Corbett: End Pa. Turnpike Obligation in 10 Years

A 2007 state law that requires the Pennsylvania Turnpike Commission to pay the state’s Department of Transportation $450 million annually — and has driven the commission deep into debt — would expire in 10 years under a proposal by Gov. Tom Corbett.

Corbett, in his budget message to the legislature last week, called for the sunset provision as part of his transportation initiative. The 10 years would give the state time to work out alternative funding.

The law, known commonly as Act 44, called for the commission to provide funding in roughly equal parts to transit systems mostly in Philadelphia and Pittsburgh, and to highway repair, and was predicated on Federal Highway Administration approval of tolls for Interstate 80, but the highway agency rejected the tolling proposal in 2010, limiting the commission’s revenue stream.

The commission’s debt since 2008 has risen from $2.6 billion to more than $8 billion. Administration officials expect to increase tolls annually for at least 10 more years to retire the debt.

“The Pennsylvania Turnpike Commission absolutely supports Gov. Corbett’s proposal,” commission spokesman Carl DeFebo said Monday. “Such an action would undoubtedly reduce the commission’s future debt issuance associated with Act 44.

“While the commission hasn’t had the chance to study the exact effect the proposal would have on toll rates, we can say shortening the timeframe would have a positive, long-term impact on the extent or frequency of future toll increases. But it wouldn’t necessarily have an immediate effect as toll increases would be required for a time beyond any phase-out to continue paying down outstanding Act 44 debt.” 

The commission on Jan. 24 sold $176 million of variable rate turnpike revenue bonds, maturing Dec. 1, 2018. Proceeds will fund part of the agency’s 10-year capital improvement program. Moody’s rated those bonds Aa3 with a negative outlook, while Standard & Poor’s and Fitch Ratings each assigned A-plus ratings, both with stable outlooks.

Shortly before leaving office in January, auditor general Jack Wagner said the commission was “drowning in debt.” Wagner also criticized the commission for using interest-rate swaps, citing an audit by his department that revealed interest-rate swaps cost state taxpayers and turnpike motorists at least $109 million over 13 years, $59 million of which related to deal cancellation fees. The commission disputed the numbers.

Funding under Corbett’s plan would include $30 million in the first year for Pennsylvania Turnpike expansion projects, and $85 million over five years.

Former PennDOT operative Mark Compton of Manheim, Pa., took over as the commission’s chief executive on Feb. 1.

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Transportation industry Pennsylvania
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