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GUEST COLUMN/ |
FOR IMMEDIATE RELEASE |
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State
Rep. Joseph Markosek |
  
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Dear Editor: Please consider this in response to your Thursday, July 3, 2008, editorial: "Turnpike: Leasing group would operate roadway much more effectively".
Leasing the turnpike: a multi-generational mistake
By House Transportation Chairman Joseph Markosek
Your July 3 editorial raises three points of concern relative to a private lease of the Pennsylvania Turnpike: operational efficiency, the value of the bid by Abertis/Citi, and the proposed reinvestment program. I disagree with your position, and would like to briefly address these matters individually.
First, while operational efficiency is frequently touted by the proponents of privatization as the most important consideration in handing over government functions to the private sector, that simply isnt the case. In their presentation to shareholders prior to leasing the Indiana Turnpike, Macquarie Infrastructure Group reported there is "no significant 'operational] cost savings envisaged." In fact, the 2007 report of the financial advisor to Gov. Rendell assumes no operational cost savings in having a concessionaire manage the turnpike.
Second, the net economic value of the proposed lease is near $8.5 billion dollars, not $12.8 billion. This is because the lease agreement requires that prior to spending any monies on transportation programs, the Commonwealth must first use these dollars to pay financial transaction costs. This includes paying off existing turnpike bond obligations, paying a concession fee to the Commonwealths Financial Advisor, and a set-aside for funding all future state police operations on the turnpike.
Finally, the proposal is predicated on an "unrealistically high" (12 percent) rate of investment return, according to testimony provided to the House Transportation Committee on June 19 and 20. Financial experts affiliated with the Pennsylvania State University and the Commonwealth Foundation affirmed that the failure to meet the 12 percent target means that the fund would be depleted very early into the term of the lease, possibly within the first 15-36 years.
For the concessionaire, the true value driver is not savings from any operational changes, but rather the guarantee that for 75 years they - not the government, not the public - have exclusive control over toll increases. Guaranteed toll increases are a required element of any concession agreement if payment is to be made by a private partner to the state. The current proposal allows tolls to increase at 2.5 percent annually or the Consumer Price Index, whichever is greater. Based upon the historical CPI increases, future tolls under the lease proposal could be 159 percent higher than under Act 44, the Commonwealths current funding law.
A matter not addressed in your editorial, but of equal significance, is that the transfer of the Pennsylvania Turnpike from public to private hands will eliminate important forms of public-sector accountability that currently exists. Pennsylvanians will lose the legal rights to information derived from state and federal freedom of information acts, open meeting laws, sunshine laws, constitutional protections, civil service regulations, and citizen access through government committees and oversight boards. These are important mechanisms that provide transparency, and can keep turnpike operations accountable to public goals, values and due process.
For these, and many more reasons, we simply cannot accept the bid and concession agreement placed before us by the Abertis/Citi consortium. Although to some, privatizing the turnpike may seem like free money, it is clear that this "free money" comes with great costs. We must challenge ourselves to find alternative ways to make improvements that would not entail these additional costs, risks, and impact on governance entailed by this particular contract.
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