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Tolling Points

Pennsylvania Court Case Sheds Light on Long-Running Toll Revenue Saga

By: 
Bill Cramer

A federal court decision last month in a long-running battle with independent truckers has paved the way for the Pennsylvania Turnpike Commission to continue with its current method of divvying up toll revenues—and, in the end, brought needed attention to a long-detested practice that it never wanted to adopt.

In mid-August, the 3rd U.S. Circuit Court of Appeals in Harrisburg upheld a lower court ruling that the Turnpike does not violate truckers’ or other highway users’ right to travel between states under a 2007 law, Act 44, that mandated the Turnpike provide a sizable share of its revenue to the Commonwealth and the DOT for transit and other purposes.

“Because Congress has permitted state authorities, such as defendants, to use the tolls for non-Turnpike purposes, the collection and use of the tolls do not implicate the Commerce Clause” of the U.S. Constitution, wrote Judge Patty Shwartz. “Moreover, because plaintiffs have not alleged that their right to travel to, from, and within Pennsylvania has been deterred, their right to travel has not been infringed.”

The Missouri-based Owner-Operator Independent Drivers Association and a group of other plaintiffs had argued the tolls far exceed the value of using the Turnpike, supporting activities with “no functional relationship to the operation, maintenance or improvement” of the tollway itself, the Associated Press reported. Transit and various multi-modal uses receive a $450-million annual boost from toll revenues.

“If the plaintiffs had prevailed, it could have blown an enormous hole in state finances and put funding for mass transit into question,” AP noted.

One Chapter Closes, Another Opens

For the PA Turnpike, the ruling closes one chapter of a long, frustrating story and opens the door to the next.

Pennsylvania Turnpike Commission CEO Mark Compton traces the current funding arrangements back to 2007, when Pennsylvania sought approval from the Federal Highway Administration (FHWA) to toll Interstate Highway 80. The Turnpike is the east-west route from Pittsburgh to Philadelphia, he explains, while 80 is the parallel northern route across the Commonwealth. Act 44 provided for the transit and multi-modal funding, with the understanding that new toll revenues would be available to cover the cost.

But that’s not the way things turned out.

FHWA eventually turned down the I-80 tolls, but legislators still allowed the financial flow between the Turnpike and state coffers, with an initial expiration date of 2057. A partial sunset was later dialed back to 2022 thanks to passage of a law known as Act 89 of 2013.

Now that the agency and the commonwealth are both clear of the truckers’ lawsuit, Compton told Tolling Points, the next step is to get the Turnpike out from under an unwieldy obligation.

“There’s a bill going through the state House of Representatives that would back us out of the allocation a little sooner, by $50 million this year, $200 million next, and a full phaseout in 2022,” he said. “We’re going to work for that and hope it comes to fruition. But at the very least, we have to ensure that the sunset in 2022 occurs as mandated by current law.”

Until then, “my biggest fear is that the replacement revenue is to come from the General Fund, where it will compete with other priorities like pensions, education, prisons — all those other obligations that the General Assembly and the Commonwealth must fund,” he added. So “we’re actively trying to educate legislators, constituents and stakeholders that we need a hard stop in 2022 for the good of our financial position.”

Even with a faster phaseout, Compton said the tollway and its customers won’t see financial relief overnight. “Everything we bond is 30-year money,” he noted. So, if the last borrowing under Act 89 occurs in 2022, it’ll pay off in 2052. Even so, while “we fully expect annual toll increases for the foreseeable future,” customers can look forward to seeing those increases to decline from six to five percent, then settle closer to the inflation rate around 2028.

In 2018, out of the $1.4 billion in total revenues the Turnpike collects, Compton said $675 million went to debt service. Out of $12 billion in total debt, $6.6 billion traces back to Acts 44 and 89, with the remaining $5.4 billion in capital available to rebuild “what will next year be an 80-year-old roadway. We’re making progress on the asset, but not at the level we deem appropriate.”

This Publicity Was Good Publicity

It isn’t quite true that all publicity is good publicity. But in this case, the public attention and media spotlight generated by the truckers’ court case could help the Turnpike correct an impossible situation.

“Stop milking the Pennsylvania Turnpike so it can stop milking drivers,” headlined columnist Paul Muschick in a mid-July post for Allentown, PA-based The Morning Call, the state’s third-largest newspaper.

“In the past 12 years, the Turnpike diverted $6.6 billion in toll money to PennDOT to pay for mass transit and construction on other roads,” Muschick added. “The Turnpike can’t afford that, so it has to borrow money. And to pay the debt, it has to raise tolls. It’s time for lawmakers to break that cycle.”

It’s an analysis Compton says he appreciates, and one we might not have seen before the truckers’ case wended its way through the legal system.

“The one bright spot about this lawsuit is the attention that was given to this matter,” he said. “This is the first year that the coverage of our toll increase came to the defense of the commission” and recognized the untenable position the agency has been in. “It’s brought enough attention that there are now bills in the House calling for immediate relief, and the editorial writers are starting to see what we’re dealing with here. These are positives.”

Newsletter publish date: 
Tuesday, September 10, 2019 - 11:30

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