Category: Commentary/Editorial || By

There was an interesting juxtaposition of articles in Monday's Daily News.

On page 3, there was a "Viewing Harrisburg" column by Mark Scolforo of The Associated Press reporting that the Pennsylvania Turnpike Commission faces "daunting financial challenges."

On page 4, there was a report by Pat Cloonan about a panel discussion at Mon Valley Hospital in Carroll Township on the Turnpike Commission's biggest construction project --- the Mon-Fayette Expressway. Proponents said a "new vision" for the project is needed.

(Only a cynic would point out they didn't really have an "old vision" for the multi-billion dollar highway that the Angry Drunk Bureaucrat calls "the Mo-Fo Excessway.")

Read together, the articles lead me to believe the Turnpike Commission may never complete the highway --- not because it's a bad idea, but because it's never going to get the money.

Although opponents of the MFX may be disappointed if the highway fails because of lack of financing rather than a lack of its merits, sometimes the outcome is more important than the reasons why.

After all, remember that the feds got Al Capone on income tax evasion.

. . .

Let's take Scolforo's news analysis first. He writes that "problems with the bond market" have increased the cost of borrowing money, and that's only one of the PTC's "financial headaches":

Revenue on the 531-mile turnpike system is down even though passenger-car use has typically increased about 3 percent annually for the last two decades.

A study released this month by consultant Wilbur Smith Associates as part of the latest bond offering estimated that vehicle traffic on the system in fiscal 2009 would would be about 2.5 percent below what it was last fiscal year and remain below that level until fiscal 2013 ...

Seven months into this fiscal year, the commission still has not adopted an operating budget as it scrambles to adapt.

The same story quotes Matthew Brouillette, president of the conservative Commonwealth Foundation, as saying that the PTC's debt load has become dangerously high and that "we can't keep raising tolls" to cover it.

. . .

One of PTC's biggest "financial headaches" is the state Legislature's Act 44 of 2007, sponsored by state Rep. Joe Markosek, a Monroeville Democrat who also represents parts of North Versailles Township and Murrysville and is chairman of the House Transportation Committee.

Act 44 requires the Turnpike Commission to provide PennDOT with millions of dollars in funding for road maintenance, construction and mass transit in Pennsylvania --- $750 million in the last fiscal year and $850 million this fiscal year.

But Act 44 assumed that the Turnpike Commission was going to get control of Interstate 80 and turn it into a toll road. It didn't and it couldn't.

That means the PTC has to borrow a lot more money to meet its Act 44 obligations --- this month it issued some $317 million in bonds to help make the payment.

. . .

In part because of PTC's new Act 44 obligations, Fitch Ratings Inc. last year downgraded the commission's bonds from "high grade, high quality" to "upper median grade."

The PTC's most recent annual report, dated May 31, 2008, showed total assets of $5 billion (that's everything from the highways to cash to the desk blotters) versus debts (not liabilities) of $3.76 billion.

Presumably the debts are up over $4 billion after the last round of borrowing. While I'm no economist, it seems to me that the Turnpike Commission is about $1 billion from hitting the limits of what it can borrow.

The commission's 2008 debt represents an increase of 44 percent over 2007. Revenues --- primarily tolls --- increased just 2 percent.

. . .

Now to the panel discussion, which was apparently ignored by the three Pittsburgh network TV stations, the Tribune-Review and the Post-Gazette. (I'd link to the article, but, well, it's the Daily News website, so it's not there.)

Cloonan points out that the discussion --- sponsored by the Mon Valley Progress Council, one of the loudest voices supporting the MFX --- coincided with the PTC's announcement that three groups of private investors may be interested in putting money into the completion of the expressway through West Mifflin, Dravosburg, Duquesne and North Versailles.

The MFX is currently complete between Large and Brownsville.

. . .

One of the panelists was Michael Krajovic of the Fay-Penn Economic Development Council, who is quoted as saying that the United States is losing "2,000 acres a day of farmland" but argues that the highway "plays a role in sustainability."

Highways tend to spread out development rather than concentrate it. Building the MFX will certainly spread development to parts of Washington and Fayette counties that are currently used as farmland, just as I-79 spurred the development of Southpointe and Cranberry.

If you think the farmland of Fayette County should be developed, then that's fine, but say so. Otherwise, buzzwords like "sustainability" are meaningless.

. . .

Another panelist was retired P-G transportation writer Joe Grata.

"Unless somebody, sometime, somewhere transforms what will soon be 57 miles of modern expressway into an asset for the future, it will be forever scored as a lonesome highway and a $2 billion boondoggle," he told the panel, according to Cloonan.

With due respect to Grata --- who's a good guy and a hell of a reporter --- it's hard to see who "somebody, sometime, somewhere" will be in the current economic climate, or even in years to come.

In the next Almanac, we'll explore why the Turnpike Commission's hope that "private investment" will bail out the Mon-Fayette Expressway may be wildly optimistic. (Danger! It involves math!)