The Pa. Turnpike has helped keep public transit afloat for years. Now what?

Next time you travel the Pennsylvania Turnpike, remember this: Your toll is also paying back the loans for billions of dollars of past spending on public transportation and state highways and bridges unrelated to America’s First Superhighway.

Since fiscal year 2008, the Turnpike Commission has turned over $8 billion to the Pennsylvania Department of Transportation, accumulating interest on the bonds sold to finance that obligation — on top of the other debt it has assumed for construction to maintain and improve the toll road.

“Customers are really on the hook for almost $16 billion to eventually pay all that back,” turnpike chief financial officer Richard Dreher said.

That will continue to require yearly toll increases. The last one is scheduled for 2051.

It was audacious back in 2007 when Gov. Ed Rendell proposed and pushed what became Act 44, a workaround for a state constitutional prohibition on the use of the gas tax for public transit and legislators’ reluctance to hike that tax to fund needed highway and bridge infrastructure projects.

“The state was always in a transportation funding crisis,” Dreher said in an interview.

Rendell would use turnpike tolls, a revenue source projected to grow, and add them on Interstate 80, Pennsylvania’s other great east-west route, to raise even more.

In the end, the federal authorities said no to tolls for I-80. It burdened turnpike finances, but after later refinements, the scheme brought 15 years of relative stability to state transportation budgeting.

But the issues of the past sometimes are visited on the present. Here we are again, with public transit in financial distress and mounting repair needs for locally owned roads and bridges. And government leaders in Harrisburg are faced with finding a stable source of funding.

This time, though, there’s no obvious fountain of “easy” money, as the turnpike is maxed out. State lawmakers are searching for another way. The state Senate Transportation Committee is holding a hearing Tuesday in Harrisburg about transit funding.

SEPTA and other state transit agencies are still getting back on their feet after pandemic ridership losses, while dealing with perceptions of disorder and crime. They need money to replace expired federal pandemic aid.

Gov. Josh Shapiro initially asked that the state pump $283 million into the Public Transportation Trust Fund by increasing the annual allocation of state sales-tax revenue it receives, which would have brought about $161 million to SEPTA for the 2025 fiscal year.

“The governor’s plan is fiscally conservative; no one would have their taxes raised,” said Connor Descheemaker, coalition manager for the advocacy group Transit Forward Philadelphia. Other states raised taxes to stabilize transit systems, they noted, including New Jersey, New York, California, and Minnesota.

Shapiro’s proposal never made it into the state budget deal that passed in July.

Senate Republican leaders insisted that any new mass transit funding would need to include spending for highway and bridge infrastructure and other transportation needs, too. There was no time to put something that big together.

Lawmakers tucked into the budget a stopgap funding measure that allotted $80.5 million for the highways and bridges and $80.5 million for transit — SEPTA says its share is about $53 million.

The agency wants to use the money to keep from draining all of its reserve funds but could need to make service cuts soon without more state money. SEPTA warned of 20% service cuts, but it has not been specific when exactly cuts must be made or how deep they would go.

Current political conditions in some ways remind Harrisburg veterans of the time in 2013 when highway and mass transit interests formed an alliance to strengthen state transportation finances.

The turnpike struggled with its debt, the huge number of structurally deficient bridges threatened weight restrictions and closures that would have hurt most parts of the state, and transit systems said they needed more than a half share of the turnpike payments under Act 44.

Federal officials had turned down Rendell’s proposal to toll I-80, so the earlier plan wasn’t bringing in enough.

Republican Gov. Tom Corbett’s administration negotiated a new financing deal with lawmakers, helped by Pat Deon, a Bucks County power broker with deep GOP ties who was then chairman of the SEPTA board and also is a longtime member of the Pennsylvania Turnpike Commission.

Under what became Act 89, the gas tax was raised for the first time in years for the backlog of road and bridge infrastructure needs. The turnpike’s obligation was slashed to $450 million a year, with all of it flowing to the Public Transportation Trust Fund — down from $750 million in 2008, split between highways and transit.

Some consider the current negotiations a search to craft an “Act 89 lite,” though there has been no talk of hiking the gas tax.

But the coalition of lawmakers and other interested parties who want a comprehensive deal is broadening, and that can only draw more votes for whatever measure emerges.

Regional and county airports need money for repairs and building and want a piece, and there’s always greater demand than money available for “multimodal” projects such as trails, bike lanes, and the like. And PhilaPort, the independent state agency in charge of the port, is negotiating to buy 150 acres from Norfolk Southern for a major expansion; it wants state money but hasn’t said how much it needs.

Lawmakers, many of them from small towns and rural areas, understand well that transit is economically crucial to the Southeastern Pennsylvania economy and thus state tax revenues, according to experienced lobbyists. But many fewer of their constituents tend to ride transit, and legislators want to to make sure their needs are met, too.

The biggest sticking point now: where to get the money. Senate Majority Leader Joe Pittman (R., Indiana) and others are interested in taxing “skill games” as part of a funding solution for transportation. Skill games are slot machine look-alikes that are currently unregulated because they exist in a legal gray area. They have cropped up in bars, gas stations, and convenience stores around the state.

How much that could generate depends on how the measure is written. Estimates range from $200 million to $600 million a year. There are differences of opinion among factions in the Republican-majority Senate over the issue.

Philadelphia is cracking down on skill games as nuisances, and some lawmakers are queasy about them but also want to protect the city’s brick-and-mortar casinos. Lobbying is intense between skill game manufacturers and merchants who want them in their shops and larger gambling interests.

Whatever a skill game tax would bring, there may be need to be money from elsewhere, such as the sales tax. But a number of conservatives don’t want to tap the general fund.

Kerry Benninghoff, the senior Republican on the Transportation Committee, is among those who think that lawmakers will have to come back to the issue in the spring; it takes time to build consensus. There’s been a lot of turnover in the General Assembly, he said, and the election is near, with few session days scheduled, he said.

“Besides if you do it before the election, you’d seal its fate,” Benninghoff, of Centre County, said in an interview. Legislators who are uncertain “are going to make the cautious vote, take the least risk, and usually that’s a ‘no,’” he said.

Meanwhile, the turnpike is crawling out from under the debt load — repayments are set to peak in 2038 and then gradually decline. One strategy has been to ratchet down operational expenses, Dreher said.

It’s held those costs essentially flat for the last 15 years, he said. The workforce is smaller, among other things.

Turnpike officials are also working on alternative sources of revenue: selling excess energy from a solar array in Western Pennsylvania to the electric grid; leasing space on the fiber optic cable it is installing on the length of the road for its communications and data; and building out EV chargers at service plaza.

It’s been financing rebuilding of parts of the turnpike and is installing a completely open toll-collection system using readers mounted on gantries — no more toll booths.

Credit ratings on turnpike bonds are good.

“It’s the resiliency of our customer that has kept the turnpike going,” Dreher said. “We’ve been gradually increasing [toll] transactions.”