WASHINGTON— The Maryland Transportation Authority is proposing its first statewide toll increases to generate more revenue to back bonds that were issued for two major highway projects and for rehabilitating aging infrastructure.
The toll increases, which the authority hopes to be able to put in place by Oct. 1 and Jan. 1, are expected to raise $77 million dollars in their first year, according to the authority.
The highway construction projects are the Intercounty Connector north of Washington, D.C., and express toll lanes next to Interstate 95 near Baltimore. The state is proposing to double the toll to $5 from $2.50 on the Bay Bridge between Washington and Maryland’s eastern shore beach resorts. It would be the bridge’s first toll increase since 1975.
The state also is proposing toll increases of $1 or $2 for other bridges and tunnels, lower discounts for E-ZPass commuters, and new video toll systems to record cars’ license plates.
“It was something we’ve known we needed to do and we’ve needed to do for along time, as we have issued significant amounts of debt over the last several years,” said Maryland Transportation Secretary Beverly Swaim-Staley.
But she also concedes Maryland drivers have not necessarily known about the toll plans for a long time.
“One of the challenges we have is that we’ve had historically low toll rates,” she said. “So it is definitely sticker shock after decades of not having to raise our tolls in many cases.”
The MDTA plans to hold nine public hearings on the proposed toll increases this month.
The Transportation Authority is a self-sustaining enterprise that operates the state’s bridges, tunnels, and turnpikes on toll revenues, completely separate from the state’s general transportation funding, so the toll increases are not a response to declining state gasoline tax revenue or declining federal aid.
The MDTA has issued $2.5 billion of bonds over the last few years as part of a capital plan covering 2008 to 2014.
Analyst Adam Torres at Standard & Poor’s said the MDTA toll increase is the kind of thing similar large systems do to keep their financial metrics on plan and their facilities in a state of good repair. Generally it has allowed issuers to keep their credit ratings stable, he said.
Typically on mature statewide systems, “its holding up. If there have been declines they haven’t been dramatic,” he said.
A mature system such as Maryland is in a different financial situation from many startup toll roads, which have to rely on projected traffic growth if they’re to remain in good fiscal condition, according to Torres.
“It can get all over the place,” is how Fitch Ratings analyst Chad Lewis characterized the financing plans of new toll roads. Fitch expects to see more new toll roads coming along as other sources of financing decline.
“It really varies,” Lewis said. “If they were very highly leveraged out of the box and depend on growth in certain different areas and [are] certainly dependent on toll increases, that would just make them riskier.”
Fitch warned investors in a recent special report on transportation financing that not all assets are self-supporting, or essential from an economic standpoint, regardless of how rosy the traffic and revenue forecast may be.
