Higher bridge tolls and PATCO train fares moved a step closer to reality Wednesday as a Delaware River Port Authority board committee approved a budget with a 10 percent PATCO hike Jan. 1 and a $1 bridge toll increase July 1.
But board members continued to hold out hope for a last-minute reprieve if they can convince Wall Street that more toll money won't be necessary until 2012.
The finance committee, after four hours of wrangling and hand-wringing, approved an operating budget of $265 million, a decrease of about 0.5 percent from this year. The budget needs approval of the full board Wednesday, as does a $150 million capital budget also approved by the panel.
Board member John "Johnny Doc" Dougherty, a Philadelphia labor leader, added a new wrinkle to the deliberations when he announced he planned to propose next week that the DRPA divest itself of PATCO, which requires a $20 million annual subsidy from the port authority.
That proposal, which Dougherty said would "change the whole way we do business," is unlikely to pass, given the strong support from New Jersey commissioners for the commuter-rail operation to Philadelphia.
The operating budget approved by the committee assumes toll and fare increases will go forward as scheduled.
Several board members, including Dougherty and finance committee chairman Jeff Nash, have been seeking to delay the toll increases until 2012 by using unspent economic-development funding to replace anticipated toll revenue.
Financial analysts warned that bond-rating agencies likely would punish the DRPA with lower ratings if tolls and fares are not raised as scheduled. That could lead to higher borrowing costs and an immediate demand for repayment of a $220 million debt.
The DRPA faces competing demands from consumers, who want no toll or fare increases in tough economic times, and from Wall Street, which wants increased revenues to pay for a $1 billion, five-year construction plan.
"We have to make a decision based on our appetite for risk," said board member Robin Wiessmann, a former Pennsylvania state treasurer. "The bad-case scenarios for the DRPA will end up hurting everybody, including those we want to protect."
Rick Remington, a spokesman for the AAA MidAtlantic motorists' organization, said, "It clearly looks like a toll increase is coming down the pike."
"Motorists are being left to hold the bag for years of poor fiscal management," Remington said.
The DRPA is about $1.4 billion in debt, and 47 percent of tolls go to making payments on that debt.
Nash said he wanted to get the advice of Gov. Christie and Gov.-elect Tom Corbett on efforts to delay the toll and fare increases. The governors appoint all but two of the 16 DRPA board members.
Nash said he hoped to find a way to at least avoid the toll increase, to $5 from the current $4, this year for commuters who use the bridge daily.
"For them, it's not $1 a year. It's $5 a week. It's $20 a month. It's $240 a year," Nash said.
"There has to be a way to postpone this."
But Nash said after the meeting that he would not risk a catastrophic response from bond-rating agencies, "because then it's not $5 [for the toll]. It's $7."
Nash said Christie's office had told him that it "wants us to act responsibly and serve the best interests of the commuters."
"The bottom line is we need to convince Wall Street they should not downgrade us," Nash said.
That promises to be a difficult task.
Katherine Clupper, managing director of Public Financial Management in Philadelphia, said, "This comes down to governance. . . . Both rating agencies have no confidence that in six months you won't have this same conversation [about delaying tolls]. At some point, the rating agencies just won't believe you're going to do what you need to do."
Dougherty and Pennsylvania Auditor General Jack Wagner, also a board member, have called for the DRPA to use unspent economic-development money to replace the revenue anticipated from a toll increase.
The DRPA has more than $50 million in unspent economic-development funding, and about $28 million of that is not contractually obligated for projects. That $28 million would provide as much revenue as six months of a $1 toll increase.
The DRPA already delayed the bridge-toll increase once. Originally, the increase was to have taken place in September. It was put off for 10 months when the DRPA board reallocated $8 million in economic-development funding last December.
But chief financial officer John Hanson said the unspent economic-development money can't bail out the DRPA now the way it did last year.
Because the DRPA has since borrowed an additional $300 million, it needs an infusion of ongoing revenue, not a onetime boost, Hanson said.
A toll increase would provide that, he said, but a shift of economic-development money would not.