First of a two-day series
The Pennsylvania Turnpike Commission's 44 percent toll hike coming this August is just the latest manifestation of a nearly two-decade-long spending binge that has left the agency with billions of dollars of debt, a doubling of tolls and the prospect of more to come.
Part of the spending spree was the unavoidable result of maintaining the Turnpike the nation's oldest superhighway and adding much-needed upgrades, such as the bigger Mid-County toll plaza outside Philadelphia.
But along the way, the Turnpike's original concept of you-use-it, you-pay-for-it morphed into a borrow-and-spend cycle driven by construction of expensive highway projects of questionable need and ever-rising employee costs.
Those decisions were made easy by a closed loop of Turnpike officials, who have no direct accountability to taxpayers, and legislators, who ordered the highway system's expansion but have no budgetary authority over the Turnpike.
Thus, when the Turnpike introduced E-ZPass, reducing the need for human toll collectors, how much did it cut from the toll collection budget?
Costs shot up by millions of dollars.
''When is this going to stop?'' demanded state Sen. Lisa Boscola, D-Northampton, who objected to the Turnpike Commission's rapid approval in January of the toll hike as much as the increase itself. ''It seems like it's never-ending anymore.''
Boscola doesn't realize how correct her observation is.
No end to the Turnpike's demand for more money is in sight.
The really grim financial news is that even after the toll increase, the Turnpike still needs billions more for projects that are under way or in development.
Don't think that if you avoid the Turnpike, the bills are someone else's problem, either. You help pay the tab if you drive or own a car in Pennsylvania.
With a more-modest expansion, the steady growth in traffic on the Turnpike could have made the toll increase unnecessary or at least smaller, and the revenue could have piled up in a maintenance reserve fund.
Instead, growth has speeded up the drain on the Turnpike's resources. The cost of borrowing to finance major construction, which took a nickel out of every revenue dollar before the binge began, now consumes 31 cents.
All this for an agency that before the spending spree was on the verge of closing the toll booths, converting into a ''free'' highway and putting itself out of existence.
Said Tom Lewis, author of a history of the interstate highway system: ''These authorities, it's just a license to steal, the way they're set up.''
When the Turnpike opened in 1940, planners envisioned a road financed by users who would pay off the bonds floated to finance construction of the original 160-mile ''mainline'' highway from Irwin, Westmoreland County, to Middlesex, Cumberland County.
That, however, didn't take into account maintenance, improvements or a state Legislature ready to saddle the public with Turnpike bills that would take generations to pay.
Awash in dollars
While the Turnpike captured the public's imagination when it opened 64 years ago, it didn't come without its share of troubles. Corruption and bribery investigations garnered headlines by the 1950s.
After the Turnpike's major expansions east to the Delaware River and north to Scranton were complete, there still remained patronage jobs to hand out. State senators effectively wielded control over Turnpike jobs, since rules at the time required that Turnpike commissioners receive a two-thirds majority vote of the Senate.
When a Republican governor, Dick Thornburgh, in 1978 was elected with a Democratic Senate, the stage was set for a political war for control of the commission. It lasted seven years, until Thornburgh signed Act 61 into law in 1985. The new law reorganized the commission and authorized what state officials estimated at the time to be $4.5 billion in construction projects.
Some of the new highways today bear the names of powerful western Pennsylvania legislators who got the dollars flowing into their districts through Act 61: former Speaker of the House James J. Manderino and Amos K. Hutchinson, both of Westmoreland County, and Washington County Sen. J. Barry Stout, still minority chairman of the Senate Transportation Committee.
Before Act 61, the Turnpike stood close to retiring itself, having only $65 million left in debt.
Had that debt been paid, the need for the toll booths would have no longer existed, and the Turnpike would have fallen under the control of the state Department of Transportation as a ''free'' highway, just like other interstates in Pennsylvania. That, of course, also would have meant transferring the cost of maintenance and improvements to taxpayers.
The 21 new projects, upgrades and expansions authorized by Act 61, however, changed everything. It also soon became apparent that $4.5 billion was a woefully poor cost estimate.
