During the past several years, the Rendell administration and the Pennsylvania General Assembly have been examining the present and future state of transportation in the Commonwealth -- most significantly, how to adequately finance repairs caused by years of deferred maintenance and decay.
Clearly, it is a policy question that cannot be delayed any longer. On the national level, and most recently in the Commonwealth with discussion about leasing our Pennsylvania Turnpike, we've read or heard about local and/or state governments filling budget gaps by leasing or selling public transportation assets to the private sector.
That leads me to ask, would a private, for-profit entity put Pennsylvania roads before its own profit margins?
Abertis Infrastructures, a Spanish toll-road company, will launch a multi-million-dollar public relations effort, including radio spots, direct mail, and field team promotion, attempting to win favor with the public and persuade the General Assembly to pass legislation authorizing the company to lease the Pennsylvania Turnpike for 75 years.
Why is Abertis spending millions of dollars on a statewide public relations campaign? If it has so much money to spend, why wasn't its "final binding offer" higher? This reminds me of the old adage of "sending good money after bad."
To date, the General Assembly has expressed disinterest in selling or leasing our premier state asset.
In 2007, when the idea of leasing the turnpike was first raised, the General Assembly chose not to pursue this option, and rather enacted the current funding law, Act 44. This law authorizes the Pennsylvania Department of Transportation to lease the in-state portion of Interstate 80 to the Pennsylvania Turnpike Commission for conversion to a toll road, and requires the Turnpike Commission to make payments of $83.3 billion to the Commonwealth over the next 50 years.
To date, under Act 44, the Turnpike Commission has provided PennDOT with $750 million and will provide an additional $850 million in the 2008-2009 fiscal year, without increasing taxes.
On June 16, the House of Representatives voted 185-12 against an amendment offered by Rep. John Maher from Allegheny County, which would have authorized state officials to execute the proposed concession/lease agreement between the Commonwealth and Abertis.
And on June 19 and 20, the House Transportation Committee held public hearings to receive testimony from stakeholders and financial experts analyzing the bid submitted by Abertis/Citi to lease the turnpike. Several key findings emerged, including:
The net economic value of the proposed bid is actually about $8.5 billion, not $12.8 billion.
The current funding law (Act 44), with or without the tolling of Interstate 80, provides more funds for transportation than the Abertis/Citi bid.
The lease proposal is predicated on an "unrealistically high" 12 percent rate of investment return.
Based upon historical Consumer Price Index increases, future tolls under the Abertis/Citi proposal could be 159 percent higher than under the Act 44 plan.
Transfer of the turnpike from public to private hands would eliminate important forms of public-sector accountability that currently exist.
Reports on the great financial expense this private company will undertake reinforces my July 4 statement that leasing the turnpike under these terms is "simply a bad business deal."
The dollars Abertis Infrastructures spends on consultants and lobbyists are not going to benefit our public transportation infrastructure. That money won't fix the roads and bridges which carry our children to school, our families to vacations at our state parks, or emergency personnel to our hospitals. Rather, private industry has a responsibility to its shareholders.
As Deputy Chief of Staff to the Governor Roy Kienitz aptly stated during public testimony on June 19, "They're profit-making companies, and their goal here is to get this project into their company, and hopefully make a profit doing it."
Clearly, the private sector's priority is not providing a top-quality highway, but finding a way to make the most money. Concerning public infrastructure, I find this philosophy outrageous. In public hands, the Pennsylvania Turnpike is available and accountable to us all.
Act 44 expanded the purpose of the Commission to apply tolls to Interstate 80, which will allow this highway to become self-sufficient. The tolls collected from Interstate 80, along with additional dollars generated from the main-line turnpike, will provide transportation money to use across the state to maintain other state roads, bridges and stabilize our mass transit systems.
For nearly 70 years, the safety, security, and service given to the users of the Pennsylvania Turnpike have been better than that of any other highway in the state. This was widely illustrated in 2007 during the snowstorm that stranded hundreds of motorists on Interstate 78 for more than a day, yet the turnpike remained open for travel.
As chairman, I will continue to work with my colleagues in the House and Senate, along with the governor, PennDOT and the Turnpike Commission to explore further funding opportunities such as public-private partnerships, also known as P3s, that would not include the Pennsylvania Turnpike. We must challenge ourselves to find alternative ways to make improvements that would avoid the additional costs, risks, and impact on governance which underlie this particular proposal.