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Quick lump sum not long-term fix
By Jessica VanderKolk, jvanderkolk@altoonamirror.com
POSTED: May 25, 2008
Retired trucker Lynn Merrill gave state lawmakers advice to stop the “highway robbery” of leasing the Pennsylvania Turnpike or tolling Interstate 80: cut transportation management positions.
“If we could clean out three-quarters of them, take that money and lease out the office space, we’d have enough income to at least help the road system,” said Merrill of Hollidaysburg.
Merrill disagrees with both plans, the state’s main considerations to raise the $1.7 billion a year needed to maintain Pennsylvania’s road and bridge infrastructure.
Act 44, passed into law last summer, would allow tolling on I-80, although the state must submit more information to the Federal Highway Administration and receive approval.
It also mandates Pennsylvania Turnpike Commission payments to PennDOT and would provide about $946 million a year.
Gov. Ed Rendell has pushed for leasing the turnpike, as long as it would provide more funding than tolling I-80. He released the $12.8 billion high bid Monday, which he said would raise $1.1 billion a year in the first decade of a 75-year lease.
The Legislature must approve the deal before the state accepts it.
Some academics and others in the transportation industry couldn’t find much in the plan worth praising.
Jim Runk, president of the Pennsylvania Motor Truck Association, said leasing the turnpike is bad public policy.
“This is an exceptional investment and something we need to keep in control and not hand it out to some foreign corporation with investors,” he said.
State Rep. Rick Geist, R-Altoona, a longtime member of the House Transportation Committee and advocate for public-private partnerships, said he already has heard “appalling” misinformation on the deal, some related to the bidding team. Many have criticized foreign investment in a state asset.
“First of all, Citicorp is in New York City,” he said of the parent group of Citi Infrastructure Investors, part of the bidding team. “Abertis isn’t the Spanish government.”
The winning bid team also includes Abertis Infraestructuras, an infrastructure manager based in Spain, and Criteria CaixaCorp, an investment group and major Abertis shareholder.
The one benefit to the leasing plan is the “big wad of cash” in the short-term to relieve some problems, said Phineas Baxandall, senior analyst for tax and budget policy for the Pennsylvania Public Interest Research Group. Baxandall wrote a report for the group showing its opposition to road privatization.
“The problem is, if it’s short-term relief that’s compounding some long-term problems, it’s not a real solution,” he said. “You’ve just taken away the toll revenue for the next 75 years in order to get a short infusion of cash.”
Baxandall said any deal should be based on long-term benefits.
“And this looks like a real loser,” he said of the state’s plan.
He and Ellen Dannin, a professor at Penn State’s Dickinson School of Law, wrote an op-ed piece on the deal.
They point out that Pennsylvania will “pay dearly” to hire lawyers, accountants and consultants to enforce the 686-page agreement.
“Litigation is expensive, and this will be complicated litigation,” Dannin said. “It will need financial experts and other experts, which adds costs most people are not going to be thinking about. Most people are focusing on tolls as if it’s the only thing that matters.”
She and Baxandall said the compensation events present in the agreement allow the state less control over what happens to the turnpike.
“Anything that interrupts their flow of paying customers is something they need to be compensated for,” Baxandall said, “which isn’t necessarily in the best interest of the turnpike.”
Geist said one thing not typically explained is the 20 percent growth in turnpike traffic the bidding firms hope to induce.
“If they can do that, they won’t raise tolls,” he said. “They don’t want to do that, drive people off the turnpike. If you get more trucks off of [routes] 22 and 30, believe me, that’s a home run for those roads.”
Some say the solution to funding state roads — however politically unlikely with continually rising gas prices — is raising the fuel tax.
Runk said the tax is the fairest way to pay.
“It puts the responsibility on everybody, not just the people who use a certain road,” he said. “Plus, you don’t have to put a new system in place, and you don’t have to pay back any debt. You can start charging more fuel tax tomorrow.”
Peter Swan, a transportation expert at Penn State Harrisburg, also has advocated for a higher gas tax but said he’s beginning to think a vehicle-mile tax is the only way out of the funding problem.
“It’d be possible to rig something up with the car’s odometer,” he said. “When you fill up, it would charge you for those miles. It could be based on whatever type of vehicle you’re driving.”
Geist called the lease plan “extraordinary” and said it deserves serious consideration from lawmakers.
Baxandall argues that he doesn’t think people have seriously considered alternatives.
“Because something is not so bad in the short-term and you can’t figure out how disastrous it’s going to be in the long-term, doesn’t make it the best alternative,” he said. “There’s a whole lot of change going on in the transportation realm as gas goes to $4 a gallon.”
Mirror Staff Writer Jessica VanderKolk is at 946-7465.
