Turnpike commission approves $800M for debts

It will go down to the wire, but the Pennsylvania Turnpike Commission now is optimistic it will be able to pay the $450 million that it owes public transit agencies for this fiscal year.

At a meeting Monday, the commission approved issuing $800 million in revenue bonds. That amount — in addition to $50 million per year in cash — will cover the $450 million owed for the fiscal year ending June 30, as well as $450 million for next fiscal year.

The payments are required by state law and will go to PennDOT to help pay public transit subsidies to agencies such as the Port Authority of Allegheny County and the Southeastern Pennsylvania Transportation Authority in Philadelphia.

“We’re pleased with the turnpike commission’s vote and we look forward to a full restoration of mass transit funding statewide,” said Adam Brandolph, spokesman for the Port Authority. The Port Authority deferred 44 capital projects last year because it had not received its annual funding share of $75 million.

Under a 2007 state law, Act 44, the turnpike was required to pay $900 million a year to PennDOT in anticipation of federal approval for tolls on Interstate 80. Federal officials later rejected the tolls, but the payments continued anyway, although they were reduced to $450 million a year through 2022.

The turnpike commission has not made a payment since April 2018 because of a federal lawsuit by a trucking group, Owner Operator Independent Drivers Association Inc., and others. The truckers claimed it was unlawful for the turnpike to use toll money for purposes other than projects directly benefiting the turnpike.

A federal judge in Harrisburg dismissed the lawsuit in April, ruling in favor of the turnpike.

Though the truckers immediately appealed, the turnpike decided to “test the waters” and found that the bond market was favorable now.

“The demand for these bonds is outstripping supply,” said Carl DeFebo, spokesman for the turnpike commission. “There are currently low interest rates.”

Mr. DeFebo said the turnpike expects the issue date for the bonds would be in mid-June, in time to make this year’s payment by June 30. For the next fiscal year, the payments would be made in $112.5 million quarterly payments.

The bond issuance would raise the turnpike’s outstanding subordinate debt borrowed to pay its Act 44 obligations to $6.8 billion, from $6 billion. The turnpike has an additional $5.4 billion in debt for capital projects, Mr. DeFebo said, bringing the turnpike’s total debt to $12.2 billion.