Pennsylvania’s new transportation funding law is a credit positive for the state and several authorities, Moody’s Investors Service said.
Pennsylvania Gov. Tom Corbett signed the funding bill into law on Nov. 25. The state expects the law’s changes to generate $7.3 billion in new revenue over the next five years. Starting in fiscal 2018 the state hopes the law to generate up to $2.4 billion annually.
The law will provide the revenue by the increasing oil company franchise tax, vehicle registration, driver’s license, county vehicle registration, and other motor vehicle-related fees.
Moody’s analyst Kimberly Lyons said that the new law is a credit positive for the state, which it rates Aa2, Pennsylvania State Turnpike Commission (senior bonds A1 and subordinate bonds A3), Southeastern Pennsylvania Transportation Authority (A1) and the Port Authority of Allegheny County (A1).
The law will eliminate the turnpike commission’s annual payment obligation to the Pennsylvania Department of Transportation, Lyons said. Some of the new tax revenues will go to the commission. The new law will slow the commission’s debt growth, which Moody’s had said was a credit challenge for the commission.
The department of transportation will get money from the new tax and fee increases.
The new law will increase the funding allotments for the port authority and transit agency to $430 million to each of them in fiscal 2015 from $250 million for each of them.