Today, the Turnpike is struggling to find enough money to build two connected highways outside Pittsburgh that alone cost almost as much as the mid-1980s estimate for all 21 projects. The Mon-Fayette Expressway, long championed by Stout, and a companion project, the Southern Beltway, have doubled in cost to an estimated $4.2 billion and the Turnpike has yet to secure about $2.5 billion of that.
The Turnpike approved a toll hike of 30 percent in 1987 and added another 30 percent to that in 1991 to finance Act 61 expansion. Improvements included expensive projects that were undeniably needed but generated no new revenue by themselves: multilane widening near Philadelphia, connecting to the Blue Route the suburban interstate link west of Philadelphia built by PennDOT and opened in 1991 and opening a second Lehigh Tunnel on the Northeast Extension, the last place in the Turnpike system where traffic funneled into only two lanes.
The increases also financed construction of additional roadway of marginal value in lightly populated areas. By the end of 1993, the Turnpike opened the 16.5-mile James E. Ross Highway in Beaver and Lawrence counties named for a Beaver County state senator and the 13-mile Amos K. Hutchinson Bypass near Greensburg, Westmoreland County, both of which levy additional tolls.
Total cost to build those two: $545 million.
Traffic for years on these two highways was a fraction of what the Turnpike commission predicted. As a result, the tolls for the new roads eventually covered operating costs, but not debt service the cost of borrowing for their construction. It's like a homeowner who has to dip into a retirement account to pay the mortgage.
In effect, funds that would have been accumulating for today's maintenance needs increasingly went to bondholders.
Traffic on the open portions of the Mon-Fayette Expressway has met Turnpike projections, although it hardly resembles the busy mainline. The open section south of Pittsburgh ''would make a marvelous bowling alley,'' said Jonathan Robison, an expressway opponent from Pittsburgh.
Meantime, Turnpike officials also recognized that the mainline Turnpike needed total reconstruction. Costs were estimated at $6 million to $8 million per mile. Work on the $1.3 billion project began in 1999 in Westmoreland County.
After years of reporting that toll rates were sufficient for Turnpike operations, officials let it be known last year that they wanted to raise tolls. On Jan. 14 this year, the commission announced a 44 percent toll hike. A week later, without seeking public comment, the five-member commission approved it to begin on Aug. 1.
Turnpike Chief Executive Officer Joseph G. Brimmeier defended the increase, saying he wanted an increase of 50 percent to 65 percent.
The 44 percent increase, he said, is ''bare-bones'' and will go entirely to fund the rebuilding of the mainline.
Without it, the Turnpike can only reconstruct four miles of highway a year, he said. With it, the Turnpike can do 10 miles a year and move on expensive bridge projects, such as those that cross the Susquehanna and Allegheny rivers, Brimmeier said.
Cash rolls in
Toll road advocates in the past defended the rationale for tolls on the basis that only driving customers foot the bill. What, they reasoned, could be fairer?
But that hasn't been true for years in Pennsylvania, where the Legislature agreed to allocate part of the state gasoline tax to the Turnpike beginning in 1992. And in 1997, it approved Gov. Tom Ridge's plan to raise vehicle registration fees by 50 percent, sending part of the increase to the Turnpike. Those two funds, totaling $74.3 million last year, aren't being used for mainline repairs, however. They're going to build new highways in western Pennsylvania, authorized by Act 61.
While toll rates haven't been raised since 1991, the Turnpike is hardly starved for cash. In 1990, when the Turnpike turned 50, the road carried 97.4 million vehicles a year. That has increased by 88 percent to an estimated 183.1 million vehicles a year each one adding more toll money to the Turnpike's cash box.
So even without raising tolls, the Turnpike's operating income went from $270 million after the last toll increase to an estimated $414 million this year. The taxes and fees provided additional revenue.
But the rate of growth in debt service far outpaced the rate of income growth.
Last year, the Turnpike paid $150 million in debt service, far more than the $7.9 million it spent in fiscal year 1985-86 before Act 61 spending started.
Brimmeier said road projects are so expensive these days that borrowing is the only option. ''You can't do it on a pay-as-you-go basis,'' he said.
