The Massachusetts Turnpike Authority today may opt to postpone toll increases that are set to begin Friday and instead use reserve funds to help meet operating costs for the remainder of fiscal 2009, which ends June 30.
The board is set to vote on putting off the toll hikes after Gov. Deval Patrick and legislative leaders last week said they had come to a general agreement on addressing the authority's fiscal woes and instructed Secretary of Transportation, Jim Aloisi, who chairs MassPike's board, to put off the increase.
For months the governor has said MassPike needs more revenue, either through toll increases or a boost to the state's gas tax. Conversely, Senate members have touted "reform before revenue."
Delaying toll hikes could affect MassPike's credit rating outlook as Fitch Ratings on March 5 - in response to the anticipated March 29 toll increase - removed $2.1 billion of Metropolitan Highway System debt from rating watch negative and affirmed its BBB ratings, with a negative outlook. MassPike's board on Feb. 24 voted to boost tolls this month to generate $100 million of revenue per year and help the authority meet roughly $12 million of operating expenses through June.
"I think this is definitely a change from what we expected and we had anticipated that a toll increase would go into affect in March and they wouldn't have to dip into reserves," said Fitch analyst Brian Taylor. "And it looks likely that they will have to dip into reserves."
Fitch rates $1.2 billion MHS senior bonds at BBB-plus and its $960 million of MHS subordinate debt at BBB. Moody's Investors Service assigns a Baa2 to the MHS senior-lien bonds and a Baa3 to the MHS subordinate debt with a developing outlook.
MassPike board member Mary Connaughton said she hopes the five-member panel will discuss how postponing the toll increase could affect the authority's bond rating prior to voting on the issue. In addition, Connaughton is eager to hear why Patrick has backed down from his earlier stance that either tolls go up on March 29, or the legislature must pass his initiative to increase the Bay State's gas tax by 19 cents.
"I'm sure at Monday's meeting the issue of the impact of this on the credit rating agencies and on the bond ratings will be discussed," Connaughton said. "And [Aloisi] will give, I'm hoping, will give an explanation as to what changed between February 24 and [last week] regarding the governor's position on these toll hikes."