Turnpike Authority is told that credit rating may be lowered

The Massachusetts Turnpike Authority was warned yesterday that its credit rating may be lowered because toll hikes it imposed last month will not generate enough revenue to cover increasing costs.

Moody's Investors Services left intact its current ratings on the transportation agency's bonds, but downgraded its outlook from stable to negative.

"There's a 50 percent chance or more that during the next 12 to 24 months, the rating will move down," said Joshua Schaff, a Moody's analyst. "We have some concerns about their ability to comfortably service their upcoming debt-service payments, given their current revenue structure."

Last year, traffic and revenues dipped after the ceiling collapse in the Interstate 90 tunnel, which killed 38-year-old Milena Del Valle, the Moody's report says. At the same time, the report said, operating expenses rose sharply because of employee pay raises and increased costs associated with the $15 billion Big Dig project.

And while the agency has set aside $25 million to pay for tunnel repairs, capital costs for this year alone are estimated at $50 million to refurbish tunnels and repair 16 structurally deficient bridges and roads.

The report also said the authority lacks "a clear financial plan for addressing revenue shortfalls and expenditure increases."

A lowered credit rating would mean the agency would have to pay more in interest rates to borrow money.

Last month, the authority board voted to raise tolls by 25 cents for cars at the Allston-Brighton and Weston tolls and 50 cents in the tunnels. The increases take effect Jan. 1.

Michael Widmer, president of the Massachusetts Taxpayers Foundation, who has repeatedly called for more dramatic steps to improve the turnpike's finances, called the Moody's report "one more indication that the state's transportation system is broken."

But Turnpike Authority Executive Director Mary Jane O'Meara said yesterday that the Patrick administration is working on an overhaul of transportation administration and financing.

The Moody's report also cited the governor's proposal to merge all transportation agencies into a single authority, MassTrans, which could cut costs by refinancing the Turnpike Authority's debt. If the overhaul is not approved, which is possible given the measure's complexity, transportation officials have agreed to seek new toll increases, the report said.

Turnpike Authority board member Mary Connaughton, who has opposed toll hikes, said the agency must cut costs before raising tolls.