ICC Debt Burdens Maryland Transit Authority

Well, I guess now we don’t need any projections about how building the Intercounty Connector was going to screw the Maryland state budget, never mind the environment .  This article in the Baltimore Sun is probably one of the most damaging stories I’ve ever seen.

“As the Maryland Transportation Authority’s revenues have declined this year, its costs for construction of the Intercounty Connector have risen to the point where the project now accounts for 53 percent of the agency’s budget – forcing delays in other road maintenance projects and making a substantial increase in tolls at some facilities a near certainty after the 2010 gubernatorial election.

According to the state Department of Legislative Services, the independent toll authority is facing the same type of recession-related squeeze that has forced the Maryland Department of Transportation to defer about $2.2 billion in projects.”

“Some increase in tolls is likely because the authority’s heavy borrowing to finance the ICC and a widening of Interstate 95 might put it close to its statutory debt limit in about five years.

“State projections show the authority’s outstanding debt – under $500 million as recently as the 2007 budget year – stands at $1.1 billion now and will approach its legal limit of $3 billion by the middle of the next decade. The authority would need authorization from the General Assembly to exceed that amount”

Much of the agency’s debt has been piled up to pay for the ICC, a $2.6 billion project that will cost $736.8 million in authority funds in the current budget year alone. That is more than all other capital, operating and debt service spending in the agency’s budget.

Freeland said the authority long anticipated that the ICC would take up a large percentage of its budget this year and the next two, tailing off after 2012.

According to legislative analysts, the authority will have to impose “substantial” toll increases in the 2012 and 2014 budget years to maintain its minimum ratios of revenue to debt. The formula is important in keeping the authority’s AA bond rating that guarantees it can borrow at favorable rates.

The authority is forecasting a 2012 toll increase that would bring in $161.4 million. According to analysts, that would amount to an increase of $1.35 in the average toll of about $3.”

“Asked to sum up the condition of his agency, Freeland chose his words carefully.

“The financial future of the transportation authority will be constrained but manageable,” he said.”