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Tuesday, January 15, 2008

Study on "Toll Road Privatization"

A study by researchers from Penn State and Wayne State makes the claim that toll road privatization will cause several negative impacts. However, they don't actually study "toll road privatization" but study the effects of higher tolls.

1) Their point of analysis is the Ohio Turnpike - which was and is run by a government agency. They do not look at any leased road, in the US or abroad.
2) Their analysis is of the effect of higher tolls - which they assume would rise even higher with a private operator.
3) They assume no efficiency gains or improvements by a private operator - which they would have if they had examined privately managed toll roads, rather than the Ohio Turnpike Commission (which is only slightly less patronage ridden than the PA Turnpike Commission).

Given this, what are the implications for PA?

1) Act 44 raises Turnpike tolls by 25% in 2009 and 3% annually thereafter, and tolls the currently free I-80.
2) These higher tolls lead to diversion to smaller, free roads.
3) A Turnpike lease agreement could ensure lower Turnpike tolls, and no tolls on I-80.
4) In fact, a Turnpike Lease would likely result in less diversion to other roads than Act 44.

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