Proposal for State Lease of the Pennsylvania Turnpike
Transportation Working Group (TWG)1
Green Party of Philadelphia
March 12, 2007
Governor Edward Rendell has proposed leasing the Pennsylvania Turnpike to provide a source of funding for transportation systems in the Commonwealth of Pennsylvania. He is thus actively throwing his support to one of a number of recommendations presented by the Pennsylvania Transportation Funding and Reform Commission in November 2006.2 Such “public-private partnerships” (P3s) are already under way elsewhere in the nation, such as in Texas, Indiana and Illinois and are under consideration in New Jersey. The purpose of such asset leasing is to offset the need to generate funds through more traditional but politically unpopular means such as raising taxes and fees. Both domestic and foreign investors are participating in the bidding process, including the Pennsylvania Turnpike Commission itself.
The PA turnpike is a significant source of revenue for the state ($571.5 million in FY 2005). Across its length of 530.5 miles, it was used by 188 million vehicles in 2006. The system also employs 2,240 people.3
At first glance, there seems to be nothing inherently wrong with leasing the turnpike, provided that the
* price is sufficiently high
* lease period is not too long
* contract is meticulously crafted to protect the public interest
* regulatory bureaucracy required to monitor the private owners is not too onerous or costly
* private owners do not default and the state is prepared to bail them out if they do
* state is prepared to bail out the private owners if they do default
* unions are induced to accept loss of control
* use of proceeds is restricted to public transportation operations and infrastructure
Clearly, this is a tall order. It is precisely the difficulty of achieving each of these prerequisites that the TWG does not support leasing the PA turnpike to private investors.4 Were the Commonwealth to relinquish its control,5 compliance with safety, security and environmental regulations, as well as protection of neighboring property and “competing” roadway interests, may well be compromised in the hands of a private investor. By the same token, if the governor’s primary motivation is to get top dollar, the lease terms he negotiates may not give sufficient recognition to important environmental and other issues that will reduce the final price. At a time when the public is increasingly aware of the need for sound environmental legislation and rail alternatives to car and truck traffic, a private company will strive to increase, rather than reduce, road traffic to maximize its profits.6 Semi-privatization would thus only serve to further buttress current societal norms that favor private automobiles as a superior expression of individual freedom and economic success. Government subsidies that provide excessive support to automobile travel reflect these values. In contrast, TWG has always held the view that the primary goal of a sound transportation policy must be to support and secure adequate funding for public transit. (For more details see our 2006 Survey “Getting Around Philadelphia.”)
The turnpike P3 should also be rejected for reasons of accountability. It represents an “outsourcing of political will”7 where sound decisions of elected officials are required to support sustainable transportation priorities. Moreover, a monetary “windfall” will undercut a public debate about the need to set these priorities, thus further eroding public trust in the government’s ability to represent the people’s best interests.
The term “public-private partnership” is itself very misleading. “Public” actually refers to “government”, as the public has no ability to enter into a contract of any form except through the government (assuming that the government, in a democracy, is an instrument of public will). “Private” means corporate enterprises. Ideally, government exists to promote and secure the general public welfare, in particular to manage the commons in the interest of current and future generations. Corporations, on the other hand, exist for the sole purpose of accumulating profit for their owners. There should be tension between the two, but in our government, corporations have been awarded the status of citizenship, so they are part of the public, and have a disproportionate role in both choosing government and shaping the “public” interest as expressed in government policy. In general, the government practice in this country is and has been to pick only the profitable firms, and to obtain “public” subsidies in order to create the infrastructure and provide ancillary services that protect their profitability.
The history of transportation shows this kind of behavior with eminent clarity. Railroads received huge gifts of land from the federal government in the 19th century in exchange for minimal obligations as “common carriers.” When urban transit became unprofitable as the result of a P3 that promoted the automobile, the remaining necessary transit became a public responsibility. While we may regard roads as a commons and their maintenance as a public responsibility, the massive expansion in number and size of roads to support the profitability of the automotive industrial complex can only be regarded as a huge subsidy in this ongoing “public-private partnership”.
The attitude of corporate power toward government is continually opportunistic. Inducing government to render overpayments on contracts for goods and services – “cost overruns” – is a common practice. Chiseling every sort of regulation to ensure that corporate goods and services provide their intended and advertised values safely, is also common, from pure food to “safe” cars.
Semi-privatization of the turnpike cannot be expected to break this mold. The ultimate weapon in the corporate arsenal is bankruptcy, which dumps the asset in a debilitated state back into the public’s lap. The P3s of health care and defense industry both illustrate what happens when the public surrenders direct control over the provision of needed social goods. Medicare and Medicaid have allowed the cancerous growth of for-profit medical bureaucracies and insurance companies. Hospitals siphon billions of tax dollars to their bottom lines while health care in this country and standards of public health deteriorate. The military industrial complex is a P3 that self-perpetuates itself in the production of armaments.
The impetus given to this partnership by our elected officials is made possible by decades of glorifying the corporate model – the financial marketplace – as the arbiter of value, and by degrading the commons and hence the role of the public and its government in ensuring the public welfare. This is the mentality that makes “new taxes” distasteful to so many citizens. It represents a complete capitulation to the current system of corporate values.
Corporations are going to be with us for a long time. Government will keep dealing with them, to purchase goods and services and, we hope, to regulate them in the public interest. Corporations will build the transit vehicles, and will be contracted to build the rights of way, the stations and, yes, some of the construction and maintenance projects of highways.
The effort to properly fund transit and reduce the subsidy for the automobile is only possible by means of a campaign in the public sphere, one that generates attention to the respective values inherent in automobiles and transit that negatively or positively affect our quality of life. Regardless of the strategy used to carry this out, corporations will take care of their own interests, without our help. We should not allow them to lease and take control of the PA turnpike and thus provide them with even more encouragement for doing so.
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1 The Transit Working Group has addressed transportation issues in recent publications – a brochure “With Gas Prices Going Through the Roof …” (2006) and Getting Around Philadelphia (2006) – and in responses to current transportation debates in Philadelphia.
2 Pennsylvania Transportation Funding and Reform Commission Report (November 13, 2006), pp. 97-98.
3 All PA Turnpike figures are based on its website at www.paturnpike.com.
4 Often-heard (past and current) charges of corruption, patronage, reckless spending and nepotism on the part of the Pennsylvania Turnpike Commission, the agency by which it is currently managed, notwithstanding.
5 The state would still have to exercise control in many areas, such as in monitoring contractual performance guarantees, adherence to maintenance standards, determining frequency and types of advertising venues, etc.
6 They would thus be likely to resist, and lessen the chances of, positive initiatives such as prioritizing high-occupancy vehicles and carpools.
7An expression cited by John H. Foote of Harvard University in his testimony “Understanding Contemporary Public Private Highway Transactionsâ€”The Future of Infrastructure Finance” to the Highways, Transit and Pipelines Subcommittee of the House Transportation and Infrastructure Committee, May 24, 2006.