Auditor general says PA Turnpike ‘drowning in debt’

By David Tanner, Land Line associate editor | Wednesday, January 11, 2012

The state auditor general says the Pennsylvania Turnpike is “drowning in debt” because of a 2007 law that diverts $450 million in toll revenue each year to other transportation programs.

Auditor General Jack Wagner says that until the law known as Act 44 is amended or repealed, the taxpayers remain on the hook in the event the Turnpike Commission were to default on its obligations.

“The statistics show clearly that the Pennsylvania Turnpike Commission is drowning in debt due to the burdens placed on it by Act 44,” Wagner said in a statement published Thursday, Jan. 5.

In the statement, Wagner says the agency cannot continue operating on an unsustainable path.

“It is crystal clear that, with the passage of Act 44, the Pennsylvania Turnpike Commission has been placed in a position where its very existence is at risk,” Wagner stated.

“No entity can continue to operate with significant increases in long-term debt and the continued serious depletion of assets caused by Act 44. It is time to rescue the Pennsylvania Turnpike Commission by repealing Act 44.”

Then Gov. Ed Rendell signed Act 44 into law in the summer of 2007. It created a 50-year public-private partnership between the Pennsylvania Turnpike and the state Department of Transportation, requiring the Turnpike Commission to fork over $450 million per year to fund roads, bridges and mass transit programs throughout the state.

To fund Act 44’s expensive proposition, Pennsylvania officials applied to the Federal Highway Administration to convert Interstate 80 into a toll road to be controlled by the Turnpike Commission. But because Pennsylvania officials could not prove that 100 percent of the toll revenue would remain with I-80, the FHWA denied the application.

Since 2009, the Pennsylvania Turnpike Commission has raised tolls four times to meet its Act 44 obligation with PennDOT. The most recent increase was a 10 percent hike for cash customers that took effect Jan. 1.

Turnpike Commission officials say their operation is not drowning in debt as Wagner suggests.

“The Pennsylvania Turnpike Commission is not facing any immediate financial crisis as the auditor general states,” CEO Roger Nutt said in a statement. Nutt added that his agency welcomes the opportunity to work with lawmakers to lessen the load of Act 44.

“We agree with the auditor general that Act 44 funding may have a negative effect on Turnpike traffic, toll rates, customer service and other traveler benefits sometime in the future,” Nutt stated.

“We certainly understand that, in the long-term, 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. However, the PTC remains committed to meeting all its financial obligations – including obligations to bondholders – by sound management of our debt load and by reinvesting in our toll-road system.”

OOIDA has repeatedly called for Act 44 to be repealed. Truckers and business owners banded together against I-80 tolls and commended the federal government for turning back Pennsylvania’s application.

OOIDA Executive Vice President Todd Spencer says it’s finally time for the madness of Act 44 to stop.

“This is a perfect example of what happens or what can happen when any state creates a toll facility such as what exists in Pennsylvania. … It’s simply looked at as a cash cow for revenues or projects that have absolutely no economically redeeming value,” Spencer said.

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