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No relief for PA motorists even with repeal of Act 44

By   /   February 6, 2013  /   No Comments

By Eric Boehm | PA Independent

HARRISBURG – The budget proposal outlined by Gov. Tom Corbett on Tuesday calls for the repeal of a 2007 state law that has driven the Pennsylvania Turnpike deep into debt and forced five consecutive years of toll increases.

The governor’s budget would sunset that law – Act 44 of 2007– within 10 years, but an administration official says motorists using the turnpike can expect to continue seeing toll increases for the next decade, and probably longer, to retire the turnpike’s $8 billion in debt.  Lawmakers say they are supportive of the repeal and are looking for ways to lessen the impact on drivers.

MOUNTAIN OF DEBT: The Pennsylvania Turnpike might soon be out from under the onerous debt created by Act 44.

Secretary of Transportation Barry Schoch said that tolls will continue to increase between 3 percent and 5 percent for the next 10 to 15 years, with smaller increases for years after that.

The increases will be necessary to continue capital projects on the highway and pay for debt service payments.

“The increases will be less once the Act 44 payments end, a few years after it ends,” Schoch said. “There is a lag of a few years before you start seeing toll reductions because you have to pay for the debt we have already incurred.”

Under the provisions of Act 44, the turnpike was authorized to borrow more money for capital projects and increase tolls annually for 50 years in order to cover the costs.  In return, the turnpike was required to pay $450 million annually to the state.

Those payments are split, with $250 million funding other highway and bridge projects and $200 million funding mass transit, mostly in Philadelphia and Pittsburgh.

Before leaving office in January, Auditor General Jack Wagner had hammered the Turnpike Commission for allowing its debt to get out of control.  Turnpike debt climbed from about $2.6 billion to more than $8 billion in the six years since Act 44 was passed.

To pay for all that debt, tolls on the turnpike have been hiked five times in five years – more than 70 percent for toll-paying customers and 36 percent for those paying with EZ-Pass.

Newly appointed CEO Mark Compton, a former senior official with PennDOT, is supportive of the repeal, which would ease the financial burden on the turnpike, said Carl Defebo, spokesman for the commission.

Defebo said shortening the time frame for Act 44 would not necessarily reduce future toll increases, and that it is too early to determine what effect, if any, it would have.

PennDOT Secretary Barry Schoch

Schoch said the turnpike would be financially stable for the next 10 years, and ending the Act 44 payments after a decade would also send a signal to the ratings agencies that the debt being incurred by the turnpike would end soon.

It would leave a decade for the legislature to find a way to replace those lost revenues, he added.

State Sen. John Rafferty, R-Montgomery, chairman of the Senate Transportation Committee, said Wednesday he favored repeal of Act 44 and was considering several options for how to do it.

“We’re going to try to contain those increases,” Rafferty said.

State Sen. John Wozniak, D-Cambria, minority chairman of the committee, said he agreed with Rafferty on the need to explore options for Act 44 but said details still needed to be hashed out.

“All of this needs to be on the table,” he said.

Frank Gamrat, a senior research associate at the Allegheny Institute, a free-market think tank in Pittsburgh, said lawmakers should repeal Act 44 as soon as possible because increasing tolls on the turnpike will push more drive motorists to find other routes.

“If the price gets too high, people will start finding alternatives,” Gamrat said. “The increase in revenues from tolls is not keeping up with the increase in debt. It is not sustainable.”

Schoch said an immediate repeal of Act 44 would be detrimental to the state’s transportation budget because it would mean an immediate loss of $450 million – particularly problematic at a time when Pennsylvania is seeking to increase funding for transportation.

“If we ended it tomorrow, that would add another $450 million to our deficit, that we have to deal with,” Schoch said.

Corbett on Tuesday announced a five-year funding plan that would increase a portion of the state’s gasoline tax in order to direct up to $1.8 billion in new cash for road, bridge, mass transit and freight projects.

Rafferty said Wednesday he would like to see more revenue included in the plan.  He would favor an increase in vehicle registrations and other fees charged to motorists.

And all the while, tolls will keep climbing.

Contact Boehm at [email protected] and follow @PAIndependent on Twitter for more.