Privatization strides made in transportation
HARRISBURG - Gov. Tom Corbett's drive to privatize parts of state government has made its greatest strides so far on the transportation front.
The Pennsylvania Public Private Partnership (P3) Board was created through a state law enacted last year to encourage private companies to tackle transportation-related projects, and has led to consideration of private companies rebuilding deteriorating bridges and charging tolls on them.
Corbett signed the P3 law last summer after a decade of debate, while the governor's plan to privatize the state-owned liquor stores faces uncertain prospects in the Legislature. Another plan, to privatize operation of the Pennsylvania Lottery, faces a new hurdle following Attorney General Kathleen Kane's rejection last week of a proposed management contract with a British-based firm.
The P3 board, meanwhile, is seeking proposals from private firms to operate the state-run 511 traffic information program, Adopt-A-Highway program and also participate in sponsorship rights at state welcome centers and rest areas. P3 projects also can involve highways, tunnels, overpasses, parking facilities, bus routes, terminals and airports owned by a state agency or municipal authority.
Bridge projects are getting the most attention since a new two-year federal transportation funding act paves the way for tolling by states on bridges where substantial work is needed.
The likeliest candidates for tolling would be major bridges that carry interstate traffic, said Transportation Secretary Barry Schoch, who heads the P3 board. He doesn't foresee privatization projects involving bridges that carry a lot of local commuter traffic.
P3 projects are more likely to occur in the Philadelphia and Pittsburgh metro areas where roads see heavy traffic, said Rep. Mike Carroll, D-118, a member of the House Transportation Committee.
"I don't think there will be many P3 projects in Northeast Pennsylvania," said Carroll. "We don't have the traffic volumes, and we have alternate routes people can use to avoid a toll."
Rep. Kurt Masser, R-107, said the only local project he could think of that might benefit from P3 involvement might be the Central Susquehanna Valley Thruway, which is intended to ease heavy traffic along Routes 11 and 15 north of Selinsgrove.
State Sen. John Gordner, R-27, is optimistic that wouldn't be necessary because of the $300 million recommended for the project by the Appalachian Regional Commission.
"We just have one hurdle at the federal level, and that is to have the transportation chair lift the cap on spending, and we could start at least two of the three phases of the project very shortly," Gordner said. "I'm hopeful that the ARC funding is the way to go."
P3 projects are seen as a secondary revenue source for transportation.
The bulk of new state transportation revenues would come from Corbett's proposal to gradually lift the cap on the Oil Company Franchise Tax, a levy on wholesalers such as gas stations, over five years. Corbett wants to reduce the state gasoline tax paid at the pump from 12 cents a gallon to 10 cents a gallon over two years.
The P3 board has the authority to solicit proposals for specific privatization projects, such as the 511 system, and consider proposals made by private firms.
Lawmakers can take action to rescind a privatization project approved by the board.
In addition to Schoch, the board consists of state Budget Secretary Charles Zogby; Nicholas DeBenedictis, president of Aqua America Inc. and former state environmental secretary; Ronald Drnevich, former CEO of Gannett Fleming Inc.; Michael Murchie, M&T Bank executive; Ryan Boyer, business manager of Laborer's District Council of Philadelphia, and Rep. Steve Santarsiero, D-31, Newtown.
The advantage with P3 projects is that the financial risks are not just borne by the taxpayers, said House Majority Leader Mike Turzai, R-28, Pittsburgh. He predicted that most new highway construction projects will have private-sector investment.
It's unclear whether P3 projects will see widespread use in Pennsylvania, wrote Attorney James W. Kutz in a recent article for Highway Builder magazine.
"Another critical obstacle is whether a private entity will view a P3 project as worth the financial risk in the current economic climate, particularly given the safeguards in the P3 law with respect to public bidding, payment of prevailing wages and requirement to hire employees who may lose their jobs due to the agreement," wrote Kutz.
(Staff Writer Rob Wheary contributed to this report.)