Pa. Turnpike tolls have gone up 5%, but that’s smaller than the past seven years

An annual toll increase on the Pennsylvania Turnpike is like a rite of passage into the new year, but this year’s hike brought with it some positive financial news for the agency.

With a rebound in commercial traffic and the elimination of a $400 million annual payment to the Pennsylvania Department of Transportation, the agency may finally be able to do projects to improve the system rather than just maintain its assets.

The increase — for the 14th year in a row — began Jan. 2 and was slightly lower at 5% after 6% annual increases since 2015. It began a process of gradually reducing the increases to 3% by 2028, a rate that is expected to continue through 2050 to help pay off the agency’s $15 billion debt.

Richard Dreher, the turnpike’s chief financial officer, said the agency maintained tight fiscal controls through the first year of the pandemic when toll revenue was down more than $250 million. It made cuts mostly in capital projects so it could continue normal daily operations.

The biggest change came in May 2020 when it eliminated all 500 toll collectors and cash processing workers and switched to all-electronic tolling about 18 months ahead of schedule. That reduced the spread of COVID-19 by reducing contact between motorists and workers but also saved the agency about $107 million through this year.

This also should be the last year the turnpike is required to pay PennDOT $400 million a year to support public transit. When former Gov. Ed Rendell wanted to charge tolls on Interstate 80 in 2007 to raise funds for PennDOT, the Legislature passed a bill requiring the turnpike to collect the tolls and pay PennDOT $900 million a year.

When federal officials rejected tolling, the state reduced the payment to $450 million a year, including $50 million for multi-modal.

But the lack of tolls meant the agency had no source to generate the funds for the payments. Over the years, the turnpike has borrowed about $8 billion to cover the payments, more than half of its debt.

That payment drops to $50 million for the 2022-23 fiscal year.

Those changes, combined with the increase in commercial traffic, will allow the agency to concentrate on improvement projects, Mr. Dreher said.

Commercial traffic accounts for about 15% of all turnpike transactions, but because trucks and buses pay higher tolls they generate about 48% of the revenue. For the fiscal year ending in May 2019, the agency had about 214 million commercial transactions, the highest in its history, but that dropped to about 190 million in 2020 and 170 million for the year that ended in May.

In the second half of 2020, commercial traffic was down 8 to 9%. But since January, commercial traffic has been above pre-pandemic levels and through May was providing 51% of the agency’s toll revenue.

Passenger traffic has been slower to return. In fall 2020, it was down about 20% compared to pre-pandemic levels, but now that decline regularly is in single digits.

Mr. Dreher said it was “encouraging” that Thanksgiving traffic in November was 10% higher than 2019.

The elimination of most of the payments to PennDOT isn’t a financial boon to the agency, Mr. Dreher stressed. It still has debt service on bonds issued to make those payments through 2051, and there will be some years where payments will be higher than others because of the way the debt was issued, he said.

The good news is all those numbers mean the turnpike can resume doing projects it wants to do rather than just projects it has to do.

For example, the agency will be able to expand its ongoing project to rebuild and widen the 550-mile system, some of which has original construction from the 1940s. So far, it has rebuilt about 150 miles starting from the Ohio border.

In addition, the switch to all-electronic tolling, where motorists pass under gantries on the highway that record their payment or take a photo of their license plate and mail them a bill, prompts another major change. Instead of needing full interchanges with tolling plazas, the turnpike can add free-flowing entrance or exit ramps just like other interstate highways. Those require far less land and cost half as much.

For example, the turnpike announced in October that it would begin designing a long-awaited interchange with Route 130 in Penn Township, Westmoreland County, because it will have funds to build it by 2026.

“Free of the yoke of [payments to PennDOT], that’s enabling us to move forward on projects like that,” said turnpike spokesman Carl DeFebo. “We’ll be able to say ‘yes’ to projects like this when local officials approach us.”

Being able to respond to local requests with less expensive interchanges will allow the turnpike to be “the economic driver we once were,” CEO Mark Compton said.

Additionally, when the agency finishes installing all the mainline gantries across the state in 2026, it can begin redesigning all of the old interchanges to eliminate the toll collection areas, reduce the size of the interchange and provide free-flowing traffic onto local roads.

“Once the toll booths go away, we can begin to make those changes,” Mr. DeFebo said. “The turnpike will look like any other interstate highway.”

The 5% toll increase raises the cost of a cross-state trip in a regular car from Ohio to New Jersey for motorists who use pre-paid E-ZPass from $47 now to $49.50. About 86% of motorists use the pre-paid E-ZPass transponder.

Motorists who use the Toll-By-Plate system pay a 45% processing fee so their cost goes from $95.30 to $100.20 for the same trip. Those fees are based on the former cash charges, which were higher than E-ZPass to encourage motorists to use the transponder.

Those motorists can receive a 15% discount on the Toll By Plate charge if they use the PA Toll Pay app to have payments automatically deducted from their bank account.

For the most common toll for passenger cars, fees increased from $1.60 to $1.70 for E-ZPass and $3.90 to $4.10 for Toll By Plate. For a Class-5 tractor-trailer, the most common rate would go from $13 to $13.70 for E-ZPass and from $26.60 to $28 for Toll By Plate.