LAW:Court scolds AG for anti-toll ballot in MA

A move to abolish tolls through popular ballot at the Nov elections failed in Massachusetts late June when the state’s Supreme Court ruled that the measure amounted to an unconstitutional taking of bondholders property and threatened a breach of a state contract. The court reprimanded the state Attorney-General for certifying the measure for vote, saying that the bonds of a state agency involve a contract with bondholders. It was his duty not to put that in jeopardy.

The Republican administration in MA is more socialist than its Democrat predecessor in its cavalier attitude toward the contract of a state agency, in moving to centralize power in state hands, and in relying more heavily on taxes and many kinds of deals with businesses than on user fees.

The Weld administration abolished tolls for cars on the far western rural section of the turnpike and announced a plan for a further phase out of tolls in rural areas. Weld’s successor Paul Cellucci has said he wants to abolish tolls totally. All kinds of “public-private parternships” are being hatched with concessionaires and others to try and find substitute revenues for tolls. It was recently announced for example that a bank will pay fees for the naming rights on electronic toll tags. Such schemes either produce pocket money, or else they constitute a hidden toll via higher prices at the gas stations and restaurants along the toll road. Meanwhile the state is building the single most expensive highway project in the nation, the $10b+ Central Artery underground highway, without tolls.

The defeat of the anti-toll ballot measure is a considerable victory for the former Turnpike counsel Jim Aloisi, now a lawyer at Hill & Barlow in Boston who organized the plaintiffs and fought the legal battle. The Turnpike stood on the sidelines, given the anti-toll stance of the administration.

Aloisi worked with bondholders representatives and a Central Artery business group which stood to see their project in jeopardy without toll revenues.

The state supreme court ruled unanimously and forcefully in favor of Aloisi’s clients. It said: “The (anti-toll) petition’s (proposed) elimination of toll revenue constitutes a full-blown appropriation of the bondholders’ right to that property (toll revenue). ...(A) toll freeze deprives bondholders of their security interest in toll revenues — an interest which was expressly bestowed on them by contract — and therefore would violate their constitutional rights....(T)he petition’s proposed (abolition) of toll collection strikes at the very heart of the express provisions of trust agreements which the legislature authorized.”

$2b debt

The court ordered the Attorney-General’s certification of the anti-toll petition be struck down, and it will not go to the voters. The Mass Turnpike has around $2 billion in debt and is going in deeper to finance the Central Artery. Success for the anti-toll measure would probably have meant a financial crisis for the state — at least a much higher cost of borrowing. If the state had not been saved by its high court bondholders would have wondered what security there was in revenue bonds in a state where a supposed Republican administration was willing to bow to populist anti-toll pressures.

The “Free the Pike” movement was run by an able populist speechwriter and political consultant Harold Hubschman. His campaign was full of catchy phrases and half-truths, but underlying it was the phony allure of promising the people something for nothing. Hubschman’s connections with reporters and editors at the state’s newspapers and broadcast stations got him lots of free publicity. His group got the necessary 100,000 signatures on the petition without too much difficulty.

His opponent Aloisi says it would have been quite difficult and enormously costly to have beaten “Free the Pike” politically, though his friends and clients would have attempted that. Aloisi’s legal victory helps build the case law against future efforts to remove tolls by establishing fundamental property rights in toll revenue on the part of those who invest their savings to finance turnpikes. And the unprincipled behavior of these politicians in MA shows how close we are to the expropriatory policies of banana republic dictators.

(Contact James Aloisi 617 428 3378 jaloisi@hillbarlow.com, Harold Hubschman 617 731 4754 harold@hubschman.com)