In 2008, Pennsylvania policy makers debated whether to lease the Pennsylvania Turnpike to a private consortium for 75 years in exchange for an upfront payment of $12.8 billion. The proposal as structured and handled, was seriously flawed and, as of this report's release, has failed to move forward. While officials in both the executive and legislative branches were well informed and had sound information about some aspects of the proposed partnership, they lacked crucial and accurate analysis about other aspects. But in the aftermath of that failed deal, Pennsylvania's unfunded infrastructure needs remain, and the state may again consider leasing assets to help pay its bills. Pennsylvania is just one of a growing number of states thinking about public-private partnerships, making it imperative that policy makers across the country learn from its experience.
In 2008, the federal Highway Trust Fund-one of the nation's primary sources of funding for highway renovation and construction-almost went broke. States, hurting from falling revenues of all kinds, including gas tax proceeds, lack the money to meet their own infrastructure needs. These funding problems have turned into a crisis. Every year, the numbers worsen. Much-needed highway repairs are being neglected, and the cumulative shortfall between those needs and available funding is about $47 billion a year.1
The current trend is unsustainable. Congestion and pollution will continue to increase, public safety will be compromised, and states' economic growth and ability to attract and retain strong businesses will falter if the nation's transportation system fails to receive the investments it needs. Policy makers are seeking all kinds of solutions. Federal funding-through the stimulus package, a proposed infrastructure bank or both-will help. But the gap remains large, and as a result, state leaders are looking to partner with the private sector. Recent long-term leases of the Chicago Skyway and the Indiana Toll Road to consortiums of private operators in exchange for sizable upfront payments have heightened states' interest; Massachusetts, Florida and New York are among those contemplating similar deals.
To help state policy makers across the country understand the information they need to have and the questions they need to answer when considering public-private partnerships to fund infrastructure, the Pew Center on the States used the Pennsylvania experience as a case study. We sought to assess what the state did well and where the process could have been improved. To accomplish this, we interviewed state officials and advisors, legislators, representatives of the bidders and the Turnpike Commission, and transportation and finance experts; reviewed the lease proposal and relevant documents; and researched similar deals in other states and countries.