Interesting question posed by National Journal on tolling of existing freeways, with particular focus on tolling I-80 in Pennsylvania, offering several experts the opportunity to respond. Pennsylvania Congressman Glenn Thompson is among those with comments.
Here is a recent blog post with some of our thoughts on the proposed tolling of I-80. Click here for more on Act 44 and I-80 tolling.
With a renewed interest in tolling Interstate 80, I find it necessary to reiterate several points of concern surrounding Act 44 and its implications on Pennsylvania’s economic future:
• Act 44, as it currently stands, is in violation of federal law requiring that tolls on federal highways be used exclusively on the highway itself. The tolls collected from I-80 would be used for other transportation projects, including funding mass transit in Philadelphia and Pittsburgh.
• In a November 2006 report, the Transportation Funding and Reform Commission recommended that “no additional funding should be provided for highways, bridges and transit unless a series of parallel actions are taken to reform funding structure and a number of transportation business practices.” Act 44 is designed to generate additional funds without putting the required reforms in place.
• The notion that transportation is underfunded is merely a myth. PA’s spending on transportation has increased 121% from 1995-2009, more than triple the rate of inflation. Even before Act 44, highway spending had increased 90% in 2007 alone, facilitating one of the highest gasoline tax rates in the country.
• Pennsylvania’s prevailing wage law requires all public projects to pay state mandated wage rates, increasing the cost to taxpayers by as much as 30%. In fact, by not allowing the market to determine wage rates, taxpayers pay an additional $9 billion dollars annually to pay these union wages. By continuing this policy, true transportation reform remains unattainable.
• Finally, Act 44 would place tolling I-80 in the hands of the notoriously corrupt and inefficient Pennsylvania Turnpike Commission. It is no coincidence that State Sen. Vince Fumo, who was convicted on 137 counts of conspiracy and fraud, frequently used the PTC to spend “other people’s money”. Giving the PTC another sweetheart deal is simply a recipe for disaster.
Letting private companies competitively bid on the rights to manage tolling is a safe and cost-efficient solution.
Tom Barnes in the Post-Gazette has a story on how some Pennsylvania lawmakers, who hail from nowhere near the I-80 corridor, want the Turnpike Commission to reapply to toll I-80 across the state.
Their theory is that after you have been rejected, the best plan is just to ask again and again - which every stalker in American will tell you is charming - and that the new administration is more likely to ignore the law (which requires that all the funding under the tolling program be used to rehabilitate the federal highway). PA Water Cooler has more on the latest development.
Here is some of our prior writings on I-80 tolling:
Governor Rendell has promptly dumped Mitchell Rubin as chairperson of the Pennsylvania Turnpike Commission and replaced him with Michael Pratt of Pepper Hamilton LLP. Toll Roads News has more on the firing.
Meanwhile, the Allegheny Institute notes that Pennsylvania's transportation funding plan continues on the expectation that I-80 will be tolled in a couple of years, despite the federal government's rejection of that plan.
Some of the Turnpike Commissioners think that tolling I-80 across PA remains a strong possibility, and that the federal government did not "reject" the tolling plan. See the story in the Post-Gazette (HT to GrassrootsPA). PennDOT Secretary Biehler (who serves as a Turnpike Commissioner as part of his duties, though unlike others, would not personally profit from tolling I-80) believes the federal law would have to be altered to allow for I-80 tolling. Freshman Congressman Glenn Thompson has introduced legislation that would do the opposite - and prevent tolling of I-80.
