Annals of Legislative Incompetence, Pennsylvania Edition

It's not just federal legislators who are good at screwing up carefully-negotiated deals. Pennsylvania's governor, Ed Rendell, faced with a $1.7 billion transportation funding shortfall, came up with a very bright idea: selling off a concession to run the Pennsylvania Turnpike for $12.8 billion. But the state's legislators sat and sat, doing nothing, and now the bidders, led by Abertis (ABFOF.PK) and Citigroup (C), have understandably withdrawn their offer. After all, in a cash-strapped world, that's a very large amount of money to have put to one side in anticipation of a deal which looks as though it probably wouldn't happen anyway.

The fiscal consequences for Pennsylvania are pretty gruesome, and not just in the short term. Highway maintenance costs continue to rise, even as future traffic might well fall, given high gas prices and increasing tolls. What's more, the Pennsylvania Turnpike Commission's budget has an anticipated cost of funds of just 4.5%, which is utterly unrealistic in today's market. Pennsylvania legislators had the opportunity to transfer all these risks onto a private-sector consortium -- and build in high minimum operating standards which currently don't exist, and get a check for $12.8 billion which could immediately be put to use on important and stimulative infrastructure projects:

The state has about 8,500 miles of roadway rated in "poor condition," said Rich Kirkpatrick, a state Transportation Department spokesman. The state has 6,034 bridges rated as structurally deficient as of June 30, the most of any state in the U.S., Kirkpatrick said.

With the state and the country in a recession, it would have been nice to be able to spend billions of dollars on improving infrastructure, thereby creating thousands of jobs and improving the state's productive capacity. Oh well.

Comments

[Dan from PA:]

The deals on the table would have resulted in a 25% increase in tolls accross the board. No wonder there was overwhelming opposition here.

Ed Rendell should devote more time to managing our state efficiently rather than chasing around the country campaigning for Hillary and now Obama, and his weekly appearances on sports commentary after the Eagles games.

2008 Oct 01 12:05 PM