funds by tolling Interstate 80—the governor will soon announce a short list of teams that will provide multi-billion-dollar bids for a potential turnpike lease.
Last month, 34 financial, engineering, and management companies submitted 14 proposals to the Pennsylvania Department of Transportation, offering their qualifications for operating the turnpike. If Gov. Rendell obtains a high enough bid, he plans to take that offer back to the General Assembly for its consideration. The Legislature would do well to give the idea serious consideration this time around.
Increasing public backlash to Act 44 has prompted Gov. Rendell to revive his turnpike lease plan. To begin with, Act 44 fails to fill the identified annual transportation funding need of $1.7 billion. Despite billions in new bonded debt, higher turnpike fees, new tolls on I-80, and no plan to achieve meaningful congestion relief, Act 44 provides less than half of the funds needed to repair and maintain our transportation infrastructure.
Additionally, Act 44 is predicated on federal approval for tolling I-80, an outcome in doubt given recent communications from federal officials to the PTC and Act 44’s failure to comply with federal rules on tolling interstates. If the turnpike commission is denied permission to add tolls to the 311-mile road, then the shortfall in revenue for our transportation infrastructure needs only grows. And the people of Pennsylvania will be on the hook for the billions in bonded debt incurred by the turnpike commission.
Lastly, from a “good government” perspective, it doesn’t make sense to reward an agency like the turnpike commission with even more power, size, and authority. The commission is hardly a model of transparency, accountability, and efficiency. Indeed, its long history as a patronage playground for the Pennsylvania Senate is well-documented.
By contrast, a properly constructed lease of the 514-mile Pennsylvania Turnpike under a public-private partnership would drive out the corruption and waste of the turnpike commission while generating a large infusion of privately-raised capital, eliminating the need for more debt, more fees, and more taxes. Under a lease agreement, the state could hold its private-sector partner to high and rigorous standards through a performance-based contract. If the company failed to comply with the terms of the agreement—whether related to snow or road-kill removal, maintenance requirements, or road widening projects triggered by high traffic volumes—it could be financially penalized or even stripped of its contract.
Projections suggest that a lease could generate at least $1.7 billion annually—the amount needed to close the long-term funding gap. The final amount, of course, will not be known until the bids are in.
Indiana decided it wanted to fully fund its long-range transportation plans through a public-private partnership on the Indiana Toll Road. After reaping nearly $4 billion for the lease of the 157-mile highway, the state chose to reinvest the upfront cash into transportation infrastructure projects. Today, the Hoosier State is the only state in the nation with a fully-funded, statewide transportation plan. Because of this one public-private partnership, Indiana will now be able to expand and modernize its transportation network and confront its major challenges in moving people, businesses and goods in, out and around the state.
Regardless of how the Act 44 issue plays out, Pennsylvania is at a crossroads. Business as usual—higher taxes, higher fees, and higher debt—will not deliver the infrastructure Pennsylvania needs to meet the mobility and goods movement needs of the 21st century economy. Policymakers need to embrace a new paradigm for highway funding and operation, and partnering with the private sector offers just that. Even better, it does so without more debt or tolls on Interstate 80.
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Matthew J. Brouillette is a president and CEO of the Commonwealth Foundation (www.CommonwealthFoundation.org). Leonard Gilroy is the director of government reform at the Reason Foundation (www.Reason.org) in Los Angeles.