The PA Turnpike Commission expects an open and vigorous debate on the merits of Act 44 versus a proposed lease of the PA Turnpike to a consortium led by Abertis. Our preliminary review of the proposed legislation and the concession agreement raises several critical concerns that will be vetted thoroughly by the relevant legislative committees.

Among the issues of importance to motorists, taxpayers and policymakers are:

• Tolls. An analysis of historical toll rates demonstrates that current tolls would be 2.5 times higher if the turnpike had been operated for the past 67 years under the terms of the concession agreement with Abertis allowing tolls increases at the rate of 2.5% or the Consumer Price Index, whichever is greater. Toll hikes in future years will likely increase at higher rates under a lease agreement with Abertis than under the financial projections that provide the financial underpinnings of Act 44.

• Capital Funding. There is no long-term plan for rebuilding I-80 and this vital interstate – if not tolled appropriately – will see a dramatic increase in traffic volume and will further deteriorate. The Turnpike itself will suffer from a vastly reduced capital plan – investment is cut by $1.6 billion under the concession plan in the first ten years alone. The concession agreement /legislation does not establish any permanent funding stream for mass transit – a critical component of Act 44.

• Bid Amount. A financial analysis demonstrates that Act 44 generates more revenue for PA roads, bridges and mass transit agencies than a lease does because the true bid – the net - is $7.9 billion. The administration’s projected rate of return of 12 percent exceeds any responsible projections and is contradicted by the use by State Employees Retirement System (SERS) of 8.5% as a reasonable investment assumption in calculating their funding requirements to meet pension benefit obligations. At 8.5%, the Abertis bid proceeds would be depleted in just 17 years.

• New Investment Board. The enabling legislation establishes a Public-Private Transportation Fund controlled by a three-member board comprised of the Governor, the Budget Secretary and the PennDOT Secretary. Contrary to public statements by administration officials, there are no provisions providing for these amounts to be deposited with SERS. Instead, the new board would control the fund without any legislative oversight, with all expenditures subject to the Governor’s approval.

• Abertis Benefits. The concession agreement provides Abertis with a 75-year tax exemption from most state and local taxes; does not provide for current Turnpike Commission retirees benefits; and exempts the Abertis deal from the Right-to-Know Law, local zoning regulations and much of the Procurement Code.