Pennsylvania transit agencies could face serious consequences from capital funding shortfall in July

Transit agencies and services such as Amtrak could face “serious consequences” if the stalemate on the $450 million annual payment the Pennsylvania Turnpike owes the state Department of Transportation continues past June, PennDOT warned Wednesday.

The turnpike has missed its three quarterly payments since the new fiscal year began July 1 because of a federal lawsuit challenging the use of turnpike tolls for public transit. As a result of the lawsuit, filed last March by the Owner Operator Independent Drivers Association Inc. and the National Motorists Association, the turnpike can’t issue bonds to raise the money it needs to make the quarterly payments.

So far, PennDOT has shifted some money and delayed some of its own projects to prevent service cuts. But in testimony before the state House Appropriations Committee last week, PennDOT Secretary Leslie S. Richards outlined additional problems the shortfall could cause if the lawsuit isn’t settled before the next fiscal year starts in July.

“Through use of reserve funds and re-prioritization of transit capital programs, we have been able to minimize impacts this fiscal year,” Ms. Richards said. “Without the turnpike payments, the distribution for transit capital projects in the new fiscal year will be dramatically lower.”

PennDOT spokeswoman Erin Waters-Trasatt couldn’t provide specific figures Wednesday for how much transit agencies might lose, but she noted that Amtrak receives half of its state operating subsidy of $8.15 million from the turnpike funds. Amtrak serves about 1 million people in Pennsylvania each year.

During this fiscal year, agencies such as the Port Authority ($65.3 million for capital expenses from PennDOT) and the Southeastern Pennsylvania Transit Authority around Philadelphia ($63 million) already have had to delay some capital projects this year and face more severe cuts next year. That would get worse unless the lawsuit is resolved, PennDOT warned.

Andrew Busch, a spokesman for SEPTA, said the agency received a letter from PennDOT saying its capital funding would be about $107 million next year if the turnpike case remains undecided or the turnpike loses. The agency was scheduled to receive $351 million this year before getting the $63 million cut that has delayed about 65 projects.

“We are looking at $250 million less,” Mr. Busch said. “We’re not looking at service cuts, but we are looking at paring down to a maintenance-only situation. On the operating side, there’s no indication that money won’t be available.”

At Port Authority, spokesman Adam Brandolph said he wasn’t aware of the agency receiving a letter about capital funds for next year. The agency board decided in November to cut capital spending for the rest of the fiscal year, delaying non-essential projects such as maintenance at authority garages, bridges and park-and-ride lots.

“The ones we didn’t do were non-essential projects,” Mr. Brandolph said. “Obviously, these are things we want to see done, but they will have to wait until the money is available.”

Ms. Richards submitted a list of $1.1 billion worth of projects across the state that wouldn’t proceed in the new fiscal year without the turnpike contribution: $64 million in potential operating impacts for smaller programs like van pooling and transit subsidies for people with disabilities; $767 million in Amtrak upgrades such as buying new cars and Americans with Disabilities Act improvements; $269 million for statewide transit facilities. Another $10.43 billion in potential “projects of significance” such as Port Authority wish list items like expanding light rail to Pittsburgh International Airport also would be in jeopardy because the turnpike money often is used as matching funds for federal grants.

Turnpike CEO Mark Compton stressed that his agency can’t make the quarterly payments because of the lawsuit, not because of the agency’s long-term debt of more than $11 billion. The trucking groups filed suit claiming the state is violating federal commerce law by using turnpike tolls to pay for non-turnpike items such as transit. A federal judge in Harrisburg has been considering a motion for summary judgment in favor of the groups for more than six months.

If U.S. District Judge Yvette Kane rules in favor of the truckers, then she will decide damages, which could be as much as $6 billion, the amount the turnpike has collected since it started making the payments in 2009. She also could dismiss the suit or order a trial.

“The agreement we have with the state is to make the state whole by the end of the fiscal year if the lawsuit goes our way,” Mr. Compton said.

Mr. Compton said the turnpike has supported other transportation methods since its inception in 1940 and has studies underway with the Port Authority and SEPTA to look at long-term funding options after its PennDOT commitment reduces to $50 million in 2023, regardless of the results of the lawsuit. The suit highlights what could happen if the state doesn’t find a new source for those funds, Mr.Compton said, something the turnpike has been pushing for the past several years.

State law calls for the money to be replaced by funds from an existing vehicle sales tax, but agencies and lawmakers aren’t confident it will generate that much money.

“It does foreshadow a real problem for after 2022,” Mr. Compton said. “We’re all trying to sound the alarm.

“If the lawsuit decision hits and doesn’t go our way, we think there will be certain elements in [the upcoming SEPTA and Port Authority studies] that could be used right away to help out if the Legislature approves them.”

The turnpike also would likely face problems paying for its mounting debt — which annually takes about $600 million of its budget of more than $900 million — unless it gets out from under the PennDOT payment as scheduled, Mr.Compton said.