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Act 44 authorizes a 50-year Public/Public Partnership between the Pennsylvania Turnpike Commission (PTC) and the Pennsylvania Department of Transportation (PennDOT). The benefit of Act 44 lies in using the Turnpike, a public agency, to raise funds.
The transportation revenue that would be generated from this Public/Public Partnership has the potential to far exceed the amount of money any private consortium could raise by privatizing the mainline Turnpike even without I-80 tolls. Lower borrowing costs and no need to maximize profits ensures that more money will be available for transportation.
With a strong credit history and tax-exempt status, the PTC can raise funds at much lower rates than private firms can. Private companies rely on costly taxable debt and even more expensive private equity. A recent independent study by experts from Penn State and Harvard (click here to read study) concluded that the tolls required by the PTC to fund Act 44 payments would be much lower than those required by a private entity. The report also cited four other independent studies on privatization that concluded there were no significant private sector cost savings.
The bottom line is that Pennsylvania has identified a reliable, financially sound, user fee-based solution to address the state's difficult transportation funding problem. Act 44 and its PUBLIC/PUBLIC PARTNERSHIP IS THE RIGHT SOLUTION for the Commonwealth of Pennsylvania.
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