MassPike OKs Executive Director, Hopes for Bailout

The Massachusetts Turnpike Authority yesterday approved Jeffrey Mullan as executive director while it waits to see if the state will avert scheduled July 1 toll hikes with a $100 million bailout.

A plan to boost Massachusetts’ sales tax to 6.25% from 5% recently passed the House and the Senate, with $275 million of the additional revenue going towards highway, bridge, and light-rail needs throughout the state. Though Gov. Deval Patrick does not support the sales tax hike and prefers targeted tax increases such as a 19-cent gas tax hike, the 1.25% sales tax boost passed both chambers with veto-proof majorities.

Now, MassPike is waiting to see how much of the $275 million it would receive.

“It’s still uncertain how much of that would go to the [authority], and if it would be enough to avert the $100 million toll hike,” said MassPike board member Mary Connaughton.

Under the $100 million plan, cars will pay 75 cents more on Metropolitan Highway System extensions in the Boston area, bringing that toll to $2. MHS Tunnel charges will double to $7 from $3.50 for passenger vehicles. Those charges are for cash payments. Motorists using Fast Lane electronic toll passes would pay discounted tolls.

Mullan will now serve as the authority’s executive director following Alan LeBovidge’s resignation last month. In a letter to Secretary of Transportation Jim Aloisi, LeBovidge said the administration’s priority position for reforming MassPike before seeking new revenue had changed.

“[The governor] felt, and I agreed, that the public had to have confidence that everything possible was being done to streamline operations before committing additional revenues,” LeBovidge wrote. “I’ve devoted the last 17 months to following this charge. However, the last two months have made it clear to me that the basic operating premise has shifted.”

Mullan has been undersecretary at the Executive Office of Transportation and Public Works since March 2007, and took on the duties of chief operating officer in 2008.

In other business, the board yesterday also approved three construction contracts for the Western Turnpike and will use $12 million from the roadway’s $74 million reserve fund to pay for the upgrades. Connaughton supports reinstating tolls on the western-most part of roadway to finance needed improvements rather than dipping into reserves.

“The more we spend from the reserves rather than generating operating revenue, the less likely that the [Western Turnpike] will become toll-free when the bonds are repaid in 2017,”  she said.

Officials estimate total capital needs on the Western Turnpike to be $544 million through 2017, just to bring the roadway to a state of good repair. The turnpike is a 123-mile east-west toll road that runs from the New York border to the greater Boston area. The 15-mile MHS runs throughout Boston.

Fitch Ratings rates $1.2 billion of MHS senior bonds at BBB-plus and $960 million of MHS subordinate debt at BBB. The bonds are on negative watch. Moody’s Investors Service assigns a Baa2 to the senior-lien MHS bonds and a Baa3 to the subordinate debt with a developing outlook.

MassPike has $162 million of outstanding Western Turnpike debt that will mature in 2017. Fitch and Moody’s rate the bonds A-plus and Aa3, respectively. Standard & Poor’s does not rate the credit.

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