Pennsylvania governor reveals ‘pike privatization plan

Gov. Ed Rendell

The Associated Press

4/17/2008

HARRISBURG, Pa. — Toll increases on the Pennsylvania Turnpike would be capped and some of the turnpike commission's 2,240 employees are expected to eventually lose their jobs under a privatization plan released by Gov. Ed Rendell's administration Wednesday.

The governor's aides said private operators would have to submit bids near the end of April and the Legislature could approve a deal by mid-June. Officials were intentionally vague about the timetable, but several legislative leaders said two months was not realistic.

If a lease of the turnpike is approved, a private firm would operate about 500 miles of the system for 75 years, and a controversial effort to introduce tolls onto Interstate 80 would be abandoned.

The goal is to raise billions of dollars to repair the state's crumbling roads and structurally deficient bridges and to subsidize mass transit costs. The Pennsylvania Turnpike Commission's operating revenue was $608 million in the fiscal year that ended in May.

Roy Kienitz, Rendell's deputy chief of staff, would not say how many groups are expected to bid. They must submit a $100 million letter of credit that could be forfeited if the General Assembly signs off on a deal but the bidder backs out.

"It's realistic to expect that the bids that come in are not going to be perhaps of the gargantuan size" that some have predicted, Kienitz said.

The operator would be allowed to increase tolls by 25 percent in January, and then each year by either 2.5 percent or the consumer price index, whichever is greater. That is designed to replicate the turnpike toll increase schedule envisioned by the law passed last summer authorizing I-80 tolls, a plan currently on hold pending federal approval.

Kienitz said the operator would have flexibility to add exits, offer off-peak toll discounts, upgrade technology or make the business operations more efficient.

Operating standards would require the company to meet safety and maintenance benchmarks. There would be no restrictions on foreign ownership, an issue that some state lawmakers have raised.

Kienitz said the governor's office is ironing out finer points in the bidding document, including how the turnpike commission's bank balances and debt obligations would be handled.

The turnpike commission issued a statement saying it was disappointed with Rendell's announcement. The statement also raised questions, including the need for alternative plans to rebuild I-80 and to handle greater traffic on the interstate from vehicles trying to avoid higher turnpike tolls.

The prospect of doing away with the I-80 tolls is attractive to many lawmakers whose districts line the roadway, including House Minority Leader Sam Smith, R-Jefferson.

Smith's spokesman described him as "100 percent supportive" of exploring a lease, but said Rendell should be more open about the process and has left the House with only about a dozen legislative days to consider a proposal.

Some lawmakers believe people who use the turnpike should not be saddled with the entire cost of infrastructure repairs, said House Majority Whip Keith McCall, D-Carbon.

To induce enough lawmakers to support the idea, bidders will probably need to put nearly $30 billion on the table, McCall said.

Even if the amount is closer to $20 billion, it will be tempting for legislators, said Rep. Rick Geist, R-Blair, a leader on transportation issues.

A study released by the House Democratic Caucus last month argued that the I-80 tolling plan was more cost-effective and warned lawmakers may try to divert money from a turnpike privatization deal to other purposes.