LANCASTER COUNTY, PA - It’s fitting, maybe, that America’s first private toll road came through Lancaster County.

The Philadelphia and Lancaster Turnpike — now the Lincoln Highway — was completed in 1795, built by a private company because the commonwealth didn’t have the money.

And while much has changed since those days, much remains the same.

A blue-ribbon state transportation commission recently reported that if Pennsylvania is going to maintain and expand its transportation network, it must come up with $1.7 billion per year on top of what it is already spending. State officials say taxes may need to go up to foot some of the bill, but Pennsylvania taxpayers aren’t about to foot all of it.

The idea, though, is that some foreign company might.

And so on Friday, Gov. Ed Rendell may get his first peek at exactly how much money the state could raise if the foreign firms said to be interested in leasing the Pennsylvania Turnpike indeed submit “expressions of interests.” Estimates are that a long-term lease could raise from $2 to a staggering $30 billion; most likely, the offer will fall somewhere in the middle. And if the offer is too low, said a Rendell spokeswoman, it won’t happen.

But if the offer looks good — and no one is specifying, exactly, what that means — then the state’s first private toll road in many years could once again come through Lancaster County.

Also, there are dozens of questions state officials will need to answer before moving forward on any deal. Though highway privatization seems to be something of a trend in the U.S., just two other governments have done what Pennsylvania is now thinking of doing. In 1999 Chicago leased its Chicago Skyway, and last year Indiana leased its Indiana Toll Road, both to the same firms likely to be interested in the Turnpike.

In both instances, officials couldn’t believe their good fortune. In both cases, according to one financial expert who has studied the deals, there remain concerns as to what those governments will do once the money runs out, or if tolls go as high as statistical models suggest they could.

Still, said Rendell spokeswoman Kate Phillips, it’s too soon to know how things will play out here. Any privatization plan must be approved by the Legislature, and “if it’s not the right fit for Pennsylvania, we won’t move forward,” she said.

For the goal, she said, is not merely to raise money by privatizing what has, until now, been public; it is that “people don’t notice the difference.”

A sorry state

The impetus, however, is that privatization could make a big difference indeed for Pennsylvania’s transportation network.

It’s long been recognized that our bridges are in a sorry state, our roads need work — and that’s on top of the need for new and bigger roads, and a complete revamping of the way in which public transportation is funded. These needs were cited in a recent report by the Rendell-created Pennsylvania Transportation and Reform Commission, which recommended a number of ways to pay for it all, including hiking the gas tax, increasing vehicle registration fees, boosting sales and income taxes — and, most tantalizingly, privatization.

Rendell has said if a long-term lease for the 537-mile Turnpike would generate just $2 billion, that “wouldn’t scratch the surface of our funding problems.” But House Speaker John M. Perzel, R-Philadelphia, said an investors group told him a Turnpike deal could net the state as much as $30 billion.

“I’m not saying you could get that,” Perzel said in a Nov. 20 speech to the Pennsylvania Press Club, but “if you could, and you get 10 percent return on your money, that’ll be $3 billion a year to take care of our highways, take care of our mass-transit system.”

The Turnpike, used annually by about 188 million vehicles, took in $571.5 million in its last fiscal year, mostly in tolls.

An Australian firm, Macquarie Infrastructure Group, is said to be interested. The firm, in partnership with Cintra S.A., a Spanish company, were winning bidders when Chicago decided to lease its Skyway for 99 years in December 2004, and when Indiana last summer leased the Indiana Toll Road for 75 years.

There are other private highways in the U.S., like Northern Virginia’s Dulles Greenway, and they are common overseas. But the Chicago and Indiana deals represent the first time cash-strapped governments have turned existing, heavily-traveled routes over to private firms, which then handle maintenance and expansion — and collect the tolls. Other states, including Ohio and New Jersey, are considering similar moves.

In Chicago, a “giddy” city council “acting as if they still can’t quite believe the city’s incredible good fortune,” according to a 2004 article in Chicago Business magazine, inked the $1.83-billion deal for the 7.8-mile Chicago Skyway. A reporter at the Chicago Sun-Times wrote that it was “the biggest steal since the Dutch bought Manhattan,” and the city has used the money to pay down debts, establish budget reserves and fund a variety of community and economic development projects.

In Indiana the sailing wasn’t so smooth. Though Cintra-Macquarie paid $3.85 billion to lease the 157-mile Indiana Toll Road, there was considerable dismay among residents who worried about turning an American highway over to foreign companies. As in Pennsylvania, Indiana Gov. Mitch Daniels needed the money to pay for transportation projects. Ultimately, Indiana’s state House approved the deal by a single vote.

Steve Allen, Macquarie’s chief executive, told the Washington Post in June that his company, which operates toll roads in nine countries, “has an incentive to improve the highways to attract more drivers.” Since taking over the Chicago Skyway, it has built electronic toll booths sooner than required, and made lane changes that reduced congestion.

Tolls also go up

At the same time, tolls have gone up faster than they might have had the roads remained in public hands.

In Chicago, the deal permitted the consortium to hike tolls immediately, and after the first 12 years the consortium can increase them annually by either 2 percent, the percentage increase of the Consumer Price Index or the percent increase in the nominal Gross Domestic Product — whichever is highest.

In Indiana, Daniels hiked tolls between 73 and 113 percent even before the lease deal was inked; the consortium can increase them annually by the same benchmark it uses in Chicago.

Therein lies the rub, reports Dennis Enright of NW Financial Group LLC in Jersey City, N.J., who analyzed both deals in a Nov. 1 report that suggests that Chicago, Indiana and other governments that privatize highways may ultimately be giving more than they get.

These are classic “one-shot” deals that provide immediate revenue but can’t be repeated. Once the money is spent, Enright writes, transportation needs will remain — and with fewer sources of revenue available after toll roads have been leased to private companies, states may wind up in even worse shape than before.

For example, Indiana’s deal will fund a 10-year transportation plan, but the lease runs for another 65 years after that. “Where will state transportation funding come from in years 11 through 75?” asks Enright.

“A vote for privatization is a vote for permanent toll increases,” said Enright in an interview last week.

And while most people are familiar with the rate of inflation, “most people do not know the history of GDP growth, which has averaged greater than 7 percent over the last 50 years,” he wrote in his report — meaning, by the terms of the deal, tolls could rise by 7 percent annually, too.

Which means that in Indiana, an $8 toll today could increase to $14.71 by 2015 — and, in theory at least, to $1,195.33 by the final year of the lease.

Phillips, Rendell’s spokeswoman, vows nothing like that will happen in Pennsylvania.

And indeed, there are numerous other factors to consider here that would make any deal for the Turnpike substantially different from the deals in Chicago and Indiana. First and foremost may be the Turnpike work force of nearly 2,200; Joe Brimmeier, chief executive officer of the Pennsylvania Turnpike Commission, said employees are naturally worried, but noted that Rendell has vowed to take care of them, and “We will do what’s in the best interest of Pennsylvania taxpayers.”

Meanwhile, the commission will submit its own plan to the governor, offering ideas on how the transportation funding gap can be closed without leasing the Turnpike.

“He is doing what he has to do,” said Brimmeier of Gov. Rendell.

“Until you put your house up for sale, you really don’t know what it’s worth.”