Pa. Turnpike using ‘flim-flam’ financing: auditor-gen.

HARRISBURG - Pennsylvania Turnpike officials are using "flim-flam finance" to cover the turnpike's increasing debt, and the toll road could be bankrupt in "a couple of years," state auditor general Jack Wagner told legislators Tuesday.

But turnpike chief executive Roger Nutt said toll increases on motorists and truckers every year will provide enough money to prevent financial calamity.

State lawmakers are considering whether to rewrite a 2007 law that requires the turnpike to provide $450 million a year for public transit and road and bridge projects around Pennsylvania, in addition to paying for the costs of operating the 545-mile turnpike system.

To meet that obligation, the turnpike has borrowed billions and boosted cash tolls by 48 percent (tolls for E-ZPass users have gone up 31 percent). Tolls will rise again in January and every year, as the turnpike tries to raise enough money to pay its debt.

"You can't just keep borrowing to get out of debt," said state Sen. John Rafferty Jr. (R., Montgomery), chairman of the Senate Transportation Committee, which held Tuesday's hearing with the transportation committee from the state House. "All of us are concerned about the debt ... the red flags were raised."

Wagner, who has been warning about turnpike finances for months, said lawmakers should repeal Act 44, the 2007 law, and find other ways to pay for the state's transportation needs.

But many lawmakers and Gov. Corbett are reluctant to raise gas taxes or other fees to pay for roads and bridges and mass transit operations such as SEPTA.

SEPTA receives about $162 million of its $616 million annual state subsidy from the turnpike funds, and without it, would face a 25 percent budget cut that could require fare hikes and service cuts for local bus and train riders.

Wagner said the turnpike's borrowing to pay for other transportation obligations "is the very definition of robbing Peter to pay Paul ... and it is saddling the Pennsylvania Turnpike with crushing debt that may ultimately fall onto the shoulders of Pennsylvania taxpayers."

Roger Nutt said "there is no disagreement with the auditor general about the debt ... but we believe there is not an immediate financial crisis."

Nutt and state transportation secretary Barry Schoch said annual toll increases of about three percent will allow the turnpike to raise enough money to make debt payments, without prompting motorists and truckers to find other, cheaper routes across Pennsylvania.

Turnpike officials believe "there is no tipping point" at which drivers would divert to other roads because of high toll costs, Nutt said.

Rafferty said lawmakers were convinced additional transportation funding needs to be raised, but that Corbett has not agreed. A commission appointed by Corbett recommended last year raising fees and taxes, including a portion of the gas tax, to provide $2.5 billion a year more for transportation projects.

Rep. Richard Geist, (R-Blair), chairman of the House transportation committee, reminded turnpike officials that they had advocated for creation of Act 44 five years ago, expecting to win federal approval to place tolls on Interstate 80.

The federal government rejected the state's request to toll I-80, leaving the turnpike to bear the costs.

"I agree Act 44 needs to be rewritten," Geist said. "But this is a tough business and we're broke. We're flat-ass broke."