Cahill calls for turnpike overhaul

Says bailout plan must include changes

A State House hearing room was packed yesterday as a joint House-Senate committee took testimony on a Patrick administration plan to shore up the Massachusetts Turnpike Authority. (DAVID L. RYAN/GLOBE STAFF)

State Treasurer Timothy P. Cahill continued to clash publicly with officials of Governor Deval Patrick's administration yesterday over the administration's proposal to throw the troubled Massachusetts Turnpike Authority a financial lifeline by guaranteeing the authority's debt.

Cahill, who has objected to the plan all week, said during a State House hearing that he believes the administration is acting recklessly. He called for unspecified changes to be imposed on Turnpike Authority operations if the deal moves forward.

"To bail out the Turnpike and not change anything about the operation, not put any reforms, I don't think the public - and rightfully so - would stand for that," Cahill said after the hearing.

The Patrick administration and the Turnpike Authority continued to call the plan a relatively risk-free move for the state, as well as the only option on the table to save an agency that is on the brink of insolvency. On Wednesday, Lieutenant Governor Timothy P. Murray hit back at Cahill, saying Cahill should have acted earlier to protect the authority's financial health.

Cahill appeared to pick up an ally yesterday in state Senator Mark C. Montigny, the New Bedford Democrat who presided over the contentious hearing where the competing viewpoints were aired.

"I think this is ill considered, ill timed, and I think it is about as bad as it gets," Montigny, cochairman of the Joint Committee on Bonding, Capital Expenditures, and State Assets, said after the 3 1/2-hour hearing. "It is the worst of both worlds for the taxpayer and the tollpayer."

Budget watchdog Michael Widmer, president of the Massachusetts Taxpayers Foundation, also blasted the administration's plan.

"This is one of the most irresponsible proposals I have seen seriously considered by the Legislature in my 16 years," said Widmer, whose organization is backed by business. "We are just heading off a cliff, Thelma and Louise, with a smile on our face."

Widmer called for a gas-tax increase and new tolls to help the Turnpike Authority meet the terms of its Big Dig-related debts.

Montigny said he would try to delay consideration of the proposal in the Senate so that lawmakers could have more time to ponder its implications.

But whether he will be successful remains unclear. Senate President Therese Murray said earlier this week that she wants to debate the plan in the Senate and is concerned about the consequences of a financial failure of the Turnpike Authority. Senator Steven C. Panagiotakos, chairman of the Senate Ways and Means Committee, said yesterday that he has concerns about the plan and will review the administration's proposal next week.

On the table is a proposal, already approved by the House, that calls for the state to serve as cosigner for $2.4 billion of Turnpike Authority debt. That would help the authority, which is a quasi-public agency dependent on toll revenues, to take advantage of the state's strong credit rating to refinance loans. If the plan fails, the authority could owe millions in new interest, as well as a roughly $200 million penalty payment to investment bankers.

Lawmakers and officials debating the plan said they also were concerned about the long-range impact on state finances of total Big Dig debt, which includes $7 billion in interest payments expected to drive the total cost of the $15 billion project to $22 billion, figures that were reported for the first time yesterday by the Globe.

Alan LeBovidge, executive director of the Turnpike Authority, said he had heard no viable alternatives to the state guarantee plan, from Cahill or other critics.

"If we get a letter tomorrow from somebody that said, 'Hey, I'm an investment banker; here's what you can do,' we'd do it," LeBovidge said. "We're not out there to waste people's money. We want to minimize the cost."

The bailout's proponents also said that having the state guarantee the turnpike's debt would be unlikely to affect the state's credit rating. Even Cahill has acknowledged that it may not hurt the state's rating.

"No one has to bear these costs," said Jay Gonzalez, state undersecretary for administration and finance. "Even with the guarantee, there is no expectation that the Commonwealth would have to pay any of the Turnpike Authority's loans."

Montigny's cochairman on the debt committee, Representative David L. Flynn of Bridgewater, defended the House's support of the bailout. "I don't know anything else [that can be done], except the responsible actions taken to pledge the credit of the Commonwealth to . . . stop the bleeding," Flynn said.