Editorial: Leasing the Pa. Turnpike
Take the next exit
It wasn't much of a winter for potholes, but jarring craters are opening up now in Gov. Rendell's proposal to lease the Pennsylvania Turnpike.
Filling those chuckholes will take more than a road crew of spin doctors.
While the governor deserves high praise for pursuing a long-term solution to fixing the state's crumbling roads and bridges while supporting mass transit, he's offering too rosy a traffic report on the turnpike deal.
Better for Pennsylvania would be the far less drastic plan to add tolls to I-80 - with discounts carved out for local users of that highway. State officials will get more mileage out of that plan, while steering clear of the turnpike lease hazards.
The lease plan calls for the state to give a Spanish-U.S. consortium the right to operate the turnpike for 75 years, in return for a $12.8 billion payment, minus about $2.3 billion to pay off existing debt.
The biggest problem with handing over the already well-maintained turnpike to a private vendor is that the state's financial return may be a good deal less than advertised.
That's becoming clear now that analysts have had since mid-May to look at the proposal. That's when the Rendell administration awarded the contract after a three-way bidding contest.
The governor's advisors estimate that the deal with Abertis Infraestructuras, of Barcelona, and Citi Infrastructure Investors, of New York, would yield $1.1 billion a year for transportation projects. But that's based on an optimistic 12 percent return on investing a possible $10.5 billion lump-sum net payment.
If the actual return proves to be closer to the 8.5 percent that state pension-fund managers foresee on their investments, that would slice more than $300 million from the transportation fund that Rendell hopes to create.
The state's nest egg could be even smaller by the time any deal is finalized, since the bid from Abertis would shrink if interest rates rise. That would leave less for the state to invest.
And there are other provisions in the proposed lease that could even force the state to compensate the private turnpike operator.
That could happen, for instance, when state highway improvements are shown to draw toll-paying traffic away from the turnpike. That would cost taxpayers, as well as hamstring sensible transportation policy planning.
From the beginning, it has never been clear why the turnpike lease was a better alternative than the commonsense tolling of I-80. Users of this interstate across the state's northern reaches talk as if a toll-free I-80 is a make-or-break issue for the state's economy. Well,
? As any vacationer heading west in the family minivan can attest, the road is tolled across the next three states, at least.
As for commerce, how come Pennsylvania officials are content to let traffic head for the New York ports toll-free, while making Philadelphia port cargo haulers stop at the toll booth?
Tolling I-80 and taking steps to clean up patronage at the Pennsylvania Turnpike Commission offer a far more realistic strategy than leasing the turnpike to meet state transportation needs.