Wrong Again: Leasing turnpike not the only solution to PA’s roads and bridge funding woes

Member Group : Lincoln Institute

The federal government has realized something Pennsylvania policymakers did not: that the proposed tolling of Interstate 80 to provide funding to fix other roads and bridges was a bad idea. Thus did the U.S. Department of Transportation deny the commonwealth’s application for permission to place tolls on the cross-state highway.

It was a bad idea from the beginning. First and foremost the tolling of I-80 would have had a crushing effect on the economy of northern Pennsylvania. The timing would have been especially bad as the region is beginning to emerge from decades of economic doldrums due to existence of shale oil deposits which have suddenly become viable to tap.

Worse, the tolls collected from I-80 traffic would have been used not to maintain and improve that roadway, but rather to fix other roads and bridges across the state. That proved to be the fatal flaw to the plan as federal regulations require any toll revenue derived from interstates to be invested back in those interstates.

The rejection leaves Act 44, which was to have resolved Pennsylvania’s highway "crisis," in tatters. Governor Ed Rendell claims the only remaining viable option is to lease out the Pennsylvania Turnpike to a foreign company.
He is, as usual, wrong.

Leasing the turnpike under a private/public partnership is, in and of itself, a good idea. Similar lease agreements in other states, and in many other nations, have proven highly beneficial as private operators, shorn of the shackles of over-unionization and other constraints of government, have been much more cost efficient.

But this proposed turnpike lease is a bad for two reasons: first, the revenue Pennsylvania would derive from the plan is far less than initially projected and far less than what the state could get if it were to rebid the contract. Second, just like with the I-80 scheme, funds derived from the proposed turnpike lease would be diverted to other roads and bridges and not spent on maintenance and upgrading of the turnpike itself. Given the overwhelming capital needs of the turnpike system, this diversion of funds would be a huge financial blunder.

The $12.8 billion high bid by the Spanish consortium Abertis Infraestructuras to lease and operate the turnpike for 75 years falls far short of the lease’s initial projected value which ranged between $15 billion and $20 billion depending upon who was making the estimation. The state received three bids after a process which initially yielded no takers. The bidders, apparently sensing a fire sale, came in low, with Abertis being the best of the bunch.

Further, whether this lease is approved, or is rebid, any revenue received from leasing the turnpike should be dedicated solely to the improvement and maintenance of the turnpike. Keep in mind the Pennsylvania turnpike is the oldest limited access superhighway in the nation. A major east-west traffic artery, traffic volumes continue to grow. The turnpike is in need of being expanded to six lanes across the state with the attendant improvements in bridges and tunnels to accommodate that expansion. Thus, the roadway needs the major infusion of capital cash a lease would yield.

That leaves the problem of Pennsylvania’s crumbling roads and bridges still on the table. It is a problem created by the Rendell Administration which has habitually diverted federal highway funds to cover massive deficits in public transit systems in Philadelphia and Pittsburgh. Rather than reform such agencies, Rendell has allowed patronage and waste to continue to flourish, choosing instead to simply cover the operating losses with highway money.
The one option the governor refuses to consider is funding the repairs of state roads and bridges with existing tax revenue. The Pennsylvania Department of Transportation is itself a bloated and inefficient government bureaucracy that cries out for reform. The problem is not a lack of revenue, but rather the inefficient and improper use of existing funds.

Rendell and the spendthrift General Assembly will be hard pressed to convince a majority of Pennsylvanians to pay higher taxes to fund road and bridge repair until and unless it become crystal clear the state has made good use of the money we have already provided. Further, if roads and bridges are so important – and they are – other parts of the state budget could be cut or eliminated and the funding shifted to transportation.

In the real world we call that living within our means.

(Lowman S. Henry is Chairman & CEO of the Lincoln Institute and host of the weekly Lincoln Radio Journal. His e-mail address is [email protected])