Rendell outlines Turnpike privatization

April 16, 2008 12:02:19 PM PDT
Toll increases on the Pennsylvania Turnpike would be capped and some of the turnpike commission's 2,240 employees would eventually lose their jobs under a privatization plan released by the Rendell administration Wednesday.

Gov. Ed Rendell's aides said prospective private operators would have to submit bids by around the end of April and they hope the Legislature would approve a deal by mid-June. The timetable has been kept purposely vague.

If a lease of the turnpike is approved, a private firm would operate nearly all of the 530-mile 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.

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.

Troubled conditions in the borrowing market could affect how quickly bidders can put together their financing, he said.

"Credit is an issue right now in the financial markets, and this is a big, big transaction," 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 the same turnpike toll increase schedule envisioned by the law passed last summer that also authorized the I-80 tolls, currently awaiting federal approval.

Kienitz said the operator would have flexibility to add exits, upgrade technology and offer off-peak toll discounts.

The operator would have to honor all existing labor contracts until they expire, after which the company and unions would negotiate future terms.

A detailed set of operating standards would require the company to meet standards for safety and maintenance. There would be no restrictions on foreign ownership, an issue that some state lawmakers have raised.

Kienitz said the governor's office still needs to iron out some of the fine points of the bidding document, including how the Turnpike Commission's bank balances and debt obligations would be handled.

The prospect of killing the I-80 tolls is likely to appeal to many lawmakers whose districts are along the roadway, but a major unknown is whether any bidder will offer enough money to induce the votes required to replace the I-80 toll plan with a turnpike privatization plan.

A study released by the House Democratic Caucus last month argued that the I-80 tolling plan was more cost-effective than a turnpike privatization and warned that lawmakers may be tempted to spend the billions of dollars for other purposes.

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