HARRISBURG — In 2005, then Gov. Ed Rendell and his cohorts decided to, literally, tax Pennsylvania’s Turnpike Commission to subsidize mass transit mainly in Philadelphia and Pittsburgh.
Fourteen-years later that decision has resulted in a fiscal crisis for the toll road agency. It is over $12 billion in debt as a result Moreover, lawmakers in both parties are scrambling for a tax-free pre-election solution.
At issue is so-called Act 44 of 2005. That statute mandates the Turnpike Commission to remit $450 million of its yearly toll revenues to Pennsylvania’s Department of Transportation or PennDOT for the transit subsidies.
That was the first-ever legal nexus between those agencies.
PennDOT is financed through the so-called Motor License Fund, composed of fuel tax revenues, vehicle registration and license fees along with federal highway subsidies and other money. Conversely, the Turnpike relies only on toll revenues and some advertising fees to finance its operations.
The mandated $450 million yearly transfer has resulted in toll hikes in virtually each of the last 14-years. Yet, the toll road agency has been forced to borrow money to meet the mandated funding transfer to PennDOT.
Seemingly-ever increasing tolls has resulted in diminishing returns. That’s economist-speak for pricing something out of existence.
As tolls increased Turnpike usage has declined. So have toll revenues
Toll road agency and other state officials saw hope in a lawsuit filed by the Missouri-based Owner-Operators and Independent Drivers.
In its lawsuit the OOID asked a federal judge to declare the mandated Act 44 transfer as a violation of the U.S. Constitution’s Interstate Commerce Clause. Turnpike tolls should only be used for highway operations, not urban mass transit subsidies.
U.S. District Court Judge Yvette Kane disagreed, In a complex 96-page ruling issued last week, Kane essentially said the problem is Pennsylvania’s. Thus, it’s up to the state legislature to find a solution.
The OOID is expected to appeal that ruling to the Third U.S Circuit Court.
Even though Turnpike and other state officials were named defendants in that suit, their disappointment by the outcome was obvious.
A financially damaged turnpike could result in an economic tsunami.
If the toll road agency declares bankruptcy, the commonwealth’s credit rating would be severely damaged since the loans were issued under the full-faith and credit of Pennsylvania.
Turnpike operations have a big impact on the region’s economy:
--Westmoreland County has 54.4 miles of Turnpike, include the east-west mainline, as well as the Amos K. Hutchinson Expressway around Greensburg, along with the New Stanton Service area
--Allegheny County has 37.7 miles including the main line and the so-called Mon-Fayette Expressway along with the Oakmont Service Area.
--Somerset County has 29.8 miles along with two service areas — Somerset North and South
--Bedford County has 35.3 miles with the midway North and South Service areas,
Besides official Turnpike personnel, hundreds of private sector jobs are at stake. They involve service area employees and delivery workers.
Enterprises adjacent to the Turnpike, such as hotels, restaurants, fueling stations and some retailers and tourist destinations, would be impacted.
Fourteen-years ago, Rendell wanted to appease his base with piles of state cash to big-city transit operations without raising taxes. That was a mistake that could cost us all much more than a regional transit tax