It wasn't as if the Turnpike didn't see it coming.
A 1997 audit by the state Legislative Budget and Finance Committee warned, ''The financial and resource demands posed by Act 61 implementation threaten the Turnpike's ability to continue to adequately maintain the mainline.''
Brimmeier, who joined the Turnpike in 2003, contends that some Act 61 projects should be looked at independently of the mainline.
But to get a view of the full cost of maintaining the mainline and carrying out the Act 61 projects, state auditors analyzed all the revenue sources against the total cost of borrowing. Even Brimmeier's predecessor, John T. Durbin, acknowledged that the two previous toll increases were ''in response to this large increase in our debt service,'' caused by Act 61.
Former Public Utility Commissioner John Hanger, a critic of the Turnpike's expansion plans, concurs that the new highways diverted money from maintenance of the mainline highway.
The Turnpike, he said, is building ''new roads and it can't maintain its bridges. That doesn't seem to make much sense.''
''Most people don't add new rooms to their homes when the roof is leaking.''
Drivers are picking up the tab
The Turnpike compounded the cost to motorists by banking on ''highly optimistic'' revenue projections, according to the 1997 audit.
Seven years after the audit was released, the committee's concern about the Turnpike's optimism is proving valid.
Hoped-for federal grants did not materialize. Another strategy that would have diverted $2.1 billion of Pennsylvania's federal highway money over 20 years also died.
''They're bonding everything to the hilt and still they're millions and millions and millions of dollars short,'' said Heather Sage of Citizens for Pennsylvania's Future, an environmental organization.
That leaves everyday motorists to pick up the tab. Commercial drivers also will suffer.
''Truckers work on a very, very, very thin margin 1 or 2 percent,'' said Richard George, co-owner of War-Hunt Trucking in Allentown. ''All you need to do is increase costs just a little bit and it could put you out of business.''
Others said truckers will use local and untolled highways rather than pay possibly hundreds more in tolls. The largest-class truck traveling the Turnpike from Ohio to the Delaware River would pay $861, a $257 increase, once higher fares begin in August.
''A lot more are going to be running the old 22 back in Altoona,'' said Jim Eisenhard, owner of J&E Trucking, Wescosville. ''And a lot of them are going to be running 80. I know the roads have to be repaired, but that's a big increase.''
Despite the growing costs, the Turnpike's bond rating remained solid, thanks to the rising toll and gas tax income. The 1997 audit committee, however, saw enough warning signs that it called for another examination of the Turnpike in 2001.
It never happened. ''I obviously had forgotten that we made that recommendation,'' said the audit committee's executive director, Phil Durgin.
August hike may be
just the beginning
To drivers, the upshot is that traffic is far heavier and vehicle tolls will have more than doubled to say nothing of the tax and fee hikes since the building spree began.
The latest increase will leave the Turnpike with tolls costing drivers about 5.9 cents per mile. The International Bridge, Tunnel and Turnpike Association, based in Washington, D.C., does not keep comparative statistics on toll roads' cost per mile, but the Turnpike's rate will be well above the rates on major toll roads in Ohio, New Jersey and New York.
Neil Gray, director of government affairs for the association, said Pennsylvania Turnpike drivers paid relatively low tolls because the Turnpike is old, as superhighways go.
Now, however, it's time to catch up. Today, ''reconstruction is orders of magnitude higher,'' he said.
That means finding new sources of money. One consideration is another gas tax increase. Turnpike advocates have expressed support for a gas tax hike of five to eight cents, with a portion of that going to support Turnpike expansion.
Gov. Ed Rendell has not committed to increasing the gas tax.
''I'm not in favor of raising the gas tax,'' said Westmoreland County state Rep. Joseph Petrarca, D-55th District. ''We've already raised taxes,'' he said, referring to the recently enacted state income tax increase.
Petrarca is seeking supporters of a bill that would give the Legislature the right to rule on Turnpike toll increases. Ultimately, he said, he wants to roll back at least part of the latest toll hike.
Republican state Rep. Jeffrey Habay of Allegheny County also wants to roll back the toll increase with legislation. ''Most representatives would agree that the rate increase is far too high,'' the 30th District legislator said. ''It should be repealed or at least reduced a great deal. Really, it's a mismanagement problem.''
