Shifting transportation burden is no solution

TWO MONTHS ago, state Transportation Secretary Bernard Cohen questioned whether a toll hike was imminent, adding, "We're talking here about bank accounts, but we're also talking about people and pocketbooks." Those words seemed to have been forgotten when the Massachusetts Turnpike Authority recently approved a $100 million toll hike.

As the state faces the politically charged issue of funding transportation infrastructure, history provides a lesson: Shifting a burden to a different shell is a deferral, not a solution.

While the details of the governor's plan to dismantle the Turnpike Authority and transfer operations to MassPort remain unknown, the 11-year impact of transferring the Big Dig to the Turnpike is apparent.

In the mid-1990s, as Big Dig costs soared and concerns spread about the project's maintenance, state leaders weighed other funding sources. Toll booths stood like gargantuan dollar signs on the western horizon and at the eastern harbor. In 1997, legislation passed strapping toll payers with Big Dig costs for years to come.

The Turnpike Authority absorbed almost $1.9 billion of the project's construction costs. To fund its commitment and refinance existing debt, the Authority issued $2.2 billion in bonds, with only less than one-half of one percent of the proceeds slated for capital improvements on the existing roadway. The bonds carried escalating principal and interest payments, setting the stage for ongoing toll hikes.

Having exhausted its borrowing capacity, the Turnpike Authority relied on current operating revenues to meet capital improvement needs. With tight operating budgets, capital projects were deferred, leading to an estimated $400 million backlog.

The financial pressures resulting from the Turnpike's upside-down financial structure contributed to questionable decision-making. Scrambling for cash in 2001 and 2002, the turnpike entered into "swaption" agreements and received up-front payments of about $64 million in exchange for assuming risks for the next 35 years. With the proceeds now spent, the gambles didn't pay off and are expected to increase interest costs $9 million in fiscal year 2009 alone.

Although the past's poor decision-making contributed to another toll hike, the Big Dig drained the Turnpike from the get-go. The Turnpike's bonds now teeter close to junk bond status and another bond rating downgrade could trigger swaption termination clauses, which may cost the Turnpike and the state tens, even hundreds, of millions of dollars.

In October 2007, the governor announced his intention to consolidate transportation agencies and eliminate the Turnpike Authority. At the recommendation of the transportation secretary, the Turnpike board approved a modest toll hike to cover rising debt costs, with the understanding that if the governor was unsuccessful with reform legislation, another toll hike vote would be needed later in 2008 to avert a downgrade and fund capital projects.

During the wait, the board supported cost reduction efforts and studied toll equity. In June 2008, the board unanimously concluded that the current tolling structure was fundamentally unfair because toll payers subsidized the free ride of the north-south drivers using the Big Dig.

With the financial clock ticking on the governor's transportation plan, the board reviewed tolling scenarios needed to shore up finances, with emphasis on raising about $70 million. Avote was delayed until November, elevating its urgency.

A day before the recent vote, the governor pitched a toll hike and a plan to shift turnpike operations to Massport, without providing substantive details. While the governor deserves credit for some transportation cost reforms, the plan came too little, too late.

On the morning of the vote, the expected $70 million hike ballooned to $100 million. The amount went beyond levels that I could support, especially without a concrete plan for toll equity through transportation reform.

Perhaps the eleventh-hour $30 million increase was a deal sweetener for MassPort, or perhaps it was designed to raise ire to stir the gas tax debate. In any case, the staggering amount deepened toll payers' resentments and spurred legislative actions. While a toll hike is needed, this one went too far.

In 1997, the Turnpike Authority bailed out the state in taking on the Big Dig. It's time for the state to take it back. Rather than shifting the burden to another authority, pitting region against region, driver against driver, let's truly think about the toll payers' pocketbooks and have all drivers share Big Dig costs, either through a gas tax increase in conjunction with toll elimination or using high-speed technologies to toll all drivers using the Big Dig.

Mary Z. Connaughton is a member of the Massachusetts Turnpike Authority.