Capitolwire has some info in their daily "Under the Dome" column (subscription)
Timothy Carson, vice chairman of the Turnpike Commission, told the House Appropriations Committee during Thursday’s budget hearing that the application “was not rejected.” “The specific language of the Federal Highway Administration said that they were unable to move the application forward at this time,” Carson said. “It was a technical point that they raised.” But one of the other turnpike commissioners, PennDOT Secretary Allen Biehler said earlier that the application was not approved and said "until the law is changed," he saw no reason to reapply. Carson added that Washington officials currently are occupied with the stimulus package and setting up the new Obama Administration, as well as the re-authorization of the transportation bill and the Highway Trust Fund’s empty coffers. “All of this is happening in Washington and we would be deluding ourselves if we thought that our application would get any real attention at this point,” Carson said. He went on to say that as the Legislature looks at the future of transportation in Pennsylvania, there may be “an opportunity for some kind of renewed political consensus to gel” regarding funding through tolling, the gas tax and other means.Advice to Mr. Carson - if a girl says "I'm not interested in getting involved with anyone right now" or "it's not you, its me" - she really means she's not interested in you & it's not her, it's you. Likewise, when the federal government says they are "unable to move the application forward", it also means you've been rejected.
There are several stories on privatization in the news lately on a number of fronts. First up is in the real value of toll roads - which should be read by Pennsylvania residents and lawmakers of all mindsets:
Senate Republican Majority Leader Dominic Pileggi told the AP that he won't allow a debate or vote to occur on the Senate floor regarding the leasing of the Pennsylvania Turnpike.
While we knew the political challenges of stripping the Senate of its use of the Turnpike Commission as a patronage playground for placing political friends and family, we always thought that the choice between massive tax increases and bonded debt on the people of Pennsylvania would eventually be trumped by the financial benefits of earning interest on a multi-billion dollar lease payment.
But it is understandable why Pileggi and others like Rep. Markosek won't even bring the issue up for debate -- the benefits of the Turnpike lease will reveal the fraud they are perpetrating on the people of Pennsylvania by defending the Turnpike Commission and Act 44.
If this issue is as dead as these elected officials say it is, why not have a real debate and vote (and not the fast one Joe Markosek tried to pull in June).
It's official, the Pennyslvania Turnpike Comission's attempt to toll I-80 has been denied by the Federal Highway Administration. See our news release for details. Like the Commonwealth Foundation, Governor Rendell states lawmakers need to seriously consider leasing the Pennsylvania Turnpike. House Republican leader Sam Smith calls on the Turnpike Commission to stop borrowing.
FHWA Press Release
FHWA Full Letter Explaining Denial
News Stories:
Central Penn Business Journal
Pittsburgh Tribune-Review
Philadelphia Inquirer
Blog coverage:
Tolls Roads News
GrassrootsPA
Reason's Out of Control
Press Release from Congressman John Peterson
We have revised our PolicyPoints on Act 44 and Transportation Funding
More Resources:
Turnpike Lease/Bid
TurnpikeFacts.com
Full Concession Agreement - Governor's Office
Synopsis of Lease Requirements/Limits - Governor's Office
Concerns About Turnpike Lease Misguided
Revenue Comparison of Turnpike Lease vs. Act 44
P3 Information
The Emerging Paradigm: Financing and Managing Pennsylvania’s Transportation Infrastructure and Mass Transit
Leasing State Toll Roads FAQ- Reason
Indiana has benefited from toll road lease
Indiana Toll Road: One Year Later - Reason
Indiana Toll Road Better than Before
Leasing the PA Turnpike: Response to critics - Reason
Foreigners Create Jobs
Act 44 Information
Act 44 and Transportation Policy Points
Turnpike Commission to owe $30 to $70 billion after Act 44
Act 44 - No Limits on Turnpike Tolls
Morgan-Stanley report - Morgan Stanley
Rendell on CNBC - "Act 44 wasn't good enough"
I-80 Tolling
New analysis of where I-80 tolls will go
I-80 Tolling Application - PTC
IRRPP Tolling Limits (Letter to Rep. Geist)
Letter regarding federal approval - FWHA
I-80 Tolling Study - PennDOT
I-80 Lease and other documents - PTC
No I-80 Tolls = Less money for SEPTA
Turnpike Commission scandals, lobbying, patronage, efficiency
The Turnpike Commission's Family Tree
Fumo Indictment
Fumo's farm -
Patronage hires by Joe Brimmeier
More on Brimmeier
Toll on integrity: The turnpike chairman owes the public an answer
Turnpike Lobbying (state)
More on Turnpike Lobbying (State)
Turnpike state lobbying (2007-08)
Bill on Turnpike Lobbying
Turnpike propoganda on I-80 tolling
Mon-Fayette promised as bargaining chip
Taxpayer funded "study" with fabricated results.
