The Maine Turnpike could become 109 miles of highway owned by bondholders and operated by Bangor Savings Bank if toll increases proposed by the Maine Turnpike Authority aren’t approved and the authority defaults on the terms of its debt, according to the authority’s executive director.
The chances of that happening are remote but it’s among the consequences the Maine Turnpike Authority faces if it can’t raise enough money to meet the revenue and road maintenance requirements laid out in its agreements with bondholders.
“It’s a cascade of consequences,” said Peter Mills, executive director of the turnpike authority.
Mills and the Maine Turnpike Authority are making those consequences clear before three hearings next week where members of the public will be able to weigh in on the turnpike authority’s proposal to institute $26 million in toll increases starting Nov. 1.
The public hearings take place on Tuesday at Auburn City Hall, on Wednesday at Portland City Hall and on Thursday at Saco City Hall, all starting at 6:30 p.m.
The turnpike authority says it needs to raise about $26.5 million in additional revenue annually to fund $113 million in bridge repairs on northern sections of the 109-mile highway over the next five years, pay for $82 million in paving and other road improvements, and pay off debt from a highway widening project completed in 2004.
The toll increase scenario favored by turnpike authority staff would mean a $3 charge for passenger cars at the York toll plaza, up from the current $2; a $2.50 cash charge at New Gloucester, up from $1.75; $2 at West Gardiner, up from $1.25; and $1.50 at both the Wells and Gray tolls, up from the current $1.
“I think the good news [is] I don’t foresee another toll increase for a long, long time,” Mills said Friday. “This increase will get us where we need to get, as well as take care of our needs well into the 2020s.”
In a memo prepared this week for Gov. Paul LePage and members of the Maine Turnpike Authority board, Mills explains the consequences if the authority doesn’t raise enough revenue to meet the terms of its bond agreements.
Without the additional revenue, he says, the turnpike authority would have to direct additional funds to its reserves, diverting cash from maintenance and other needs. And without that required level of revenue, the turnpike authority wouldn’t be able to secure new bonds that could fund bridge improvements.
In addition, a revenue shortage would leave the turnpike authority without the required amount of money to put into a mandatory account for maintenance. Each year, according to Mills, an independent engineering consultant reports on the condition of the road to bondholders and tells the authority how much it needs to invest in its maintenance account.
“Failure to make the required [reserve maintenance] deposit puts us squarely into default and forces the bond trustee, Bangor Savings, to take over the Pike, raise tolls, and start running the road as trustee in possession,” Mills wrote in the memo.
As trustee for the turnpike authority bonds, Bangor Savings Bank’s role is to make sure the authority makes its payments and that the bondholders are paid what they’re owed, said Yellow Light Breen, an executive vice president at the bank.
Breen said it’s “incredibly unlikely” the bank would need to step in and operate the Maine Turnpike.
“We don’t get involved so long as they’re meeting their obligations to the bondholders,” Breen said.
The Maine Turnpike Authority, which last raised tolls in 2009, raises about $103 million annually in tolls and another $3 million from its service plazas, according to Mills. The turnpike authority board would have to sign off on any toll increase.
The proposed toll increases this week sparked criticism from Democratic legislators in the Lewiston area, who said the increases would unfairly affect drivers headed to the Lewiston-Auburn area and western Maine. The legislators also recommended holding off on the toll increases until lawmakers can discuss them when they return to Augusta in January.
And Sen. Ronald Collins, a Wells Republican and chairman of the Legislature’s Transportation Committee, said Friday he wants the Maine Turnpike Authority to “investigate all other alternatives before the toll increase,” and he’ll be looking for evidence the agency has done that when he attends the hearing in Saco on Thursday.
“Here in southern Maine, they use the turnpike extensively to get from home to work, and I just think it’s an additional hardship on people,” he said.
Collins also said the turnpike authority should hold an additional hearing closer to York, where the largest toll increase is slated. Mills said he would be open to a meeting in that area to discuss the toll increase and other turnpike issues.
In his memo to LePage and authority board members, Mills said the turnpike authority has minimized the size of the toll increase by cutting its operating budget, refinancing bonds at lower interest rates and negotiating less costly construction contracts.
Those moves have won the praise of the Maine Motor Transport Association, which represents much of the state’s trucking industry.
“We don’t dispute it being necessary, and we think that Peter [Mills] and his team have done a good job mitigating the impact,” Brian Parke, the association’s president and CEO, said of the increase.
Still, Parke said, the toll hikes come at a difficult time economically and would disproportionately affect commercial trucks. A five-axle commercial truck now pays four times the passenger vehicle rate. That multiplier would jump to 4.25 under the turnpike authority’s proposal.
Already, Parke said, “our industry will be paying a significant portion of the primary toll increase at the barrier tolls.”
A spokeswoman for LePage said Friday the governor has been briefed on the proposed toll increases but that it would be premature to comment on them.