Largest Privatization Deal in U.S. History Proposed for Pennsylvania Turnpike

toll road

In the largest privatization deal ever proposed in the United States, a consortium led by Spanish company Abertis Infraestructuras offered $12.8 billion to lease operation of the Pennsylvania Turnpike for 75 years.  The deal would allow the company to immediately hike tolls 25 percent and then increase tolls each year thereafter up to the rate of inflation. 

Gov. Rendell is promoting the deal, despite the state legislature's rejection of previous privatization plans and despite polls that show fifty-eight percent of Pennsylvanians oppose leasing the toll highway.  Many legislators and the Pennsylvania Turnpike Commission itself have proposed that the state would do better financially to keep the Turnpike in its own control and raise tolls itself, including on I-80, which runs parallel to and is the Turnpike's main competitor (although this would require federal approval).

The proposed Abertis deal is just one of a spate of large-scale transit privatization proposals promoted just in the last few weeks:

  • West Virginia just enacted a law, HB 4476, to allow private developers to build and collect tolls on future highways througout the state.

  • The Nevada Department of Transportation last Thursday voted to back a proposed demonstration project and new legislation that would allow a private company to operate two lanes of its I-15 highway as a toll lane.

  • Texas Gov. Rick Perry continues to promote his proposals for large-scale private toll roads across Texas, despite the legislature passing a moratorium (watered down during negotiations with the Governor) during last year's legislative session.

Dangers of Privatization: Progressive States Network last year highlighted the financial and social costs of such privatizations in Ripoff Privatizations -- And Why They Keep Happening, while state groups like PennPIRG have specifically highlighted the dangers of Turnpike privatization. Its parent group, U.S. PIRG, also published a key report last year highlighting the chronic problems of road privatization, including loss of public control over key social policies, the public getting ripped off in deals negotiated over excessively long contracts, the lack of transparency in most deals, and the selling of privatization based on short-term payoffs and budget gimmicks, despite long-term losses to state budgets.

Given legislative and public opposition to most privatizations, the Pennsylvania Turnpike and other proposed deals are hardly a sure thing, but giant global financial firms are now circling states looking for a financial score.  Globally, $53 billion in privatization deals worldwide have been announced this year, triple the $13 billion in the comparable period last year.  Privatizing public assets are the new gold rush for Wall Street firms -- and legislators should be justifiably skeptical that the public will benefit financially in negotiations with such firms.

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