Pennsylvania Turnpikeís Credit Rating Downgraded
The Pennsylvania Turnpike Commission tried to distract people from the findings our recent study that demonstrated that the Turnpike is one of the least efficient toll roads in the country by claiming the big credit rating agencies disagree with us. Whoops. As the Pittsburgh Post-Gazette reports, " One of the nation's 'big three' credit rating agencies has raised a caution flag about the Pennsylvania Turnpike's financial future because of the transportation funding bill that the state Legislature passed last summer. New York-based Fitch Ratings Ltd. announced it has downgraded the turnpike's $2.1 billion in outstanding revenue bonds by one step, from AA- to A+, thereby crossing the line from 'high grade, high quality' to 'upper median grade.' The move means the turnpike will likely have to pay a higher interest rate on future borrowing for such capital improvements as the new bridge over the Allegheny River and widening the east-west mainline to six lanes between Irwin and New Stanton." The Fitch downgrade notes the "mission change of the PTC from a self-supporting entity into one subsidizing state-wide functions," giving it less financial flexibility. It also notes "the potential that capital projects can be deferred to meet Act 44 obligations, resulting in delayed and more expensive capital projects." It also says that "Fitch believes that there are reasonable scenarios under which planned toll increases may be insufficient to meet the annual obligations under Act 44," reinforcing the Reason report's suggestion that toll rate increases may actually be higher under the status quo (where toll rates are not capped) than under a lease of the Turnpike (where rate increases will be capped).