The Turnpike Commission wanted to ensure bondholders that, “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.”
But while bondholders (and bond attorneys) may rest assured, taxpayers and drivers should not.
Act 44 may not result in a default—as a government monopoly, the Turnpike Commission can raise tolls without threat of competition, and bonds are further backed by Pennsylvania taxpayers—but that doesn’t make it sound policy.
The Turnpike Commission’s Annual Financial Report (see page 24) shows that the PTC lost $523 million, $1 billion and $891 million respectively each of the last three years. That should worry taxpayers and motorists.
The negative outlook reflects the possibility that larger than currently forecasted toll rate increases will be necessary to maintain sound financial operations and targeted debt service coverage levels. The outlook also incorporates the possibility that the turnpike could be tapped to pay for more of the state’s growing unfunded infrastructure needs.
Let’s not forget, Act 44 was created as an alternative to leasing the Turnpike to a private investor and manager. The claim was that a private company would … wait for it … raise tolls!
So is the commonwealth better off having borrowed $5 billion under Act 44 compared to getting $12 billion in an up-front lease payment?
The Turnpike Commission’s persistent defense of Act 44 might make one think that its Chief Operating Officer is the Senate staffer who wrote the offending legislation.