Lawmakers divided over Turnpike rescue

Senate passes bill insuring less debt than Patrick's plan

Lawmakers, hoping to strike a deal before the legislative session ends tonight, remained divided yesterday on how far the state should go in salvaging the finances of the troubled Massachusetts Turnpike Authority.

The Senate late last night passed a bill that falls short of the full-scale plan advocated by Governor Deval Patrick and passed by the House earlier this month. The Senate version, attempting to reach a middle ground between several competing factions, would leave the state insuring more than $1 billion in Turnpike Authority debt and investment obligations. The Senate measure would provide $800 million in refunding bonds to aid the turnpike.

Patrick and the House want the state to act as cosigner for the Turnpike Authority's entire $2.4 billion debt in a way that would allow the Pike to use the state's superior credit rating when it refinances its debts.

But the final version is still very much in doubt, as the sides will continue negotiating today.

Without any action, the Turnpike Authority faces the threat of owing hundreds of millions of dollars to pay penalties on investments that have gone sour amid turmoil in the financial markets. The quasi-public agency, which runs on a deficit, says that it cannot afford the payments and potential penalties and that its leaders are hoping the state's backing will allow them to refinance some of the most onerous debt.

The complex and divisive debate in the waning days of the Legislature's session reflects the lingering financial hangover from the $15 billion Big Dig. Included in the Senate bill that attempts to protect the Turnpike from insolvency is the creation of a nine-member task force to look at the structure and viability of the authority.

A Republican amendment to abolish the Turnpike Authority failed in the Senate early last night.

Leaders of both chambers and the Patrick administration say they are working to negotiate their differences before the session ends tonight.

"Nobody is happy to be here," said Steven A. Baddour, chairman of the Senate Transportation Committee, as he opened debate on the bill yesterday afternoon. "This amendment does, quite frankly, the minimum necessary."

Baddour said the Senate version "is not a bailout."

In both the Senate and House versions, the Turnpike Authority, which is dependent on toll revenue, would remain primarily responsible for its debt payments. But if it defaulted, taxpayers would be on the hook for interest payments.

Opponents say that some help is necessary, but worry that the state is taking on too much risk.

"We are about ready to pledge far more than the taxpayers should without guarantees that this will never happen again," said Senator Mark C. Montigny, a New Bedford Democrat who planned to vote against the Senate version.

Senators passed the measure, 30 to 8, as an amendment to a $3 billion bond bill.

State Treasurer Timothy P. Cahill, also a critic, said that the Senate version is an improvement on the proposal supported by Patrick and the House, but that it still falls short.

He said the state should be insisting on more financial oversight of the authority.

But Patrick officials and House leaders worry that without strong backing from the state, the Turnpike Authority could be forced into a situation it cannot afford, leaving toll payers with massive hikes or sending the agency into insolvency. They say the plan is relatively risk free.

Representative Joseph F. Wagner, who is chairman of the House Transportation Committee, said, "Clearly there's a fix required, and I appreciate the attempt the Senate is trying to make to try to narrow any exposure to the Commonwealth."

But Wagner said the Senate plan does not go far enough.

"I want to make sure that the action that we take is not an action that will require that we come back to further remedy the problem," he said.

Material from State House News Service was used in this report. Noah Bierman can be reached at nbierman@globe.com.