The movement to privatize large sections of state-owned highways is gaining momentum. Citigroup Inc. and Abertis Infraestructuras SA have won an auction — paying $12.8 billion — to lease the Pennsylvania Turnpike from the state of Pennsylvania for 75 years. Money from a turnpike lease would help the state close a $1.7 billion gap in transportation funding.
Terms of the lease agreement, if it gets final approval, would allow the operator of the turnpike to raise tolls by 25 percent Jan. 1. Tolls then would increase 2.5 percent annually or match the rise in the consumer price index if it is higher, according to Bloomberg.com.
The Bloomberg article makes no mention of improvements to the turnpike or the use of congestion pricing to maximize throughput. Based on the details published in the article — I reserve the right to retract my analysis if the reporting is incomplete — this looks like the wrong way to go about privatizing a state highway. Basically, the privatization here is a back-door way to jack up rates on one set of drivers (those who use the Pennsylvania Turnpike) in order to underwrite transportation improvements to other parts of the state. In this instance, privatization is a tool used to perpetuate Business As Usual transportation policies.
This deal does not take Pennsylvania toward a user-pays system. It looks like an old-fashioned money grab by the political elites in Pennsylvania. There are no discernible signs of added value for turnpike drivers. There are no indications that the tolls would be fine-tuned to encourage drivers to seek transportation alternatives during periods of peak demand. Tolls are hiked willy nilly to meet the needs of investors and the state of Pennsylvania.
By comparison, the deals that the Kaine administration has struck with private sector entities to build HOT lanes on Interstates 495 and 95/395 look vastly superior. In those deals, congestion pricing will maximize throughput and incentivize drivers to find alternatives during periods of peak demand. Money raised from tolls will be plowed back into major upgrades of the Interstates, including Bus Rapid Transit, thus expanding the alternatives to one-man-one-car. People paying the tolls in Virginia will receive tangible benefits for their money. History will show the HOT lane deals to be the signature transportation achievement of the Kaine administration.