The issues are straightforward on either side and the battle lines are clearly drawn. On one hand are the States, which need to generate more funds to not only repair and maintain current roadways and bridges but to build new ones to handle rising freight and traffic volumes. On the other, are commercial truckers, concerned about paying more tolls in addition to fuel taxes for road maintenance and construction plus possibly enduring more delays brought on by more highway congestion.
The battleground is the privatization of toll roads-- literally the hand-over of publicly financed roadways to private entities in return for big cash payments to state governments while relieving the states of roadway repair responsibilities.
Nowhere is this a bigger issue than in the Commonwealth of Pennsylvania.
“A tightly controlled lease – one that maintains the Commonwealth’s ownership of the turnpike, includes strong protections against excessive toll hikes, and protects turnpike workers – provides a unique opportunity to meet our transportation funding needs,” said Governor Edward Rendell (D) at the unveiling of an analysis of the Keystone State’s toll-road privatization plan conducted by investment firm Morgan Stanley & Co.
Morgan Stanley reviewed three money-generating options for Pennsylvania.
1) A long-term lease of the turnpike
2) Creation of a new, tax-exempt, public benefit corporation under IRS code 63-20, which would allow for private management of the turnpike
3) A proposal by the Pennsylvania Turnpike Commission that includes new tolls on Interstate 80 and a new “congestion tax” that would be collected at the most heavily used turnpike exits
The report concluded that each proposal could likely deliver the $965 million per year required to meet the state’s highway and bridge investment needs. However, two of the options – the long-term lease and the new public corporation – could also provide significant funding for the state’s transit needs. But only the long-term lease option would be able to meet all highway and transit needs.
“The lease option would almost certainly provide the most money and, for that reason, we have to take it seriously,” Gov. Rendell said. “We need $1.7 billion to repair our roads and bridges and keep public transportation going in all 67 counties. That’s why leasing the Pennsylvania Turnpike is likely to generate the highest level of funding to repair roads and bridges and avert drastic public transit cuts.”
Not so fast, counters Jim Runk, president of the Pennsylvania Motor Truck Association.
“Even with the new financial report, Pennsylvania truckers do not believe that the numbers add up for the Governor’s Turnpike leasing plan. The report had a very limited scope and it incorrectly assumes the status quo,” Runk said. “The Governor can work the numbers any way he wants but it’s pretty clear that tolls are going to go up and up every year if the Turnpike is leased to a private interest.”
He said a poll conducted by his group found that 68% of Pennsylvania voters are against leasing the Turnpike. Maybe even more telling, 60% of voters indicated that even the prospect of a multi-billion dollar tax increase to address transportation needs did not impact their view that leasing the Turnpike was a bad idea.
Whether it’s a good or bad idea, toll road privatization can’t occur overnight due to many hurdles that must be crossed first. According to Rendell, Pennsylvania must first determine the actual value of the Turnpike in a process requiring that bidders not be publicly identified in order to create greater competition for the bid.
Morgan Stanley also noted in its analysis that experience in other states and cities indicates that uncertainty over political support for leasing would likely depress bid values, so enactment of broad authorizing legislation is necessary to provide the best environment for maximizing revenue. That means the state’s General Assembly must vote just to approve considering toll road privatization, with a separate vote required later on to sign off on any deal.
The worry is a prolonged battle over toll-road privatization may hold up and delay the search for desperately needed funds from other areas. “The time to commit to a transportation funding strategy is now; we cant wait any longer,” said Pennsylvania’s Transportation Secretary Allen Biehler.
“We walk a fine line every day when it comes to matching projects with available funding – and far too often, funding simply is not available,” Biehler said. “Faced with fewer federal dollars and skyrocketing construction costs, we must make a commitment to fund, build and maintain the transportation system that Pennsylvania residents deserve.”