Habay's and Petrarca's bills, however, are stuck in the House State Government Committee, headed by state Rep. Paul I. Clymer, R-Bucks. Clymer's committee invited only Turnpike officials to a meeting earlier this year to hear about the reasons for the toll increase after the commission ratified it. As an informational session, the meeting did not even warrant having a stenographer present to make an official record.
After all, Clymer noted, the General Assembly has no authority over the Turnpike. Turnpike employees report to a five-member commission appointed by the governor and ratified by the state Senate. After that, the Turnpike makes budget and operational decisions without legislative approval.
''I'm not sure I'm the right committee to have oversight,'' the 145th District legislator. ''But someone has to ask them about why they needed'' the toll hike.
The only other person who had the muscle to question the increase was Rendell himself. But the governor, who supports building the Mon-Fayette Expressway, nominated Brimmeier for the chief executive position and stood behind Brimmeier's decision, saying the higher tolls would provide the means to keep the Turnpike safe.
''If this increase isn't done, there's going to be some huge potential safety hazards in the years to come,'' Rendell said.
If the numbers don't seem to add up how many agencies get 44 percent rate hikes even as revenues rise by tens of millions of dollars? part of the explanation lies inside the toll booths.
A staff that doesn't go away
Since the Turnpike opened Oct. 1, 1940, whenever a driver paid a toll, a toll collector took the cash. That changed in December 2000 when the Turnpike introduced the electronic toll collection system, E-ZPass.
Since then, drivers have used the E-ZPass system in greater numbers, to the point where 36 percent of mainline tolls now are collected without the need to roll down the car window.
But with the Turnpike not directly accountable to the public or state legislators, it lacked a key pressure point to lower toll collection costs.
In 2000 as E-ZPass was being initiated union negotiators representing toll collectors and maintenance workers signed a three-year contract that barred layoffs. It also boosted full-time toll collectors' base salary to almost $39,000 a year.
The Turnpike has used attrition to reduce its full-time toll collecting staff by about 100 since E-ZPass started, Brimmeier said, although temporary collectors' numbers increased, sending total staffing to 2,345. The Turnpike now employs 678 permanent full-time toll collectors and 183 ''supplemental,'' or temporary, collectors.
However, considering the 138 other toll collection-related positions and 61 toll collection managers, the total of 1,060 employed in toll collections is largely unchanged from pre-E-ZPass days.
In whatever way the employee pool is divided, the bottom line tells the story.
In the last year before E-ZPass was implemented, the Turnpike budgeted the cost of fare collections at $51.2 million, according to records. This year, it is estimated costs will reach $58.3 million.
And that does not include the cost of running and maintaining E-ZPass. Add them, and the cost of collecting tolls is nearly $68 million this year, 33 percent more than before E-ZPass came on-line.
Brimmeier said E-ZPass was sold as a timesaver that also reduced backups at toll plazas. That has the added benefit of reducing pollution from fewer idling cars, he noted.
''E-ZPass was never designed or sold to the commission, from what I know, to save money,'' Brimmeier said.
Other agencies managed to find savings when they added electronic toll collections, however.
New Jersey, for instance, laid off part-time and temporary toll collectors and reduced its full-time staff from 800 to 475 as a result of E-ZPass, former New Jersey Turnpike Executive Director Edward Gross testified in a 2002 state Transportation Committee meeting.
The Maine Turnpike Authority also reduced its ranks of toll collectors and other employees through layoffs and early retirement incentives when it instituted electronic toll collection, spokesman Bruce Pelletier said. ''We ended up saving $4 million to $5 million,'' he said.
At Florida's Turnpike, which also just raised tolls, spokesman Chad Huff said officials cut a break for drivers. Tolls remain at about 6 cents a mile for drivers using electronic toll collection. Cash payers pay at a rate of 71/2 cents a mile.
''The rationale,'' Huff said, ''is that electronic toll collection is extremely more efficient and less expensive for us to process.''
And the International Bridge, Tunnel and Turnpike Association's Web site says that ''electronic toll collection technology promises potential long-term savings in costs.''
