Believe it or not, songs have been written about Pennsylvania’s famous toll road. In 1969 a country duo named Homer & Jethro wrote “Pennsylvania Turnpike, I Love You,” which somebody has unearthed and posted on Youtube:
Pennsylvania Turnpike, I love you so
All the way from Jersey, to Ohio
From the beautiful mountains
And the fields of grass
And the friendly road stops
Where we eat and get gas!
At the time, the turnpike was regarded as a fun touring route, not a political albatross. Public attitudes changed through the decades as books like William Kiesling’s “When the Levee Breaks“ (1993) and Brad Bumstead’s “Keystone Corruption” (2016) publicized patronage and mismanagement at the Turnpike Commission and in state government generally. New editions, if released, may need to add a chapter on the current situation. Penn Live reports that toll revenue in the month ended April 18 fell by half, placing the turnpike under financial stress and exposing its reckless debt load.
The turnpike has about $12.8 billion in bonds outstanding, 16 times cash flow before interest of about $800 million. The borrowed money is long gone, funnelled to state government for mass transit in Philadelphia. Interest payments are $620 million annually, meaning a traffic reduction of more than about 20% for the year will require the turnpike to draw on reserves. The Turnpike Commission could increase tolls, but it already raised them in January. A driver paying cash to go from Jersey to Ohio in a car pays $61.20. If he’s in an eighteen-wheeler, he pays $197.50 cash or $142.60 electronically.
Briefly stated, Pennsylvania’s political class has turned the turnpike from an asset into a liability.
It didn’t have to be like this. In 2006, the Pennsylvania Funding and Reform Commission proposed leasing the turnpike to a private operator. The idea was to collect money up front while transferring business risk and and maintenance costs. A well-written lease agreement could have contractually limited toll increases and stipulated the reinvestment of profit for road improvements. At least one bid came in at $13 billion for a 75-year lease.
State government passed on the lease idea and opted instead for the Act 44 plan of 2007, which kept the turnpike under Turnpike Commission control while requiring it to make annual payments to the state. The turnpike is currently required to pay $450 million annually through 2022, at which time annual payments will fall to $50 million through 2037. The Pennsylvania Department of Transportation has been sending $250 million of that money annually to Philadelphia via the Public Transportation Trust Fund.
Where does the turnpike get the money for the payments? It borrows and hikes tolls. Unlike the proposed lease, Act 44 placed no limit on toll increases. The financial burden of Act 44 has given us the high debt, high toll situation we have today.
Last year, after releasing a report on the Turnpike Commission, State Auditor General Eugene DePasquale announced that the current situation “just isn’t sustainable” and “the idea that motorists and truckers on [the turnpike] are going to be able to pay that entire debt back is literally delusional.”
DePasquale’s damning assessment came during an economic boom. Now, with traffic dropping, the situation is urgent. To avoid insolvency, the turnpike will most likely need to modify the Act 44 payment schedule, and it will almost certainly have to delay important construction projects. If the turnpike had been leased, the state would already have its money while coronavirus and debt would be a private operator's problem.
Numerous stakeholders are set to lose as the Act 44 plan unravels. Drivers will lose as tolls keep rising. City transit systems will be squeezed if their state funding dries up. Taxpayers will lose if the turnpike remains distressed and politicians decide to bail it out. Absent a bailout, lenders would lose. The last scenario is the fairest, if it comes to that. The Turnpike Commission's debts are secured by toll revenue, not guaranteed by the state government. It's a risk lenders willingly took.
Instead of Homer & Jethro’s happy song, all parties are now singing the “Pennsylvania Turnpike Blues” (Alex “Suitcase” Shoumatoff, 2008) as they wait out the virus:
Pennsylvania Turnpike blues
Tell me which exit shall I choose
I’m just cruising all confused…
Picked up a hitchikin’ stranger
Didn’t say a word, he was deaf and dumb
Pulled out a Bible and started to thumb
Stopped at Revelation, Chapter One
It may not be the end of days, but it sure is a mess.