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Monday, November 26, 2007

Turnpike Commission's version of MiniTru

Turnpike Commission Vice-Chair and bond attorney Tim Carson in the Morning Call offers a rebuttal to the Brouillette-Gilroy Commentary. Carson's editorial is as accurate as an Enron financial report:

  1. "I've got a bridge you might want to buy." Carson doesn't own the Brooklyn Bridge. Comparing a lease of the Pennsylvania Turnpike, approved by the General Assembly, to a fake sale of the Brooklyn Bridge wouldn't fool a fifth-grader.

  2. "This law was crafted by Gov. Ed Rendell and the General Assembly after months of study and debate. Lawmakers looked at many alternatives." False. Act 44 was created by a gut-and-replace amendment on the floor of the House, then amended by Senate leadership - it did not go through the committee process. There were no hearings on Act 44. The only study of tolling I-80 concluded that it should not be tolled. The Turnpike Commission claims to have an analysis of I-80 tolling conducted by Citibank, but refuses to release it publicly.

  3. "Act 44 generates enough funding to satisfy the needs identified by the Governor's Transportation Funding and Reform Commission, which cited a $1.7 billion annual gap in funding for our transportation systems. ... the Turnpike will provide PennDOT with direct payments averaging $1.67 billion annually over the next 50 years."

    Act 44 will pay $1.7 billion - in 2036. The Transportation Funding and Reform Commission didn't suggest we needed $1.7 billion in 30 years, but now. Act 44 provides only $750 million this year, and won't provide $1 billion until 2015. Furthermore, given historic inflation rates, $1.7 billion in 2037 will only be worth about $500 million today.

    If the federal government rejects I-80 tolling, then Act 44 will yield only $450 million - one-fourth the identified need.

  4. "No private conglomerate (foreign or domestic) can raise these amounts under comparable financial assumptions." Prove It. Open up the Turnpike and I-80 for competitive bidding - if the Turnpike Commission/Act 44 is the best deal, it will win. But the Morgan-Stanley report suggests that a Turnpike lease could generate twice as much, as did Governor Rendell on CNBC. A Turnpike lease may generate three times Act 44's revenue. And that is without tolling I-80 - competitive bidding of both toll roads should generate four to six times what Act 44 does.

  5. "The Turnpike will incur debt under Act 44 but there is a critical difference: The interest on our debt is free from federal and state income tax. That means it will carry a much lower interest rate than the debt incurred by a private investor."

  6. So What? Debt by the Turnpike Commission is owed by taxpayers, debt by a private operator is not. This argument is akin to saying the Turnpike Commission should buy me a new house, because it can get lower interest rates than I can. Under a lease, Taxpayers are on the hook for $0 in debt - all risk is on the hands of the private investors.

  7. The Nov. 14 op-ed took our management to task with irresponsible and unsubstantiated allegations." Substantiatiated:

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