Why privatization failed in Pennsylvania - COMMENTARY
Posted Wed, 2007-08-22 21:56
An opinion survey just out shows the Pennsylvania Governor Ed Rendell as having a public approval rating 53% favorable to 37% unfavorable, a slippage from the 61% to 30% support in February and from the 57% to 33% in late March. Rendell has been heavily involved in advocacy of Turnpike privatization – the principal political issue before the Pennsylvania public this year.
Rendell has been damaged politically, but not too badly. His credit is still on the right side of the ledger.
The Quinnipiac University Polling Institute conducted a poll Aug 14 to 20 of 1,160 Pennsylvania voters. They said in the third phrase of their headline today: "Support For Lease Of Turnpike Collapses". That line was picked up by broadcasters and the press.
"Collapses" is overblown.
The Quinnipiac poll shows 40% still supporting a "lease to a private company" and 47% opposed.
40% support is not a collapse.
And 7% is a significant, but not a very large net margin of opposition.
The question asked was: "Governor Rendell has proposed leasing the Pennsylvania turnpike to a private company, but keeping state control over toll increases and maintenance schedules.
The money would be used to pay for highway and bridge construction. Do you support or oppose this proposal?"
The margin has swung from net support for privatization late March (49% for and 41% against), to near even support and opposition at the end of May, to modest net opposition now - a serious swing against, but hardly a collapse.
Why did Gov Rendell get beaten?
The Turnpike Commission and their allies launched a campaign against privatization which dwarfed the advocacy in favor. Given the consistently louder voices against privatization than in favor the swing is not surprising.
Governor Rendell was the only prominent official who campaigned for privatization - supporters in the legislature were mute.
And Rendell's theme was simply that a private lease was a good way to raise a lot of money for the government to spend. Given public skepticism about the ability of governments to spend money well that was a loser theme from the start.
In Chicago Governor Daly said a tollroad was not a line of business the city should be in - which got to the heart of the issue. He faced little opposition to privatization of the Skyway.
In Indiana Gov Daniels did stress the inefficiency with which the state tollroad had been managed, and the inability of the state to set realistic toll rates. But he made the same mistake as Gov Rendell in stressing the billions of dollars the state would get from a longterm lease-concession. People hate the idea of governments suddenly being flush with money.
Privatization in Indiana was a cliffhanger. It only gained legislative support by a couple of votes.
The heart of the case for privatization is that a tollroad is a quintessential business. It involves assessing whether there's a market for a service, mobilizing capital, getting needed facilities built efficiently, marketing the service, and persuading customers it provides them with benefits greater than the price needed to cover costs and gain a return on investment.
The case for any kind of privatization of a tollroad - call it PPP, a lease, a concession, a franchise, private ownership, whatever - is simply that governments do business poorly, and that it is standard practice to leave business to competitive investor owned groups. Tollroads like other businesses are risky investments. Risk is best handled by investors not politicians
Governments only do a lot of the business in socialist or communist economies and those economies don't work well. In a free market economy government ownership and operation of any business is an anomaly. That's the best case for privatization and only Mayor Daly in Chicago used it as his primary argument.
Editor
TOLLROADSnews 2007-08-23
Rendell has been damaged politically, but not too badly. His credit is still on the right side of the ledger.
The Quinnipiac University Polling Institute conducted a poll Aug 14 to 20 of 1,160 Pennsylvania voters. They said in the third phrase of their headline today: "Support For Lease Of Turnpike Collapses". That line was picked up by broadcasters and the press.
"Collapses" is overblown.
The Quinnipiac poll shows 40% still supporting a "lease to a private company" and 47% opposed.
40% support is not a collapse.
And 7% is a significant, but not a very large net margin of opposition.
The question asked was: "Governor Rendell has proposed leasing the Pennsylvania turnpike to a private company, but keeping state control over toll increases and maintenance schedules.
The money would be used to pay for highway and bridge construction. Do you support or oppose this proposal?"The margin has swung from net support for privatization late March (49% for and 41% against), to near even support and opposition at the end of May, to modest net opposition now - a serious swing against, but hardly a collapse.
Why did Gov Rendell get beaten?
The Turnpike Commission and their allies launched a campaign against privatization which dwarfed the advocacy in favor. Given the consistently louder voices against privatization than in favor the swing is not surprising.
Governor Rendell was the only prominent official who campaigned for privatization - supporters in the legislature were mute.
And Rendell's theme was simply that a private lease was a good way to raise a lot of money for the government to spend. Given public skepticism about the ability of governments to spend money well that was a loser theme from the start.
In Chicago Governor Daly said a tollroad was not a line of business the city should be in - which got to the heart of the issue. He faced little opposition to privatization of the Skyway.
In Indiana Gov Daniels did stress the inefficiency with which the state tollroad had been managed, and the inability of the state to set realistic toll rates. But he made the same mistake as Gov Rendell in stressing the billions of dollars the state would get from a longterm lease-concession. People hate the idea of governments suddenly being flush with money.
Privatization in Indiana was a cliffhanger. It only gained legislative support by a couple of votes.
The heart of the case for privatization is that a tollroad is a quintessential business. It involves assessing whether there's a market for a service, mobilizing capital, getting needed facilities built efficiently, marketing the service, and persuading customers it provides them with benefits greater than the price needed to cover costs and gain a return on investment.
The case for any kind of privatization of a tollroad - call it PPP, a lease, a concession, a franchise, private ownership, whatever - is simply that governments do business poorly, and that it is standard practice to leave business to competitive investor owned groups. Tollroads like other businesses are risky investments. Risk is best handled by investors not politicians
Governments only do a lot of the business in socialist or communist economies and those economies don't work well. In a free market economy government ownership and operation of any business is an anomaly. That's the best case for privatization and only Mayor Daly in Chicago used it as his primary argument.
Editor
TOLLROADSnews 2007-08-23