Pennsylvania Gov. Ed Rendell on Wednesday, April 4, appeared with U.S. Transportation Secretary Mary Peters on Wednesday, April 4, to tout the benefits of a proposal to lease the Pennsylvania Turnpike, an arrangement Rendell hopes will provide nearly $1 billion a year for the state’s highway network.
“This partnership could generate billions of dollars that could be used to repair deteriorating roads and bridges and free up money for construction and keep the state moving both now and into the future,” Peters said at a press conference in the Capitol rotunda.
The Pennsylvania Turnpike’s 359-mile stem from New Jersey to Ohio is a popular long-haul link for commercial and local traffic. Rendell, a Democrat, hopes to sell the future revenue promised by the 66-year-old turnpike’s tolls for an upfront payment of billions of dollars. The state would invest that lump sum and use the gains to help pay for repairs to thousands of bridges and miles of state highway.
Rendell said federal highway dollars are expected to decline in 2010 and that hefty state funding increases have hardly shortened the state’s long to-do list of repairs. “We cannot wait for someone to come to our rescue,” Rendell said. The expectation is that a private company could earn a solid return on the turnpike by raising tolls, improving traffic flow and cutting costs. Toll payers, including trucking companies and out-of-state motorists, would shoulder the burden of new highway funding in Pennsylvania, instead of residents and taxpayers.
Peters agreed with Rendell’s assessment and warned that a solid transportation network is critical to economic prosperity. “Please don’t wait for the federal government to ride in and fix this because … there’s not enough money to do that,” Peters said. The federal government in 2005 tried to encourage such private investment by allowing tax-exempt bonds to finance projects by private operators and developers on highways and rail routes supported by federal money, Peters said.
Rendell has hired Wall Street investment bank Morgan Stanley & Co. to advise his administration on raising money for transportation, but he can’t invite offers or hold an auction until the Legislature gives him the authority to lease the toll road. Rendell said he hopes to sign legislation by mid-June so his administration can hammer out a lease deal and generate revenue for the fiscal year that starts July 1.
With a slim Democratic majority in the House and a solid Republican majority in the Senate, Rendell will need GOP votes on his proposal. Legislation has been submitted that would authorize private leases of public assets, but the Republican and Democratic chairmen of the state House and Senate Transportation Committees would not promise Wednesday that it would be voted on. The House’s Republican leader, Sam Smith of Jefferson County, said lawmakers should not be rushed into authorizing a lease.
Chicago and Indiana pioneered the idea of privatizing existing U.S. highways in the last two years, but critics question whether it is wiser to retain control of the tolls — about $600 million a year on the Pennsylvania Turnpike — and borrow against the future revenues to raise needed cash.