CHICAGO – The Illinois State Toll Highway Authority heads into the New Year with a $1.7 billion budget that includes $300 million of borrowing to finance projects in the sixth year of its $12 billion, 15-year capital program.
The authority board at its December meeting approved the budget, which includes $961 million for capital projects, $405 million for debt service, and $336 million for maintenance and operations. In addition to bond proceeds, the budget is funded with $1.38 billion in revenues generated by the 292-mile system.
"This budget sets our spending at a responsible level that will keep our system operating smoothly and enable us to invest in programs and services to create jobs and support diversity," said Tollway Board Chairman Bob Schillerstrom.
Operating costs will rise 4.4% due primarily to increases for health care and retirement costs and equipment and fees to accommodate revenue collection. The budget also provides $65.3 million for technology, implementation and maintenance to support I-PASS account management – the tollway's electronic tolling program -- and $14.7 million to support the development and implementation of an enterprise resource planning system.
Revenues are projected to rise by $80 million to $1.38 billion next year primarily due to scheduled commercial truck toll increases approved in 2008, a projected increase in toll transactions, and implementation of the new Illinois Route 390 Tollway. Passenger vehicle toll rates will hold steady.
The capital program mostly funds projects included in the $12 billion Move Illinois program. It provides $374.5 million to continue building the new Illinois Route 390 Tollway and planning for the new I-490 Tollway as part of the Elgin O'Hare Western Access Project. About $295 million has been budgeted for systemwide roadway, interchange and bridge repairs and other work to keep the existing tollway system in good repair.
The tollway will sell $300 million of new-money, toll-backed bonds next year.
"The specific sale date has not been determined," said spokesman Daniel Rozek. "The tollway currently is monitoring the market for possible refunding opportunities but has not taken any action at this point."
The finance team is reviewing submissions from firms interested in serving as municipal advisor following a request for proposals process that closed last month. The authority will soon open a request for proposals to establish a new underwriting pool as the current one expires this year.
To support the capital program, the board in 2011 adopted a one-time 87% increase in passenger tolls and is phasing in a 60% increase in commercial vehicle tolls that will also be adjusted annually based on inflation starting in 2018.
The toll highway authority's revenues and operations are segregated from the state government, although its leaders are appointed by the governor.
Rozek said the authority has not seen any impact from the state's prolonged budget impasse.
A constitutional amendment approved by voters in November requiring that transportation related revenue collections go into a "lockbox" and solely go to fund transportation related projects doesn't impact the authority because all of its revenues already are limited to tollway use.
The agency has paid limited penalties on recent sales in line with those typically imposed on Illinois-based issuers, especially ones with a Chicago or state-related name, even when the issuer faces little exposure to the state's budget woes, which have driven Illinois' ratings down to the triple-B category.
Ahead of a sale earlier this year, three rating agencies affirmed the authority's AA-minus-level ratings on about $6 billion of debt secured by toll revenues. All assign a stable outlook.
Another $2 billion of borrowing expected through 2022.
The system has been sticking with fixed-rate issuance on its current capital program, lowering the percentage of variable-rate exposure incurred under its previous capital program. The authority's nearly $1.2 billion of floating paper is swapped to a synthetic fixed rate under seven agreements with six banks.
Rising pension costs pose a risk because the authority participates in the Illinois State Employees Retirement System, one of the state's five poorly funded pension accounts.
