Gov. Rendell (PA.) vows to protect 'cookie jar'

WASHINGTON - Gov. Ed Rendell hopes to prevent lawmakers or even his successor from "raiding the cookie jar" holding the billions of dollars that could be generated from leasing the Pennsylvania Turnpike.

Rendell said he wants to build a wall around the money to ensure it would be used only for transportation needs, instead of wish lists or other problems.

"Not one nickel, as long as I'm around, is going to be diverted to anything but transportation," said Rendell, who would dedicate lease proceeds -- which could total $10 billion or more -- to repairing the state's roads and bridges.

Such an enormous pot of money would make some lawmakers "wide-eyed with glee," Rendell predicted. He is weighing options such as creating an annuity to dole out money while walling off the rest to prevent a raid by a successor or lawmakers.

Either leasing the turnpike or a public-private partnership appear to be among the few options to meet the state's road and bridge needs short of an unpopular move such as raising gas taxes by $12.5 cents a gallon, Rendell said.

He spoke during a briefing organized by the National Governors Association to discuss alternatives states are considering to pay for infrastructure needs that some estimates put as high as $500 billion nationwide. (with Krusee & other TX.  cheerleaders) 

Rendell and Indiana Gov. Mitch Daniels, speaking at the National Press Club, predicted that public-private ventures will be necessary to come close to meeting the nation's transportation needs. They also attended a White House-organized summit with state transportation leaders to address alternative ways to pay for highway and bridge needs.  (with Krusee & other TX.  cheerleaders)

"We cannot make up this shortfall through traditional means," said John Thamasian, director of the NGA's Center for Best Practices, a policy research center for the nation's governors.

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Rep. Peter DeFazio (Ore.), chairman of the House Subcommittee on
Highways and Transit, stated, "For the Bush administration, the rush to
promote public-private partnerships is based in ideology, not a critical
evaluation of how public-private partnerships might help meet the goal of
an improved, integrated national transportation system and further the
public interest.".........................................................................................................
 

Indiana, which received nearly $4 billion leasing the Indiana Toll Road, is at the forefront of the strategy Rendell is considering.

"This is about solving a very difficult, some would say intractable, problem," Daniels said. "We found a solution in our state without raising taxes."

State Rep. Rick Geist, the ranking Republican on the state House Transportation Committee and a leading supporter of leasing the turnpike, predicted such partnerships are inevitable. Federal funding is inadequate and alternatives such as raising the tax on gas are unpalatable, he said.

"It's going to be the new paradigm," said Geist, who attended the White House conference along with the ranking Democrats and Republicans on the state transportation committees.

"The feds are throwing their hands up" and suggesting states come up with funding solutions, he said.

But Rendell said the federal government could be helpful by establishing a capital budget, which would provide a predictable, long-term funding stream separate from the budgets that fund the government's annual operations.

Critics of the plan Rendell is considering complained that Indiana's highway was leased to a foreign company. Rendell said he would prefer that an American company run the turnpike, but that he would choose the best deal for the state if Pennsylvania pursues a lease deal.

He was careful to say that no final decision has been made, though he made it clear that a public-private partnership, likely to include a 99-year lease, appears to make the most sense.

A Turnpike Commission counterproposal to issue bonds, in essence mortgaging its assets itself, appears less favorable to investors because of tax advantages offered to private investors funding the deal. The state is still investigating similar options though, Rendell said.

The Pennsylvania Department of Transportation in December received nearly 50 expressions of interest, worth $8 billion to $30 billion, to operate the turnpike.

Rendell said he hopes to get legislative approval as early as spring to begin negotiations with private groups.

Geist predicted it will pass because lawmakers have few alternatives to fund the state's estimated $1.7 billion annual shortfall for highways, bridges and mass-transit needs.

Private operators would likely have to cut turnpike costs -- including toll collectors, who earn around $40,000 -- and raise fares to make the deal financially worthwhile. Rendell said he would require concessions to protect workers.

He also said he would support limiting toll increases to the inflation rate, as Indiana did.

BRETT LIEBERMAN: 202-383-7833 or blieberman@patriot-news.com