Turnpike seeks second delay in quarterly transit payments
The Pennsylvania Turnpike has asked the state if it can defer its $112.5 million quarterly payment for public transit for the second quarter in a row because of funding problems related to the COVID-19 pandemic.
And Charles Duncan, the turnpike’s director of legislative affairs, told the state House Transportation Committee on Tuesday he doesn’t know when the agency will be able to resume the payments, which annually provide millions in capital and operating funds for agencies such as Port Authority.
Under state law, the turnpike is required to pay $450 million per year to the state Department of Transportation — $400 million to help subsidize public transit and $50 million to encourage multimodal projects across the state — until the subsidization payment
is dropped in 2023 and the required payment falls to $50 million. The House committee is holding a two-day hearing on a series of bills on transportation funding, including one that would cut the turnpike obligation each year until 2023, something the agency has been seeking for several years.
Since the pandemic began in March, the turnpike has seen a huge drop in traffic, which translates into a substantial drop in revenue. From March through the end of May, the agency lost $118 million in toll revenue, causing it to cut its capital budget by 25%, eliminate more than 500 jobs of toll collectors and other finance workers by switching to a cashless system and defer its first payment of the new fiscal year to PennDOT.
At its low point in March, turnpike traffic was down more than 63% compared with the same week in 2019 and it has been slowly recovering since. Industry officials estimate it could take two years or more for traffic to reach pre-pandemic levels. The turnpike asked Aug. 12 for the second deferment due in October.
Mr. Duncan told the committee he didn’t know when the turnpike would be able to resume its transit payments. The agency, which is $14 billion in debt, generally borrows money to make the transit payments.
“We are essentially trying to get on stable financial footing,” he said. Asked if that could take a year or more, Mr. Duncan replied, “That wouldn’t be out of line.”
Mr. Duncan said when revenue stabilizes, he doesn’t believe the agency will have a hard time selling bonds again.
“There will be an appetite for our bonds” he said.
But Mr. Duncan and Brad Heigel, the turnpike’s chief engineer, cautioned the committee against extending the transit payments beyond 2023. Mr. Duncan said that would cause the turnpike to limit road work to milling and paving projects on the system and eliminate lane expansion and other improvements.
Mr. Heigel was more succinct.
“I think the word devastating is what I would use,” he said. “We’re moving toward that maintenance-only plan now.”
Two years ago, when transit payments were held up by a lawsuit challenging the legality of using tolls for non-turnpike items, PennDOT shifted funds to cover operating subsidies but Port Authority delayed 44 capital projects worth $65 million. The authority couldn’t say Tuesday how many projects would be delayed if the state money is held up again.
PennDOT officials are facing their own funding problems because decreased traffic has cut gasoline tax receipts used to pay for a large portion of highway work. After the agency allowed the turnpike to defer its July payment, it suggested Port Authority and other transit agencies could use federal stimulus funds to make up the difference.
“We are currently evaluating the request, and must consider how we can continue our mission and support the needs of transit agencies when making our determination,” PennDOT spokeswoman Alexis Campbell said in an email Tuesday.
Congress passed a federal aid package that provided $25 billion across the country for transit systems that suffered huge ridership losses during the pandemic. Port Authority is eligible for up to $141.75 million, but that money is expected to be used up by the end of the year to replace lost fare revenue.