Governor Edward Rendell in a forceful speech Feb 9 in Washington DC said he is determined on privatizing the Pennsylvania Turnpike.

In an apparent allusion to the Fumo indictment the Governor called the present Turnpike Commission a "a patronage haven." He said reform of the Turnpike by way of a longterm concession was a bipartisan and a practical, not ideological issue.

"We are looking at it out of necessity," Rendell said. He was speaking at an Invitation-Only event called the "White House Transportation Legislative Leadership Summit" held in the ornate Indian Treaty Room of the Old Executive Office Building Feb 9. It brought together about 50 state legislators, 33 of whom are chairs of transportation committees in state legislatures.

We weren't among the invitees, but snuck in a side door... No, a couple of good friends were sufficiently distinguished to be present and provide this account from notes they took.

Rendell said he believes a toll concession of the Pennsylvania Turnpike will produce about a billion dollars a year.

(By contrast the Turnpike as a state toll authority produced only a quarter of this in a current surplus of $247m with revenues of $612m offset by cost of operations of $365m. Depreciation of $215m and debt service expenses of $128m mean that the Turnpike presently earns no significant return at all on capital for the state. Annual report for FY2006. TRnews)

In order to get an equivalent cash flow to the concession's billion a year from motor fuels taxes (gasoline plus diesel) the state would have to raise tax rates by 12.5c/gallon, Rendell said. This was unthinkable because it would make the state the highest taxing in the country.

Wants annual income flow from concession

The Governor said he proposes to structure a concession contract so that it yields income for the state on an annual basis rather than providing it all in one upfront concession fee.

White House supports tolls

The meeting was opened by Karl Zinsmeister, White House chief of staff for domestic policy, who talked about the vital importance to the country of improved mobility and how congestion on the roads is as intolerable as electricity blackouts. Zinsmeister said better technology, and better policy were needed to reduce congestion. He said pricing and tolls were central to any congestion fix and that the country had to be open to world capital markets as part of the fix.

AAA had underlined the public support for tolls versus taxes he said.

Mary Peters sec transport followed speaking about the administration's congestion initiative.

Gov Mitch Daniels spoke about how the feds were not going to solve transport problems and the states had to take matters into their own hands.

Mike Krusee of Texas denounced the gas tax as unfair and inefficient as compared to pricing and tolls. Building new free roads he said is wrong because they simply constitute future liabilities without any revenue stream to support them.

Other speakers included Tyler Duvall, of USDOT, Doug MacDonald Washington DOT, Kathy Wylde, NY Partnership, Jim Smith of Merrill Lynch, Murray Bleach of Macquarie, Jack Finn of HNTB.

TOLLROADSnews 2007-02-13