Turnpike Commission criticized

January 9, 2013

HARRISBURG – State Auditor General Jack Wagner on Tuesday blasted the Pennsylvania Turnpike Commission for several practices, including use of a debt financing method he says unnecessarily costs taxpayers and motorists at least $108.9 million.

An audit of the commission that covered Jan. 1, 2007 through Aug. 31, 2011 also criticized the commission for:

• Providing the generous perk of letting employees ride the turnpike for free and allowing more than $4 million of free travel to consultants, officials and others.

• Failing to implement fire detection systems in two of five tunnels.

• Being overly permissive when reimbursing commissioners for expenses.

Wagner said the commission's long-term debt skyrocketed from $2.6 billion to $8.3 billion since it entered into a lease and funding agreement with the state Department of Transportation in 2007 and agreed to pay PennDOT $450 million a year to fund roads, bridges and transit.

He also noted that the turnpike raised tolls only five times between 1940 and 2004, but since 2007 there have been five annual toll increases.

Wagner said the commission's strategy to save money was to use interest-rate swaps – rather than fixed-rate bonds – to finance debt, but it lost millions of dollars. Given its precarious financial position … the turnpike should not use these complicated and risky deals, he said.

In response, the commission said Wagner's analysis of the interest-rate swaps is incomplete and leads to incorrect conclusions. Using a complete analysis, the commission said it lowered its overall debt and saved $10.8 million.

The commission also disagreed with Wagner's characterization of free travel on the turnpike for employees and others as a generous perk, and his assertion that the commission is losing millions of dollars because of it. It also took issue with Wagner linking free travel with toll increases that went into effect Sunday.

Still, it agreed to research the feasibility of developing techniques to monitor usage and identify potential misuse and would consider modifying policies.

The commission said a fire detection system project is being developed for a fourth tunnel and it will assess its fire detection needs for the remaining tunnel.

In criticizing the commissioners' spending, which included hotel stays that sometimes exceeded $300 a night, Wagner said there was an overall lack of transparency in accounting for costs.

The audit said the commissioners racked up $539,000 in expenses from the start of 2007 through August 2011, or nearly $2,000 per month for each commissioner. They are not required to submit itemized receipts.

Those costs included $406,000 for vehicles, $46,000 for lodging, $30,000 in fuel and $15,000 for meals. The turnpike provided $18,000 for catered meals for the 101 board meetings during the study period.

We do not believe that part-time commissioners require permanently assigned vehicles, the audit said. Further, we found no convincing reason to allow commissioners to use commission-purchased vehicles for personal use.

The commission said it is altering its meeting schedule and using video conferencing to cut down on some of those costs.

Twenty miles of Turnpike run through Luzerne County, and two interchanges – one in Bear Creek and one in Pittston Township – are located here. An average of 10,658 vehicles passed through the Bear Creek exchange monthly in 2011 and an average of 6,986 vehicles passed through the Pittston Township exchange monthly that year.

The Associated Press contributed to this report.

Find the audit and the response at www.timesleader.com