Summary of Study Findings: (See pp. 1 to 17.)
1. Implementation Progress to Date. The PTC has completed 7 of the 21 projects listed in Act 61. These include two new toll roads (the Beaver Valley Expressway and Greensburg Bypass), two interchanges, a tunnel, and lane widening. In total these projects added 31 miles to the Turnpike System. Implementation efforts are currently focused on the Mon/Fayette Expressway and Southern Beltway projects.
2. Implementation Costs. Through November 30, 1996, the PTC had expended a total of $1.02 billion to implement Act 61. When adjusted for reimbursements, net PTC expenditures for Act 61 projects are $993.6 million. Through that date, the bulk of Act 61 project costs had been financed with toll-supported revenue bonds. Other funding sources have included toll increases, state Oil Company Franchise Tax monies, federal funds, and reimbursements.
3. Expenditures From Oil Company Franchise Tax Revenues. Through November 30, 1996, the PTC had expended a total of $109.9 million from state Oil Company Franchise Tax revenues and tax revenue bonds to implement Act 61 projects. This included $98.7 million for the Mon/Fayette Expressway and $11.2 million for the Southern Beltway.
4. Projected Costs to Fully Implement Act 61 Projects. The estimated total cost to fully implement Act 61 in its present form is in the range of $7.5 to $12 billion in current dollars. This includes: $1.02 billion spent through November 30, 1996; $2.46 billion in projected costs to complete the Mon/Fayette Expressway and Southern Beltway projects; and an estimated $4 to $8 billion to complete all other remaining projects.
5. Future Funding Plan. The PTC is about $1.7 billion short1 of the $2.5 billion required to complete the seven Mon/Fayette Expressway and Southern Beltway projects. The PTC's plan to make up this shortfall is heavily dependent on the receipt of substantial additional new state and federal funding, and appears to be highly optimistic. Even if additional federal and state revenues are received, the need for a toll increase appears to be a real possibility if debt service costs for Act 61 extensions continue to be shifted to the Turnpike's Mainline.
6. Impacts of Act 61 Implementation. Act 61 has had a profound impact on PTC finances. Outstanding debt rose from $65 million in 1986 to $1.2 billion in 1996. In 1996 PTC debt service costs totaled $96 million, or about 28 cents of each toll dollar collected. This compares to a debt service share of 5.5 cents per toll dollar in 1986. In short, the PA Turnpike is the oldest toll road in the Nation and has growing infrastructure needs ranging from total roadway reconstruction to interchange expansions and upgraded fare collection systems. The financial and resource demands posed by Act 61 implementation appear to threaten the Turnpike's ability to continue to adequately maintain the Mainline.
7. Reporting Requirements. In part due to the absence of an established reporting mechanism, the PTC has not adequately advised the General Assembly of the actual and potential implications of Act 61 implementation on both the PTC's operations and financial affairs.
8. Other Findings. Other report findings relate to PTC project management activities, PTC bond ratings, financial operating condition of completed Act 61 extensions, potential project cost savings, and the award of bond counsel contracts.
Summary of Study Recommendations: (See pp. 16 to 17.)
1. By December 31, 1997, and annually thereafter, the PTC should submit a written report to the Legislature on the status, costs, and impacts of Act 61 implementation, including detailed information on how the PTC has spent state tax revenues from the Oil Company Franchise Tax. As part of this reporting requirement, members and key staff of the PTC should be available to appear, upon request, before the House and Senate Appropriations and/or Transportation Committees to discuss and respond to questions/concerns regarding the Commission's use of state tax revenues.
2. The PTC should develop a written report on the economic feasibility and potential fiscal and operational impacts of each Act 61 project or group of projects that is to be added to the Turnpike System.
3. The PTC should also: (a) define and adopt in policy a competitive bid procedure for selecting bond counsel; and (b) submit recommendations, if any, concerning amendments that should be made to the Turnpike improvement and extension project listings currently in statute.
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1This figure was calculated prior to passage of Act 1997-3 on 4/17/97. Additional funding from this act will, to some degree, reduce this shortfall.
LB&FC: 4/30/97