Pa. ’pike in Financial Trouble, Auditor General Says

Posted by By at 17 January, at 12 : 54 PM Print

Pennsylvania Auditor General Jack Wagner issued a stern warning to legislators earlier this month, noting that “like the City of Harrisburg and Jefferson County, Ala., the Pennsylvania Turnpike [is] in danger of becoming financially insolvent and defaulting on its debt obligations.”

One has to wonder what would happen if the turnpike authority were declared insolvent. What do you do when a major contributor to the state’s highway system goes belly up? Close the more than 500 miles of turnpike? Which, by the way, comprises a portion of interstates 70 and 76, from Philadelphia to the Ohio border northwest of Pittsburgh.

On the other hand, closing those routes would likely not be an option, since they also receive funding from federal, and other state, funds.

At the core of Wagner’s argument is Act 44 of 2007, passed by the General Assembly the year before the nation’s economy crashed and burned. That year, the turnpike authority was one of a very few state entities actually making money and paying its own way. Also, lawmakers hoped, the agency would collect millions of excess dollars from Interstate 80 travelers when the Federal Highway Administration allowed the state to toll the state’s other major east-west Interstate.

Act 44 was the foundation of a so-called “public-public partnership” between the state and itself – on paper, between the turnpike authority and PennDOT – in which the turnpike system would give PennDOT an annual contribution, and the transportation department would use the money to repair roads and bridges and assist in developing the state’s public transportation system.

The turnpike authority, overseen by a five-member Pennsylvania Turnpike Commission, also would increase tolls on the Pennsylvania Turnpike – 25 percent in 2009 and three percent annually thereafter.

From its financial wellspring, the turnpike authority also would give PennDOT $750 million in 2008, $850 million in 2009, and $900 million in 2010, and presumably increasing contributions annually over the next 50 years.

Unfortunately, Interstate 80, like all Interstate highways, is a federal road, and the feds said “no deal” to tolling it. (The turnpike was built as a state-owned toll road beginning in 1938, so the state does not have to ask federal permission to continue levying a fee on its travelers.)

When you ask your uncle for a cookie, there is an implication that he could say “No,” so state lawmakers included a provision in Act 44 lowering the turnpike’s PennDOT contribution to $450 million – $250 million for public transportation and $200 million for roads and bridges – if I-80 could not be tolled. Unfortunately, they did not build in a way to fund even the reduced payment, which Wagner says is becoming a pit into which the ’pike is in danger of falling.

The turnpike commission has two ways to make its $450 million payment to PennDOT: raise tolls even more, and borrow money. Since 2009, Wagner said, the Turnpike Commission’s total net assets plunged 997 percent. He projected borrowing for PennDOT will increase the authority’s deficit more than $20 billion over the next 50 years – unless Act 44 is repealed, or amended to eliminate the payment.

Responding to Wagner’s alarm, Pa. Turnpike Commission CEO Roger Nutt replied in his own written statement that the turnpike authority is not in financial crisis – at least not yet.

“Since the first Act 44-necessitated toll increase on the Pa. Turnpike in 2009, we have made it clear to our customers, to elected officials and to citizens of the commonwealth that annual rate hikes are needed to fund the Act 44 debt,” Nutt said. He noted the PTC approved a funding plan in June that will allow it to meet its obligations “for the next three years.”

But he acknowledged, “The funding stream [toll increases] necessary to do so may not easily be sustained, and so subsequent amendments to the funding requirements may need to be considered.”

In other words, for the next three years, we’re good. After that, depending on the turnpike to maintain a statewide transportation system probably will be an exercise for dreamers. Huge trucking and tourism lobbies will keep the feds convinced tolling I-80 is a bad idea, and travelers likely respond to higher turnpike tolls by finding other routes to their destinations.

The legislature needs to find another way to raise the money. Unfortunately, that likely will mean increased broad-based taxation.

Photo by MPD01605
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- who has written 169 posts for Rock The Capital
John Messeder is an award winning journalist with more than 35 years experience writing about education, environment and local government issues. He has lived in Maine, Florida, California and Alaska, and, by temporary turns, numerous places in between. John also is an accomplished photographer, and avid hiker, conservationist, oral history buff, and author of several books he has not yet got 'round to writing. He lives in Adams County, Pa., just over a hill from Gettysburg, with his wife and Golden Retriever. He may be contacted at - Email jmesseder

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