...or 30 billion there, says Governor Rendell:
Pennsylvania's official request for expressions of interest in a concession on the Turnpike just asked for qualifications and expertise. It didn't ask for even ballpark figures on what they'd pay.
That was the official process being administered by the secretary of transportation Alan Biehler and the state DOT.
But, an official tells us, Governor Rendell wanted $#s and he and leading officials have met informally with a bunch of interested companies. Before those meetings Rendell said that a concession was worth between $2b and $30b. Quite a range! After the meetings he honed his estimate down to $10b to $12b, though he added that $16b was the high number he'd got.
But now, the Governor seems to be leaning toward an annual revenue scheme:
Governor Edward Rendell in a forceful speech Feb 9 in Washington DC said he is determined on privatizing the Pennsylvania Turnpike.
....Rendell said he believes a toll concession of the Pennsylvania Turnpike will produce about a billion dollars a year.
(By contrast the Turnpike as a state toll authority produced only a quarter of this in a current surplus of $247m with revenues of $612m offset by cost of operations of $365m. Depreciation of $215m and debt service expenses of $128m mean that the Turnpike presently earns no significant return at all on capital for the state. Annual report for FY2006. TRnews)
In order to get an equivalent cash flow to the concession's billion a year from motor fuels taxes (gasoline plus diesel) the state would have to raise tax rates by 12.5c/gallon, Rendell said. This was unthinkable because it would make the state the highest taxing in the country.
Wants annual income flow from concession
The Governor said he proposes to structure a concession contract so that it yields income for the state on an annual basis rather than providing it all in one upfront concession fee.
White House supports tolls
The meeting was opened by Karl Zinsmeister, White House chief of staff for domestic policy, who talked about the vital importance to the country of improved mobility and how congestion on the roads is as intolerable as electricity blackouts. Zinsmeister said better technology, and better policy were needed to reduce congestion. He said pricing and tolls were central to any congestion fix and that the country had to be open to world capital markets as part of the fix.