A special committee will examine the financial condition of the Illinois State Toll Highway Authority and Gov. George Ryan’s plan for a state takeover of tollway bonds, Senate President James “Pate” Philip said Monday.
The committee, to be led by state Sen. Kathy Parker (R-Northbrook), will meet this summer to address concerns raised by Ryan’s proposal to refinance the agency’s $854 million in bond debt by backing it with state revenue. The tollway now uses toll revenue to back the bonds.
Parker’s committee won’t be the only legislative group examining what is certain to be an election year issue.
“I think legislators are demanding a more complex discussion over the summer,” said Michael Tristano, House Republican chief of staff.
The Senate Appropriations Committee held hearings last month on the subject. The committee chairman, Sen. Steven Rauschenberger (R-Elgin), plans subcommittee hearings on Ryan’s proposal this summer.
Also examining the issue will be the House Transportation Committee, headed by Rep. Jay Hoffman (D-Collinsville), and the Appropriations/Public Safety Committees, led by Rep. Charles Morrow (D-Chicago).
There is much at stake for many members, with nearly half the seats in the 118-member House up for grabs in the November election.
The hearings are expected to go beyond questions raised by Ryan’s proposal, to questions of tollway finances, such as how much money does I-PASS save the toll authority; how much does it really cost to maintain the existing roads; and how much will it actually cost to rebuild them?
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Bond analysts, experts on construction costs and on interest rates are likely to be among the witnesses called, Tristano said.
“We need to get to the bottom of how much it would cost to reconstruct the toll road. We have to have meaningful hearings,” he said.
“The toll authority welcomes the public discussion and we stand ready to participate,” said Joelle McGinnis, the agency’s spokeswoman.
Ryan, who has said he wants to end or reduce tolls, called for the refinancing of tollway bonds so he can get around current bond restrictions that bar suspending toll collection at selected plazas that account for more than 10 percent of the system’s traffic. Eliminating tolls is something he has vowed to do.
But while refinancing will allow Ryan to pull the plug on a few congested or underperforming toll plazas, it also may provide the state and the toll highway authority the opportunity to issue additional new bonds to pay for the rebuilding and widening of old toll roads, for I-PASS expansion, and other expansions of the system that toll authority officials say they cannot otherwise afford.
At the hearing by Rauschenberger’s appropriations committee last month, deputy budget director Michael Colsch testified that if the state had to pay, say, $70 million more in annual debt service to pay for additional bonds, it would require budget reallocations, a concern to Downstaters.
“What I wouldn’t want to happen is a change in the allocation formula. If we are going to pick up additional debt service, it should not come at the expense of other projects currently in the five-year [transportation funding] plan,” said Rep. Frank Mautino, (D-Spring Valley), vice chairman of the Appropriations/Public Service If Ryan keeps his promise not to raise tolls, the toll authority on its own won’t have enough revenue to service much additional debt.
And identifying another revenue source could make Wall Street bond analysts nervous, with the $12 billion Illinois First transportation plan to pay for over the next five years.
Also driving this summer’s hearings are concerns that restructuring the tollway’s debt could jeopardize requirements to maintain the toll authority’s roadways for bondholders.
“I’m very concerned about how we continue to monitor the toll road in the absence of the bond indentures,” Rauschenberger said. “If you allow them to refinance so they dump the bond indentures, you are restructuring the whole relationship.”
The indentures, or restrictions, require a percentage of toll revenues to be spent on maintenance of the toll roads.
They also require that another percentage of revenue be put in special accounts for capital improvements and additional debt service.
Without those restrictions, and with no required legislative oversight of tollway spending, tollway officials would, hypothetically, be able to use some of that set-aside money for other purposes, such as hiring more staff, buying property, doing more construction, and servicing additional bonded indebtedness.
“If you refinance the bonds and get rid of the indentures, you need to think through how you are going to manage the governance of the toll road,” Rauschenberger said.