The Rendell administration’s financial adviser released a report this week suggesting that turning the Pennsylvania Turnpike over to a private operator would generate more revenue than two other options.

Morgan Stanley said a 99-year lease could bring as much as an $18 billion up-front payment, which would generate $1.6 billion annually, assuming a return of 8 percent.

“Monetizing the Turnpike could turn out to be part of the solution to Pennsylvania’s transportation funding crisis, but even in Morgan Stanley’s best case, that alone will not be enough,” said Ron Drnevich, PHIA president.

The Transportation Funding and Reform Commission estimated that it would take an additional $1.7 billion annually to fund mass transit and repair and maintain the existing highway system. The highway portion of that would be $965 million per year.

“Given the continuing, significant increases in highway construction costs, the amount required today will not cover the needs in future years,” Drnevich said. “So even if the revenue from a Turnpike lease covered the needs initially, there would be another funding gap in just a couple of years.

“As the Pennsylvania Economy League noted in its study last fall, solving this problem will require dedicated funding sources that grow with inflation. Monetizing the Turnpike does not accomplish that.”

Drnevich also noted the $965 million figure needs to grow with inflation just to repair the existing highway system over the next 17 years, and there would be no added capacity.

“Traffic congestion will continue, and the solution would require funds above what has been proposed,” he said. “Our 50-year-old highway system was not designed for the current volume of traffic, and the volume will continue to increase.”

The Indiana Turnpike and Chicago Skyway are both operated by a private company. Morgan Stanley said two other options – creating a tax-exempt corporation that could utilize public financing or expanding the role of the Turnpike Commission – would probably generate less revenue, and the revenue would be less predictable.