Should we all pool our money together and make a bid?
Rendell: Make an offer for Pa. Turnpike
Private operators can bid on the road until Dec. 22.
By Larry King
Inquirer Staff Writer
Available for sale or lease: Historic, 359-mile toll road. Guaranteed income. Heavily worn; needs TLC. Work force of thousands included. See Gov. Rendell for details.
Yes, the Pennsylvania Turnpike is up for grabs.
Scrounging for transportation funding amid the no-new-taxes atmosphere of Harrisburg, Rendell officially invited suitors yesterday to make an offer for the venerable tollway.
"There is only one option that is not on the table - and that is doing nothing," Rendell said of Pennsylvania's quest to find almost $2 billion more each year to bolster its roads, bridges, and public transit system.
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Though selling or leasing the turnpike is far from certain, there is precedent elsewhere. Toll roads have been rented out recently in Indiana and Illinois, and a wave of similar privatization bids is rising in other states, including New Jersey.
At a news conference in Philadelphia, Rendell said he was giving private operators - some of whom have been inquiring for nearly a year - until Dec. 22 to submit their proposals.
The Pennsylvania Turnpike is among the nation's busiest toll roads, used last year by 188 million vehicles. It took in $571.5 million in its last fiscal year, mostly in tolls, and employs about 2,200 people.
For now, privatization talk centers on the turnpike's 359-mile east-west spine, not the Northeast Extension or four expansion spurs in the Pittsburgh area, said Kate Philips, Rendell's spokeswoman.
Early talks have involved estimates ranging from $2 billion to $30 billion for a turnpike privatization deal, Rendell said, stressing that the lower end is clearly unacceptable.
But if the price is right, proceeds would be invested in a fund whose interest income would feed solely into transportation needs.
"We don't take this step lightly," the governor said, but he added that Pennsylvania's transportation needs were too pressing to ignore any possible solutions.
Last month, a Rendell-created study commission reported that Pennsylvania needed $1.7 billion more per year to stabilize, maintain and modestly improve roads, bridges and public transportation. In Philadelphia, for instance, SEPTA faces a $37 million operating deficit for the rest of the fiscal year, which ends June 30.
Privatization was among the options suggested by the Transportation Funding and Reform Commission to raise cash for statewide transportation needs. And the turnpike was the most prominently mentioned source.
Leasing or selling it is just one of many funding options Rendell plans to present to state legislators by late January.
It appears to be more politically palatable than some of the commission's other proposals, such as a 12.5-cent per-gallon hike in the gas tax. Higher prices at the pump would be a tough sell to a state legislature still stung by voter ire over lawmakers' ham-handed bid for a pay raise.
"There is no political will in the legislature to raise any taxes or fees at this time," said State Rep. Keith McCall (D., Carbon), who stands to become the new House majority leader. "So I think it's very smart to at least see what the turnpike would be worth."
State Rep. Dwight Evans (D., Phila.) said mass transit sorely needs a dedicated funding source, but he said tax increases "should be a last resort." Looking at privatizing the turnpike, he said, "is an idea that is long overdue."
Antitax sentiment echoed among Republicans as well.
"If you can minimize the need for a tax increase by doing this, it should be explored more fully," said Craig Shuey, executive director of the Senate Transportation Committee and a spokesman for committee Chairman Roger Madigan (R., Bradford).
Rendell said any turnpike sale or lease would come with strong strings attached.
No proceeds could be used for nontransportation needs. Limits would be set on future toll increases. Private operators would have to adhere to a maintenance schedule. And current turnpike workers would have to be protected.
"We believe we can put those protections into the contract," Rendell said.
Officials at Teamsters Locals 77 and 250, which represent a combined 1,600 turnpike employees, would not comment yesterday on Rendell's suggestion.
Joe Brimmeier, chief executive officer of the Pennsylvania Turnpike Commission, called Rendell's plan "just one of many options" in the transportation funding debate.
Brimmeier said he would address the turnpike's work force today, acknowledging that despite Rendell's assurances, "there is always a fear of the unknown." Turnpike officials also will help the governor assess the pros and cons of two privatization deals in Indiana and Illinois, he said.
In March, Indiana Gov. Mitch Daniels signed a bill authorizing a 75-year lease of the 157-mile Indiana Toll Road for $3.8 billion to a Spanish-Australian consortium. The proceeds were earmarked for state highway improvements.
A year earlier, the same consortium paid $1.83 billion to lease the 7.8-mile Chicago Skyway for 99 years.
The Australian investor in those deals, Macquarie Infrastructure Group, is among those interested in the Pennsylvania Turnpike, Rendell said.
Several other states - including Ohio and Illinois, in addition to New Jersey - are also looking into taking their toll roads private.
In New Jersey, the idea first was floated last year by then-Gov. Richard J. Codey, who faced filling a multibillion-dollar budget hole. It died amid worries about jacked-up tolls or poor maintenance by private operators.
Gov. Corzine has since revived the idea by ordering a study of all the state's assets - including its three toll roads and the lottery - to weigh the costs and benefits of selling or leveraging them to raise money. State Treasurer Bradley Abelow said the study was still going on.
As for lawmakers seeing toll-road sales as politically benign, Indiana offers a cautionary tale.
In the Hoosier state, as in Pennsylvania, control of its House of Representatives shifted from Republicans to Democrats in last month's elections.
Among the reasons most cited: Voter outrage over adopting Daylight Saving Time and leasing the Indiana Toll Road to foreigners.