2009-04-02 / Local & State

Pew Study Assesses Failed PA Turnpike Lease Plan

By Petrer Jackson ASSOCIATED PRESS WRITER

HARRISBURG, Pa. (AP) - State officials made mistakes that undermined a plan to lease the Pennsylvania Turnpike to a private company, according to the findings of an independent study released Tuesday.

The Pew Center on the States said its study's conclusions are meant to be lessons that could help Pennsylvania and other states considering similar publicprivate transportation projects in the future.

Gov. Ed Rendell advocated leasing the 531-mile turnpike, which would have been the nation's largest public-private infrastructure deal, as a politically painless way to generate $1 billion a year to finance an expansion of the state's ailing highways, bridges and mass transit systems. But the plan never gained traction in the Legislature.

The study's authors commended Rendell's administration for thoroughly scrutinizing Pennsylvania's highway and transit needs and designing a bidding process that assured the highest possible bid. But they also found room for improvement.

For example, they said the administration's projection that the lease would generate $1 billion a year for transportation improvements was overly optimistic.

The figure assumed a 12 percent annual return that was based on the 20-year average for the State Employees' Retirement System. But the system's own forecasts called for an annual return of only 8.5 percent, they noted.

The researchers also said friction between the governor's office and the Legislature caused problems.

They said the administration polarized the debate by moving ahead with Rendell's plan before lawmakers had signaled support for such a move. Also, many lawmakers felt confused and left out in 2007 when the governor revived the turnpike plan just weeks after they approved a separate transportation funding plan that included adding tolls to Interstate 80, according to the report.

Rendell said he was keeping the turnpike plan alive as an alternative in case the federal government rejected the I-80 tolls.

Last spring, a partnership between Abertis Infraestructuras of Spain and a unit of Citigroup Inc. made the highest bid _ $12.8 billion for a 75-year lease of the 531-mile turnpike system. But the offer expired in September without legislative approval.

The proposal to put tolls on I- 80 met stiff opposition from state and federal lawmakers from districts along the 311-mile highway that links Ohio and New Jersey across northern Pennsylvania.

The Federal Highway Administration rejected the toll plan in September - widening by hundreds of millions of dollars the gap between revenue and the state's roughly $1.7 billion in annual transportation funding needs.

In the short term, state officials are counting on more than $1 billion in federal economic stimulus money to underwrite an expansion of highway, bridge and mass-transit projects.

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