Pennsylvania Gov. Edward Rendell yesterday called for a special legislative session to find $472.5 million for fiscal 2011 transportation needs as the Federal Highway Administration denied, for the second time, the state’s request to implement tolls on Interstate 80.

The decision leaves a $472.5 million hole in Rendell’s proposed fiscal 2011 budget, since his administration incorporated potential I-80 toll revenue and the bond proceeds that revenue stream would produce in the spending plan. House members approved Rendell’s budget proposal last month. The Senate has yet to act on that measure or release its own budget bill. Fiscal 2011 begins July 1.

The governor said he is open to all options for additional revenue, including revisiting his earlier proposal of a gross-profits tax on oil companies along with public-private partnerships, fee or tax increases, and potential borrowing options through the state’s own capital budget. The special session would happen “very soon,” Rendell said.

“We simply cannot wait to replace these funds,” the governor said during a press conference. “We’ll look at every option on the table. We’ll go back, hopefully, to look at the oil company gross-profits tax, something that I think the citizens of Pennsylvania will heartily approve. We’ll look at P3s, public-private partnerships, maybe looking at a possible lease or a partial lease of the Pennsylvania Turnpike itself. We’ll look at any fee or taxing options and I’m not committed to either of those. And we’ll look at using the state’s capital budget authority to see how much of that we can use to meet the needs of our roads, bridges and highways.”

Rendell said not replacing the $472.5 million of revenue represents a loss of 12,000 construction and manufacturing jobs, 300 miles of roadway that will be left in need of repairs, 100 unfunded bridge upgrades, and cuts in mass transit operations and capital plans throughout the state. Since the state was expecting to leverage the anticipated revenues, Rendell said spending cuts are not an option in his opinion.

“You can’t cut spending to produce capital dollars,” the governor said. “You have to have some revenue stream to bond off of to produce capital dollars and most of this is capital dollars.”

In a prepared statement, U.S. Transportation Secretary Ray LaHood said the FHWA denied Pennsylvania’s application because it did not meet the federal requirement that toll revenues be used exclusively for the facility being tolled.

“I care about the transportation needs of the commonwealth of Pennsylvania and since I became secretary of transportation, I’ve traveled there 10 times,” LaHood said in a press release. “In addition, we have provided $1.4 billion in Recovery Act funds to Pennsylvania over the last year to jump start the economy and put people back to work. We based today’s decision on what is allowable under federal law.”

Overall, not tolling the 311-mile I-80 will result in $60 billion less in revenue for the state over 50 years.

The PTC in late October re-filed its I-80 tolling application to the FHWA after the administration rejected the commission’s initial request in September 2008. At that time, the FHWA said the commission’s use of the toll revenue did not meet legal requirements and lacked objective market valuation.

Under Act 44, the Pennsylvania Turnpike Commission makes annual payments to the Pennsylvania Department of Transportation, with those payments financed in part through bond sales backed by toll increases on the 530-mile Pennsylvania Turnpike. To date, the commission has made $2.2 billion of payments to PennDOT since the passage of Act 44 in July 2007, according to commission spokesman Bill Capone.

In addition to the increased Turnpike tolls, the plan was to begin tolling I-80 with PennDOT leasing that 311-mile roadway to the commission. In return, it would make yearly lease payments to PennDOT. Without the toll revenue from I-80, the commission’s total fiscal 2011 payment to PennDOT will be $450 million, $472.5 million less than the anticipated $922.5 million payment, Capone said.

The Turnpike runs east-west through southern Pennsylvania. I-80 is parallel to the Turnpike and extends through the middle of the state.

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