Massachusetts Turnpike Authority being dismantled - with difficulty

"Self-layoff" Alan LeBovidge looks like being the last full chief executive of the Massachusetts Turnpike Authority (MTA).  Jeffrey B  Mullan, undersecretary of the Executive Office of Transportation (or state DOT) is only assuming the CEO position on an acting basis.

James Aloisi chairman of the Turnpike Authority board said in a statement this week: "As everyone knows, transportation reforms proposals from the Governor, Senate and House all include the elimination of the Turnpike Authority.

"The Governor (Patrick Deval) and I are recommending that Undersecretary Jeffrey Mullan be appointed Acting Executive Director to implement ongoing reforms and continue the process of integrating Turnpike Authority functions into the existing MassHighway structure."

"Recommending"? Normally in Massachusetts the Governor names the Turnpike Authority chairman and the chief executive. LeBovidge was announced as an appointment by Governor Deval. The Board has no say.

But there is no opposition to the appointment of Mullan.

There is general agreement that the Turnpike Authority is being dismantled, and that the Turnpike itself will be folded into some kind of highways division of a new state mega-agency for transportation along with the Massachusetts Highway Department (known as Mass Highways).

There are three different versions of a new mega transportation agency: Gov Patrick's making it effectively a giant state DOT under executive branch control, and differently structured house and senate versions which are controlled by an independent board. Efforts are being made to reconcile these differences in house-senate conference, but at time of writing there is no agreement.

$2+ billion debt is big black shadow over the end of the Turnpike

Major problem in winding up the Turnpike Authority is its debt - about $2500m ($2.5b) of toll revenue bonds. With their different maturity dates and  'swaptions' attached they will be very complicated to refinance.

A spokesman in James Aloisi's office told us this refinancing will be addressed in the restructuring legislation. However Turnpike Authority board member Mary Z Connaughton, who in real life is an accountant and a partner in a business development firm, says she thinks no one has yet faced up to the difficulty of this aspect of doing away with the Authority.

Connaughton accepts that the Turnpike Authority will be abolished but she's concerned about the manner in which it is closed, and the public's expectations.

"There's overwhelming public sentiment for getting rid of the authority. So much of what went wrong with the Big Dig is associated with the turnpike authority, any governor who can abolish it will get kudos. The Big Dig just dragged the the Authority down.

"The Turnpike has been loaded down with the Big Dig's huge debt, and no one can manage or cost-cut their way out of that.

"What I'm not sure the public understands is that getting rid of the turnpike authority does not mean getting rid of tolls.  Without proper controls, what follows could be worse."

Huge fees

Although Connaughton says the abolition of the Turnpike Authority will be popular she says it will be very expensive short-term:

"There will be huge legal and broking fees involved in dealing with the $2.5b in debt and major expense in consolidating the various agencies."

Transferring the rural Turnpike to a state DOT will be relatively simple and painless, but transferring the metropolitan Turnpike (inside MA128 plus the harbor tunnels) will be difficult, expensive, and take time, she says.

Staged or one-off closure

There are proposals to stage the closedown of the Turnpike Authority - transferring the easy rural Turnpike first, leaving time to do the complicated and much larger transfer of the metropolitan part later.

Connaughton says meanwhile the Authority board is legally responsible for the Turnpike and will need to exercise oversight until the last debt is paid off and all operations transferred.

State revenues won't allow toll reduction

The state's overall budget difficulties are so dire there will be no question, it appears of freezing toll rates at their present levels. Major toll increases scheduled for mid-year may be deferred a few months for the reorganization of road and transit agencies to be defined, but the financial pressures for raising more money will remain.

The saga of the Massachusetts Turnpike - the most tumultuous toll agency in the history of modern tolling - is into its final chapter, but it is not yet finished.

HISTORY: The 222km (138-mile) long Massachusetts Turnpike, Interstate 90, spans Massachusetts from east to west from a New York State Thruway spur at West Stockbridge on the New York border to Logan Airport/Route 1A in East Boston.

Massachusetts is a narrow state - only 77km (48 miles) north-to south over most of length.

The Turnpike is to this day the only expressway standard or even 4-lane divided lane highway that goes the length of the state. That makes it "the way west" and a major economic artery.

The Turnpike is legally and financially divided into two parts:

 - the original MassPike, now called the Western Turnpike which opened in 1957 and runs 198km (123 miles) between the New York border and Interchanges 14/15 at State Route 128/I-95 on the Weston-Newton town line and was incorporated into the Interstate highway system as the eastern portion of I-90

 - the Metropolitan Highway System (MHS), which the Massachusetts Legislature created in 1997 as part of a political compromise intended to shelter rural residents from the costs of the Big Dig, already running into serious cost over-runs. It comprises 25km (15 miles) including

(1) the 1965  Boston Extension (I-90) which runs 20km (12 miles) east from MA128 to downtown Boston and I-93, and

(2) as part of the Big Dig the Boston Extension Extended Again 5km (3 miles) through the I-90 Connector tunnel and the Ted Williams Tunnel into Logan Airport/Route 1A

(3) Sumner (1934) and Callahan (1962) Tunnels which form a two way 2-lane each pair of tunnels under Boston Harbor between downtown Boston's North End and East Boston/Logan Airport.

The Massachusetts Turnpike Authority was created by an act of the Massachusetts Legislature in 1952 as as user pays toll facility and did not receive state or federal tax revenue until 1997 when it took on the disastrous Central Artery/Tunnel project generally known as the Big Dig.

Widenings, interchange additions and an eleven service plaza system have enhanced the Turnpike over the years. The Turnpike immediately west of downtown Boston has heavily developed air rights over roadway, with buildings built atop it. This has generated considerable revenue but makes widening beyond the present 6 lanes impossible.

BACKGROUND: The Western Turnpike is a trip-based or ticket toll system which matches an entry with an exit to compute the toll, whereas the inside-128 Metro system is based on point tolling at barrier and ramp toll points. In 2008 transactions and toll revenues were:

- ticket system 103m, $136m

- barrier tolls 68m, $78m

- tunnels 20m, $71m

In the last financial report for an 18-month period ending mid-2008 total tolls were an annual $277m and other revenues $52m for total revenue of $325m. Operating expenses were a huge $350m including $135m of depreciation. There was an operating loss of $25m. (All 18 month figures x0.67 to annualize)

Interest expenses were $128m.

Net interest expense was $74m, suggesting an overall loss of $99m.

TOLLROADSnews 2009-05-08