Spending money on highways continues to be good politics in just about any state. But raising money for highways by leasing them to private companies is turning out to be another story. Indiana's Governor Mitch Daniels has found that out the hard way over the past couple of years. Pennsylvania's Ed Rendell may be about to learn the same lesson.
Rendell proposed in February that his state lease the Pennsylvania Turnpike to a private operator in return for $12 billion over 30 years. The idea initially prompted a polite debate over how best to raise road maintenance and construction funds, but as the issue gains attention, the argument is getting nastier.
Like his counterparts around the country, Rendell faces the discouraging fact that his state's needs for spending on roads, bridges and transit far exceed the resources available. The American Association of State Highway and Transportation Officials warns that federal gas taxes, which pay for 45 percent of the country's transportation infrastructure, will fall at least $11 billion short of national maintenance and construction requirements by 2009, and could miss by as much as $19 billion the following year. It's this reality that has helped spur toll-road leasing arrangements in Chicago, Indiana, Texas and Virginia.
According to one study, Pennsylvania will need $1.7 billion a year just to maintain its current roads and bridges and meet its mass transit obligations. Rendell argues that his leasing plan would raise $965 million a year for roads; another $760 million for transit projects would come from a tax he's proposed on gross profits earned by oil companies in the state.
Not surprisingly, the leasing idea has fallen with a thud at the Pennsylvania Turnpike Commission, which thinks it's doing just fine running the 530-mile system of toll roads. "We agree with the governor that there is a transportation funding crisis," says commission spokesman Carl DeFebo. But DeFebo ticks off a long list of reasons not to trust a private highway operator: the prospect of greater-than- usual toll increases; the lack of any long-term track record in Indiana or Chicago; and above all, uncertainties about service. The commission and its executive director, Joseph Brimmeier, lose no opportunity to recall the Valentine's Day snowstorm in February, when hundreds of motorists were stranded on highways operated by the state DOT while drivers on the turnpike encountered few problems.
Rendell has asked the investment firm Morgan Stanley to study the best way of using the turnpike to raise money for road projects, but ultimately the decision will lie with the state legislature, which has to approve any leasing plan. So far, it has been lukewarm about the idea, reflecting some misgivings on the part of the Republicans who control the Senate and want to win back the House next year. "A conservative would generally love the idea of privatizing," says pollster and political analyst Mike Young, "but he has constituents who don't like the idea at all."