Pa. Turnpike Taking On New Debt At Difficult Time
HARRISBURG, Pa. (AP) - Even before gas prices spiked and the economy turned sour last year, the Pennsylvania Turnpike was saddled with daunting financial challenges.
A major 2007 transportation law required it to generate billions of dollars for roads, bridges and mass transit through borrowing, higher fees and the proceeds from introducing tolls to Interstate 80.
The I-80 tolling plan has failed to get federal approval, but the rest of the law remains very much in force, and on Thursday the turnpike commission raised $317 million by selling bonds as part of the deal.
"We've given the turnpike a heavy load to carry, and that's not their fault,'' said Rep. Joe Markosek, the Allegheny County Democrat who chairs the House Transportation Committee.
Matthew J. Brouillette, president and chief executive of the conservative Commonwealth Foundation and a turnpike critic, said the borrowing has put taxpayers and the state's infrastructure at risk.
"The numbers just don't add up,'' Brouillette said. "We can't keep raising tolls on turnpike users.''
Problems with the bond market have recently increased the cost of borrowing, but that has hardly been the agency's only financial headache these days.
Revenue on the 531-mile turnpike system has been down about 5 percent, a remarkable drop-off considering that passenger car use has typically increased by about 3 percent annually over the past two decades.
Commercial traffic fell more than 12 percent in November compared to the same month a year ago, a sharp decline even taking into account that November 2008 contained two more low-truck-traffic weekend days than November 2007. December traffic figures, however, were more encouraging, the commission said Saturday.
A Jan. 6 study produced by consultants Wilbur Smith Associates as part of the latest bond offering estimated that total vehicles on the system will end the year about 2.5 percent under what was recorded during 2007- 08, and remain below that level until 2012-13. The turnpike served 185 million vehicles in 2007.
According to the study, revenues are projected to climb, boosted by the 25 percent toll rate increase that took effect Jan. 4 and expected 3 percent annual toll increases in subsequent years.
The turnpike commission has undertaken a belt-tightening effort, shedding 60 employees in the past two months, most of them midlevel management.
Seven months into its current fiscal year, the commission still has not adopted an operating budget as it scrambles to adapt.
"Certainly we're in a recession now that is very severe, and it's something that we all have to address,'' said turnpike chief financial officer Nick Grieshaber.
Craig Shuey, an aide to Senate Transportation Committee Chairman Rob Wonderling, RMontgomery, said he has seen no evidence the turnpike's challenges are any more serious than what is happening elsewhere in state government.
"No one can say fat-andhappy days are just around the corner with any certainty, so everyone's going to have to figure out how to maneuver in the economy,'' he said.
Ratings agencies have not lowered their assessment of the turnpike's ability to repay its borrowing, last week's bond sale was deemed a success, and Grieshaber says wiggle room was built into the 2007 transportation law.
Turnpike officials say the recession has brought a silver lining by reducing the cost of construction materials such as asphalt and steel. Federal stimulus money may be on the way, and the Obama administration might approve I-80 tolls.
But Markosek worries an influx of federal money may relieve the pressure on state officials to adequately deal with transportation needs. He hopes the Legislature will support responsible but politically difficult solutions.
"We need to make some tough decisions this year,'' he said.