Turnpike Commission vs. PennDOT - Efficiency Measures
Pennsylvania Turnpike is One of Country's Least Efficient Toll Roads
Patriot News editorial notes that the proposed Turnpike lease deal would make PA a model for the nation.
It's not that the public-private partnership concept being pushed by Rendell is unique. Twenty- five states have either sold or leased highway and transit infra structure to private enti ties, including eight in the past three years, as an alternative funding mechanism in the face of tight budgets. Other parts of the world, particularly Europe, have long used these partnerships. Rendell's proposal has generated intense interest because it would be the largest deal of its kind ever in the United States.The P-N editorial board remains "neutral" on the proposal. However, the Scranton Times Tribune is not, arguing that "By the Numbers ... For drivers, the turnpike lease is a better deal."
Here is a roundup of news coverage of our Turnpike Family Treeand video:
Joe Brimmeier, the turnpike commission’s chief executive, is featured at the top of the Commonwealth Foundation’s “family tree” poster of turnpike figures. Brimmeier said the turnpike commission’s “superior credit rating” shows that it is well run.
We have also gotten some negative feedback, including one semi-anonymous message, essentially saying that this corruption doesn’t matter – we still shouldn’t allow anyone to make “a profit” on the Turnpike, but we should keep it in “public control.”
Nathan Benefield's response:
Do you believe the government should take over all farms, or should we continue to let farmers profit off our need to eat? Should government take over the trucking industry, Microsoft, Wal-Mart, and so forth, since all those people are “profiting” off their sales to us. Of course the private company plans to turn a profit, but there is nothing evil about the free market.
What is naïve is thinking that a government agency like the Turnpike Commission will ever act in the public interest, or will ever be efficiently run.
Our efforts to expose waste and corruption goes to show that the Turnpike is “not owned and controlled by the people of Pennsylvania,” but it is controlled by a group of self-interested politicians and political appointees who “profit” from tolls.
Congressman Peterson, the lead critic of tolling I-80, makes an astute observation: the Turnpike Commission's financial model relies on I-80 traffic growing 2.5% annually. Yet a recent report and news stories highlight the fact that drivers are driving lass due to higher gas prices. And that is without new tolls on I-80..
This 2.5% growth model was also used by the academics hired by House Democrats to do their own study (their model only expected 1% traffic growth if the Turnpike was leased to a private operator, with no justification for the different traffic models).
In addition to the questionable model of traffic growth, the heavy borrowing based on future revenue, mandatory payments to PennDOT, and no caps on tolls (on either I-80 or the Tunpike), increase the likelihood that tolls will increase even higher than the Turnpike Commission has promised.
Critics of a Turnpike lease—including Rep. Joe Markosek—have offered the claim that Act 44, even without tolling of I-80, represents more revenue to taxpayers of the state than a lease. That claim is erroneous. The Commonwealth Foundation projects that, over the next 50 years, a lease deal would generate $37 billion more for the state than Act 44, absent I-80 tolling.
Under the contract to toll I-80, the Turnpike Commission promises to pay $450 million annually to the state if I-80 is not tolled ($22.5 billion over 50 years). A Turnpike Lease would - even using an estimate of 7.5% interest, rather than Governor Rendell's generous 12% estimate - generate far more revenue for the state.
While the Turnpike Commission talking points mention costs of the lease (namely the cost of policing the Turnpike), they fail to mention the savings, including $87 million annually in subsidies from the state Motor License Fund and Oil Company Franchise Tax.