“If we could clean out three-quarters of them, take that money and lease out the office space, we’d have enough income to at least help the road system,” said Merrill of Hollidaysburg.
Merrill disagrees with both plans, the state’s main considerations to raise the $1.7 billion a year needed to maintain Pennsylvania’s road and bridge infrastructure.
Act 44, passed into law last summer, would allow tolling on I-80, although the state must submit more information to the Federal Highway Administration and receive approval.
It also mandates Pennsylvania Turnpike Commission payments to PennDOT and would provide about $946 million a year.
Gov. Ed Rendell has pushed for leasing the turnpike, as long as it would provide more funding than tolling I-80. He released the $12.8 billion high bid Monday, which he said would raise $1.1 billion a year in the first decade of a 75-year lease.
The Legislature must approve the deal before the state accepts it.
Some academics and others in the transportation industry couldn’t find much in the plan worth praising.
Jim Runk, president of the Pennsylvania Motor Truck Association, said leasing the turnpike is bad public policy.
“This is an exceptional investment and something we need to keep in control and not hand it out to some foreign corporation with investors,” he said.
State Rep. Rick Geist, R-Altoona, a longtime member of the House Transportation Committee and advocate for public-private partnerships, said he already has heard “appalling” misinformation on the deal, some related to the bidding team. Many have criticized foreign investment in a state asset.
“First of all, Citicorp is in New York City,” he said of the parent group of Citi Infrastructure Investors, part of the bidding team. “Abertis isn’t the Spanish government.”
The winning bid team also includes Abertis Infraestructuras, an infrastructure manager based in Spain, and Criteria CaixaCorp, an investment group and major Abertis shareholder.
The one benefit to the leasing plan is the “big wad of cash” in the short-term to relieve some problems, said Phineas Baxandall, senior analyst for tax and budget policy for the Pennsylvania Public Interest Research Group. Baxandall wrote a report for the group showing its opposition to road privatization.
“The problem is, if it’s short-term relief that’s compounding some long-term problems, it’s not a real solution,” he said. “You’ve just taken away the toll revenue for the next 75 years in order to get a short infusion of cash.”
Baxandall said any deal should be based on long-term benefits.
“And this looks like a real loser,” he said of the state’s plan.
He and Ellen Dannin, a professor at Penn State’s Dickinson School of Law, wrote an op-ed piece on the deal.
They point out that Pennsylvania will “pay dearly” to hire lawyers, accountants and consultants to enforce the 686-page agreement.
“Litigation is expensive, and this will be complicated litigation,” Dannin said. “It will need financial experts and other experts, which adds costs most people are not going to be thinking about. Most people are focusing on tolls as if it’s the only thing that matters.”
She and Baxandall said the compensation events present in the agreement allow the state less control over what happens to the turnpike.
“Anything that interrupts their flow of paying customers is something they need to be compensated for,” Baxandall said, “which isn’t necessarily in the best interest of the turnpike.”
Geist said one thing not typically explained is the 20 percent growth in turnpike traffic the bidding firms hope to induce.
“If they can do that, they won’t raise tolls,” he said. “They don’t want to do that, drive people off the turnpike. If you get more trucks off of [routes] 22 and 30, believe me, that’s a home run for those roads.”
Some say the solution to funding state roads — however politically unlikely with continually rising gas prices — is raising the fuel tax.
Runk said the tax is the fairest way to pay.
“It puts the responsibility on everybody, not just the people who use a certain road,” he said. “Plus, you don’t have to put a new system in place, and you don’t have to pay back any debt. You can start charging more fuel tax tomorrow.”
Peter Swan, a transportation expert at Penn State Harrisburg, also has advocated for a higher gas tax but said he’s beginning to think a vehicle-mile tax is the only way out of the funding problem.
“It’d be possible to rig something up with the car’s odometer,” he said. “When you fill up, it would charge you for those miles. It could be based on whatever type of vehicle you’re driving.”
Geist called the lease plan “extraordinary” and said it deserves serious consideration from lawmakers.
Baxandall argues that he doesn’t think people have seriously considered alternatives.
“Because something is not so bad in the short-term and you can’t figure out how disastrous it’s going to be in the long-term, doesn’t make it the best alternative,” he said. “There’s a whole lot of change going on in the transportation realm as gas goes to $4 a gallon.”
Mirror Staff Writer Jessica VanderKolk is at 946-7465.
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View Comments: | 1-2 | Post a comment
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Chuxspringer
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05-27-08 8:06 AM
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Amen & Geist should stick to pedaling.
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jimdandy
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05-25-08 9:39 PM
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All I can say is that the state better keep control of these roads or or it will become a real mess. It will be like de-regulating, which never works!!! You will have higher tolls & less maintenance.
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