With Pennsylvania Turnpike toll collecting costs rising faster than income, simply collecting the toll means less of the money is available to maintain and repair the road. This year, paying toll collectors' salaries and running E-ZPass not including the other operational and maintenance cost of toll plazas are estimated to take more than 16 cents of every toll dollar collected.
Additionally, construction and technology upgrades to toll plazas will cost nearly $12 million more a year for the next 10 years.
Generous recompense for working the Turnpike
Meanwhile, the Turnpike is grinding through negotiations with Teamsters unions representing toll collectors and maintenance personnel on a new contract. Neither side would discuss the negotiations, which have been ongoing since the 2000 pact expired last September.
Compared with PennDOT, the Turnpike is heavily staffed. PennDOT has a highway maintenance and administration work force of 10,469 covering 88,262 lane miles, according to spokesman Ed Myslewicz. That's 0.12 employees per lane mile.
Setting aside the Turnpike employees whose jobs are related to toll collections, the Turnpike employs 0.52 employees per lane mile, or a rate more than four times the rate for PennDOT's work force.
Besides the number of employees, at stake in the negotiations are employee benefits that are generous by any measure. Unionized workers receive 15 paid holidays and 10 sick days a year. Workers are reimbursed for unused sick days. Some employees in management positions even receive overtime pay. Last year, that cost more than $54,000.
Writing in Transportation Quarterly last year, researchers Jonathan R. Peters and Jonathan K. Kramer argued that toll collections are highly inefficient methods to collect what are essentially taxes. Gas taxes levied by the federal government pay for upkeep of interstate highways. About 3 cents of every dollar collected in federal gas taxes goes to administration, they said.
But in their study of New Jersey's Garden State Parkway, they concluded that the cost of paying toll collectors, operating E-ZPass, maintenance of toll plazas and societal costs such as extra pollution and lost time took about 40 cents out of every toll dollar collected.
Although the Pennsylvania Turnpike doesn't have as many tolls per mile as the parkway, the overall cost of collecting tolls is much higher to the public than if the Turnpike were funded with gas taxes, they said.
Additionally, they said, toll roads are ineligible for federal highway trust funds, so toll road motorists suffer from triple taxation with a twist: You pay your toll, a state gas tax and a federal gas tax, but none of the federal money goes back into the Turnpike.
Said Peters: ''It's pretty brutal in terms of the way they're raising the money.''
Road ahead isn't clear
The depth of the Turnpike's spending binge is unclear. The Turnpike has a 10-year, $1.6 billion capital plan that includes partial funding of one of its major upcoming projects the interconnection with Interstate 95. But the capital plan does not lay out costs or a timetable for a number of other road projects outlined in Act 61.
Brimmeier said he didn't know how the Turnpike will deal with the Act 61 projects not started. He did promise, however, that the Turnpike would not raise tolls again for at least the remainder of this decade.
Where the full funding will come from for two of the most expensive projects the Mon-Fayette Expressway and the I-95 interconnection is unknown. Together, construction costs alone will tally around $5 billion.
Confronted with similar challenges in Massachusetts, Gov. Mitt Romney proposed a solution: Have the state highway department assume the entire Turnpike operation. Like Pennsylvania, the Massachusetts Turnpike Authority has many more employees per lane mile than the state highway department and duplicative administration.
But the Massachusetts state Legislature already has killed a similar proposal once before, with opponents arguing against dumping the Turnpike's billions in debt onto taxpayers. And even pro-taxpayer groups question Romney's proposed use of Turnpike reserves to balance the state budget.
In any case, Rendell has taken a hands-off approach toward the Pennsylvania Turnpike, ensuring that drivers and taxpayers will continue to support the commission well into the future. Obviously, tolls will be necessary to keep financing the Turnpike's spending for years.
For how long? The answer is buried inside the Turnpike's annual report. There, it shows that interest alone for existing bonds will total $2.6 billion.
Those bonds won't be paid off until 2041 101 years after the Turnpike opened.
Coming Monday: A closer look at the $4.2 billion Mon-Fayette Expressway.
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