Pennsylvania Transportation Partners would pay the state an an estimated $3.3 to $4.2 billion in the Corporate Net Income Tax over the 75-year lease.
Click here for our news release.
Here is my letter to the editor in the Intelligencer Journal
Your July 28 editorial, “No free way,” implies that tolling I-80 is somehow more “fair” than a Turnpike lease. Your definition of fairness seems bizarre.
Tolling I-80 would not mean lower tolls for Turnpike drivers. The Turnpike Commission promises to raise tolls 25 percent next year and three percent annually thereafter (in addition to tolling I-80). The Fitch bond rating service downgraded the Turnpike Commission's rating, believing tolls will be dramatically higher. In contrast, a lease would cap tolls at a rate about equal to, likely less than, the Commission's plan.
Is it fair to charge drivers on both roads more, without generating additional revenue or ensuring better service? Obviously, a lower toll on both roads is a better option.
You also misstate facts about I-80 tolling, claiming, "all of this money will be used for bridge and road repairs on I-80." Actually, about 40 percent of I-80 tolls will fund other roads and bridges and mass transit.
Shifting to a toll system to fund transportation infrastructure might be a good move, but only with:
The backroom deal to give the inefficient and patronage-ridden Turnpike Commission authority to toll additional roads fleeces all Pennsylvania taxpayers and drivers.
- A reduction in the gas tax, which has been charged to construct and rehabilitate I-80. Tolls should replace our current tax system, not be in addition to what we currently pay.
- Competitive bidding to ensure that motorists and taxpayers receive the best deal -- in terms of state revenue and toll limits.
The Commonwealth Foundation submitted a letter to the Federal Highway Administration in opposition to granting any authority to the Turnpike Commission to toll additional highways.
Click here for our News Release and click here for the letter itself.
While I have previously posted that I-80 tolls will mostly go to other projects, rather than stay on I-80, the Turnpike Commissions new application for tolling I-80 changes that (click here for original data and here for new spreadsheets) - about 30% of I-80 tolls go to pay PennDOT over the 50-year plan (and 41% over the first 40 years, which is the end of the orginal analysis).. Of course, a number of other changes have been made to the numbers, that make the new plan as bad (or worse):
The Pennsylvania Turnpike Commission has resubmitted their proposal to toll I-80 - full application, letter from the Governor, and Appendices A through L are available for download here.
Readers will note that this follows 8 months of delay, and pressure from both the Governor and the Commonwealth Foundation.
Vindy.com has an editorial against I-80 tolling, noting
The state pledges to spend nearly $200 million more on maintenance than it is spending now, But revenue from the road is projected at $1 billion a year for the first 10 years and as much as $2.5 billion a year later.We have pointed this out before, and have analyzed the Turnpike Commission's own numbers on this.
Where will the rest of the money go? And why should Washington give Harrisburg such a money-making asset? Somehow we don’t think that a toll road producing four to 10 times what is needed to maintain it is what President Eisenhower envisioned when he championed an interstate highway system more than 50 years ago.
Though the Turnpike Commission unveiled their plan for capital improvements on I-80 (if they get approval to toll it), it remains the case that most of the revenue generated from I-80 tolls will be used for payments to PennDOT for other roads and bridges and for mass transit.
This of course, makes it highly unlikely that the Turnpike Commission will get federal approval to toll I-80 (without Congressional action) as the program they are applying for requires toll revenue to be reinvested in the road itself. For readers in the Scranton area, I will be discussing this issue on WYOU TV tonight at 7. Also, see why the Turnpike Commission running I-80 would not be such a good idea (and hence I-80 should be competitely bid, if it is to be tolled), given their woeful ineffeciency in our latest PikeTV video.
Click here for our news release explaining why, if legislators insist on tolling Interstate 80, it should be competitively bid.
Also, here is our video on the unveiling of a billboard promoting TurnpikeFacts.com, our website highlight facts and exposing myths about the proposed Turnpike lease.
