Mass Turnpike tells state: show us $100m/year or tolls go up by 60%

The Massachusetts Turnpike Authority in its protracted bargaining with the state today (2008-06-24) postponed a scheduled meeting on toll rates to Monday (2008-06-29). The Turnpike has voted to raise tolls by about 60% July 1, but board members say they'll cancel the hikes if they get $100m/year in support from the state budget. That $100m/year subsidy must continue for the term of $2200m of bonds they floated to pay for the untolled Big Dig.

In the last few days the legislature passed a transportation reorganization bill that merges the Turnpike into a Massachusetts Department of Transportation by year's end. It also passed a budget that would raise the state sales tax from 5.00% to 6.25% to provide the $100m/year bailout for the Big Dig and to support chronic deficits of the 'T' or transit system - a living museum piece of ancient trolleys that creak and groan under the streets of Boston at horse cart speeds.

Trouble is Governor Deval Patrick has been threatening to veto the sales tax increase. He favors a gasoline tax hike. Patrick's veto could probably be over-ridden, but that would take time.

Chairman of the Turnpike board and state secretary of transportation James Aloisi said today that the administration "continues to analyze the very complex transportation reform bill and budget sent to the governor by the Legislature. Given the time needed to determine whether these bills meet the long term needs of the Commonwealth, it is both prudent and respectful to postpone the Turnpike's Board meeting until next Monday."

Michael Angelini, a board member told the Boston Globe today: "Unless and until the executive and legislative branches of government reach sufficient agreement to provide the turnpike authority with $100 million, which everyone recognizes it needs, the only thing we can do is have that toll increase. In a way, we're spectators to a drama conducted elsewhere."

Meanwhile the Turnpike continues to be bedeviled by the complex swaption financing entered into early in the decade with international banker UBS to fund the Big Dig. The Turnpike's bond insurer Ambac was today downrated by Standard & Poors below the threshold that allows UBS to "call" the Turnpike's swaptioned loan. Any time the Turnpike could face a demand for some $270m - although that would be a case of trying to tap the proverbial blood out of stone.

TOLLROADSnews 2009-06-24