Penn Pike disputes PennDOT bill for $922m, says only $450m payable

The Pennsylvania Turnpike Commission says it only owes the state DOT (PennDOT) $450m this year but PennDOT says it must turn over $922m. The dispute pits Turnpike CEO Joe Brimmeier against Allen Biehler, state secretary of transportation. It is unclear where Governor Ed Rendell stands on the issue.

Brimmeier is quoted by local reporters: "It’s a fairness issue: Why should the people who live from Pittsburgh to Harrisburg, from Harrisburg to Philadelphia pay all this additional money to support all of the transportation problems in the entire state? For PennDOT to ask [for the higher payment] ... is just not right, and we will fight it."

The two officials have different interpretations of the detailed meaning of state Act 44 passed in mid-2007 which laid down schedules of payments by the Turnpike to be made to Penn DOT for support of its lossmaking roads and transit operations. The law endorsed major increases in tolls plus the introduction of tolls on northern  I-80 which parallels the Turnpike mainline east-west across the state.

However the USDOT ruled that tolls on I-80, built with federal grant monies, were only permissible if the monies went back into the I-80 corridor. PennDOT wanted the money principally for free road projects and loser-transit operations in Philadelphia and Pittsburgh.

Act 44 was written to provide for $922m payment to the state this year with I-80 toll revenues and $450m this year without I-80 tolls, payments to be made quarterly. The state also executed a 50 year lease of I-80 to the Turnpike which contained similar provisions.

The Brimmeier-Biehler dispute is over the fine print on the timing of the reduction in payments from the Turnpike to the state DOT in the case of the Turnpike not being permitted to collect tolls on I-80.

The Turnpike maintains the reduction in its obligations has already begun, while PennDOT says the reductions must not occur until next year.

The dispute is detailed in a Supplement to bond issuance documents of the Turnpike Commission.

PennDOT has threatened to invoke a power under the lease agreement with the state to require all Turnpike Commission board votes to be unanimous - rather than the normal simple majority. Since Allen Biehler is a member of the Turnpike Commission board (he's chairman) that would give him an ability to block its decisionmaking.

The dispute caused the Turnpike to postpone a $600m bond sale this week so that  the disclosure Supplement could be filed. However Turnpike officials said they plan to proceed with the bond raising shortly.

The Supplement concludes that: "The resolution of these matters and the timing of such resolution is uncertain."

Joe Brimmeier says the Turnpike and PennDOT should be sitting down discussing the issues, not writing threatening letters to one another.

Meanwhile Gov Ed Rendell is quoted in Pennsylvania reports as saying he's opposed to Turnpike getting deeper into debt with constant large bond sales.

"I wouldn’t authorize (the Turnpike) going into the bond market… The turnpike doesn’t have independent money. They’re not a bank," Rendell is quoted.

see text of bond issuance Supplement

http://www.tollroadsnews.com/sites/default/files/Supplement0825.pdf

TOLLROADSnews 2010-08-26 UPDATED 22:00