Pennsylvania Turnpike

Source: Pennsylvania Public Interest Research Group

Summary: 

In 2007, Pennsylvania Governor Ed Rendell pushed for the privatization of the Pennsylvania Turnpike as a way to raise money for the state's transportation budget.  A consortium led by Spanish company Abertis Infraestructuras and Citi Infrastructure Investors offered $12.8 billion to lease operation of the turnpike for 75 years.  As advocates educated the public and lawmakers about the risks involved with the road privatization, the future of the deal became uncertain.  The Legislature, which had the responsibility of approving the proposal, effectively killed the deal letting a deadline pass without a vote in September 2008.

 

History: 

In 2007, Pennsylvania Governor Ed Rendell pushed for privatization of the Pennsylvania Turnpike.  His administration proposed that the turnpike be leased for 75 years to a private entity.  In return, Pennsylvania would receive a cash windfall upfront to cover transportation budget shortfalls throughout the state. 

In 2008, a consortium led by Spanish company Abertis Infraestructuras and Citi Infrastructure Investors offered $12.8 billion to lease operation of the turnpike for 75 years.  The proposed deal allowed the Abertis/Citi consortium to raise tolls 25% the first year and 2.5% or the rate of inflation each year thereafter. 

State law required the Governor to get the winning bid approved by the Pennsylvania Legislature before the deal could be finalized.  Advocates testified to the legislature in June 2008, outlining the hidden costs of privatization to the state and community.  The Legislature effectively killed the deal by failing to vote on the matter by September 2008.  The Legislature suggested that the state look into alternative ways to increase state transportation dollars.

 

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Key Issues
Key Issues: 

One major issue that concerned advocates and drivers was the provision for annual toll increases in the proposed contract. As of 2009, it costs $22.75 to travel 358 miles on the turnpike.  The proposed toll increases would have raised that cost to at least $36.40 within ten years. 

The proposal also contained many hidden costs.  Under the lease proposed by Citi-Albertis, taxpayers would be required to compensate the private company for lost revenue from problems that might reduce toll-paying traffic on the road.  For example, certain emergencies that contributed to lost toll revenue would set off a contract clause requiring the state to compensate the company.

The 75-year concession lease also would have meant the loss of accountability and loss of control over transportation policy decisions. The contract would have included a "noncompete" agreement to ensure that the private company had a monopoly, meaning the state could not decide to build another major roadway in the area, no matter how badly needed. The state would be giving up decision-making authority related to a critical part of Pennsylvania's public infrastructure.    

An excerpt from USPIRG:

The Pennsylvania Turnpike is a major public asset worth billions of dollars, and its day-to-day operation directly impacts the lives of thousands of Pennsylvanians. Pennsylvania businesses rely on the Turnpike to deliver goods to their doors, commuters use it to get to work, and students rely on it to get to and from school. The Turnpike's operation also affects the thousands of homeowners who live nearby (through)...noise and car emissions..., changes in the traffic flow on local roads, billboard placement, or a myriad of other ways local communities can be affected.

Focusing solely on the Commonwealth's short term cash flow problems could significantly impair Pennsylvanian's long term financial health, and negatively impact our transportation policy for decades to come. The Turnpike is more than just a source of revenue; it is a vital component of our public infrastructure, and its operation is a keystone of Pennsylvania transportation policy.

 

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Advocacy
Advocacy: 

A campaign led by the Pennsylvania Public Interest Research Group (PennPIRG), called "Stop Misguided Road Privatization," helped ensure that the legislature and the public understood the risks involved with a long-term lease of the Turnpike.  PennPIRG issued reports and press releases that highlighted pitfalls of road privatization forthe media and public officials. 

Phineas Baxandall from PennPIRG and Ellen Dannin, a privatization scholar from the Pennsylvania State University Dickinson School of Law, testified before the Legislature in June 2008 about the hidden costs, loss of public accountability and potential community impacts of turning over a crucial thoroughfare to corporate control.