Misinformation on Act 44 - false claim it caps Pennsylvania Turnpike Commission tolls

Pennsylvania Turnpike Commission spokesmen have repeatedly claimed they are limited in the toll increases they can impose under last summer's Act 44, whereas, they say, the Governor's private concessionaire might double and triple tolls. Timothy Carson, vice chairman of the Commission and its leading speaker and writer has a powerpoint presentation he frequently gives titled "Pennsylvania and the Public Monetization Option" where he says on slide 18 of 22 slides under the heading "Act 44 Basic Structure (cont.)":

"Permitted Toll Increases

- 25% in 2010 and 3%/yr thereafter across the entire expanded 848 mile system."

Permitted.

Similarly a Turnpike Commission press kit dated November 2007 called "Act 44 Focus; Transportation Funding Highlights" says under heading "Revenue Sources":

"Turnpike 'mainline' tolls will increase 25 percent in 2009 and 3 percent each successive year."

see http://www.paturnpike.com/I80/I_80_PressKit/FundingNeeds_Act44Solutions/Fact_Sheets/FS-ORG-Act_44_Focus.pdf

Turnpike CEO Joe Brimmeier has echoed the same theme of the Turnpike Commission being locked in to the 25% increase next year and 3% annual increases thereafter, whereas he said under a private concession tolls would "double or triple."

Newspaper reporters and even apparently the Governor and his staff have picked up on the notion that Act 44 and the so-called public-public partnership it spawned have capped the Turnpike Commission's tolls. A report this week (Jan 22) in the Pittsburgh Tribune Review ran:

"Rendell said the (toll) hikes by a private company would have to track - and not exceed - the (toll) hikes already planned by the turnpike commission as part of a law enacted last year to raise money for highways, bridges and mass transit. The turnpike's (tolls) are expected to increase to 25 percent next year and by about three percent in subsequent years under Act 44.

"There is still some flexibility on how much the turnpike will raise (tolls) under Act 44, the transportation funding law. 'The truth is they (the Turnpike) are not locked into that' schedule of 25 percent in 2009 and three percent thereafter, (the governor's chief of staff, Roy) Kienitz said."

We have written something similar. We also fell for the Turnpike Commission's line!

"Nonsense"

"Its all nonsense. You have all swallowed the Turnpike Commission lies," an observer of the Harrisburg debate told TOLLROADSnews on Thursday. "Check it out."

We did.

We read Act 44 closely, especially the parts on tolls setting, and we doublechecked by using the search box on Acrobat to see if 25 percent or 3 percent appear.

Here is Act 44: http://www.paturnpike.com/I80/images/200700044.pdf

The guy's right.

Act 44 has nothing which limits the Turnpike Commission to 25% and 3% annually. On the contrary it grants the Turnpike Commission total discretion over toll setting. Here is the passage starting on page 68 under "8116. Collection and disposition of tolls and other revenue.":

"8116. Collection and disposition of tolls and other revenue.

(a) Establishment and changes in toll amounts.--Subject to
the terms of any trust indenture entered into by the commission
or any resolution authorizing the issuance of any bonds, notes
or other obligations of the commission, the commission is
authorized to fix and to revise tolls for the use of the
Pennsylvania Turnpike System and the different parts or sections
of the system, including the turnpike, the turnpike extensions
and improvements and the toll road conversions authorized by
this chapter. The commission is further authorized to charge and
collect tolls; to contract with any person, partnership,
association or corporation desiring the use of any part thereof,
including the right-of-way adjoining the paved portion, for
placing thereon telephone, telegraph, electric light or power
lines, gas stations, garages, stores, hotels, restaurants and
advertising signs or for any other purpose, except for service
plazas in the right-of-way along Interstate 80 and for tracks
for railroad or railway use; and to fix the terms, conditions,
rents and rates of charges for use. Tolls shall be fixed and
adjusted as to provide funds at least sufficient with other
revenues of the Pennsylvania Turnpike System, if any, to pay all
of the following:

(1) The cost of the turnpikes. This paragraph includes
the cost of constructing, reconstructing, widening,
expanding, extending, maintaining, repairing and operating
the Pennsylvania Turnpike System and the different parts and
sections of the system.

(2) Any of the following:
(i) The commission's bonds, notes or other
p69
obligations and the interest on them.
(ii) Sinking fund requirements of the commission.
(iii) Other requirements provided for by any
resolution authorizing the issuance of the bonds, notes
or other obligations by the commission, or by any trust
indenture to which the commission is a party, as they
become due.

(3) Amounts due to the department under 75 Pa.C.S. Ch.
89 (relating to Pennsylvania Turnpike) and pursuant to the
lease agreement under 75 Pa.C.S. 8915.3 (relating to lease
of Interstate 80).

(4) The cost of repayment to the Federal Government of
funds required to be repaid pursuant to Federal legislation
authorizing the conversion of toll-free roads to toll roads.

(5) Any other amounts payable to the Commonwealth or to
the department.
(b) Restrictions on toll revenue.--Tolls shall not be
subject to supervision or regulation by any other State
commission, board, bureau or agency. Subject to the terms of any
presently existing trust indenture entered into by the
commission and any presently existing resolution authorizing the
issuance of any bonds, notes or other obligations of the
commission, the tolls and all other revenue derived from the
Pennsylvania Turnpike System shall be set aside and pledged as
may be provided in any resolutions, trust indentures or any
other agreements that the commission may hereafter adopt or
hereafter enter into with respect to the issuance of bonds,
notes or other obligations of the commission."

In fact the Turnpike Commission staff proposed toll increases in 2009 (or 2010) of 25% and 3% annual increases thereafter as a way of supporting the borrowing needed to make payments to Pennsylvania DOT under the terms of the lease concession agreement for tolling I-80.

But the Turnpike is not legally limited by Act 44 to those toll increases. It isn't limited at all.

The prospectuses being issued by the Turnpike to solicit bond buyers mention no limits on toll rates and pledge the Turnpike to raise tolls to whatever levels are needed to service the debt and meet covenants.

TOLLROADSnews 2008-01-25