When Paul Violette stepped down as executive director of the Maine Turnpike Authority last Monday after 24 years in the post, he noted in his resignation letter that he served under four governors and 13 legislatures. A former House majority leader, Violette was rarely challenged.
But a critical report about him and the MTA released in January by OPEGA – the state's Office of Program Evaluation and Government Accountability — has not only prompted Violette's resignation last week, but catalyzed a political wave that promises to change — if not eliminate — the MTA.
The 78-page report, while respectful of the MTA’s authority and cautiously worded, first raised the question of $157,000 in gift certificates purchased by Violette in 2005 and 2006 and said to be given to organizations between 2005 and 2007 – spending for which Violette had no records, only a general recollection of what groups had benefited.
That troubled state Sen. Roger Katz, R-Augusta, co-chair of the OPEGA oversight committee. He vowed to issue subpoenas, if necessary, and said, after an initial investigation, that the MTA’s account of gift card use was “not completely accurate,” and that the Attorney General's Office had been notified of the investigation. Two days ago, Katz's committee followed through on those vows, subpoenaing five gift card vendors and telling MTA staff to be prepared to testify before the committee.
The gift cards became the leading wedge in events that led to Violette’s resignation, but the OPEGA report raised many other questions the Legislature and the MTA are just beginning to address.
— The way the turnpike shares money – or doesn’t – with the Maine Department of Transportation;
— The MTA’s exclusive engineering contract with a national firm, HNTB, which totals $5.7 million, but has never been put out for bid;
— The way the Legislature performs its oversight role.
The result of these inquiries is virtually certain to change the way the turnpike does business, and could even lead to the extinction of the MTA — one of the oldest and most powerful of independent state agencies. It has issued $400 million in bonds, and has an annual budget of about $100 million.
Termination is the course Gov. Paul LePage clearly prefers. At a community forum in Westbrook last month, LePage called for merging MTA into MDOT and putting its functions under the direction of Transportation Commissioner David Bernhardt.
Since then, LePage has upped the ante. Last week, communications director Dan Demeritt said, “He doesn’t think there’s a need to study the issue. He thinks we should merge it with DOT right now.” Demeritt also suggested it was time to revisit the turnpike’s toll system, which spans the 109-mile roadway that now extends from Kittery to Augusta. “Maybe we could keep the toll in York, but eliminate the rest of them,” he said.
Most legislators are far more cautious about the turnpike’s future status, but virtually all of them believe change is due, if not overdue, at the MTA.
Rep. Richard Cebra, R-Naples, House chair of the Transportation Committee, said change could begin with the way the MTA presents its budget to the Legislature. Though the state has long since moved to a July fiscal year, the MTA continues to budget by the calendar year.
“That means that the budget arrives in Augusta in September, when nobody’s here,” Cebra said. He doesn’t think this allows adequate oversight.
Katz said that for him, a key issue is that the MTA “is so insulated from public scrutiny.” He also believes that lawmakers will press the MTA to transfer larger amounts to DOT, which has fallen far short of its highway maintenance and reconstruction targets.
“Does it really benefit the state to have one Cadillac road, when the rest of the system is a Yugo?” Katz asked.
In an interview the day after Violette resigned, Deputy Director Neil Libby, Treasurer Doug Davidson and spokesman Scott Tompkins defended the MTA’s record and operations, while conceding that the OPEGA report had already put changes in motion.
“Maine is well served by the way the turnpike is run,” Libby said. “It’s an efficient, low-cost operation that’s responsive to public needs.”
MTA's income saved it from elimination
The Maine Turnpike Authority was created in 1941 to build a high-speed toll road from “the vicinity of Kittery” to “the vicinity of Fort Kent.” Actual construction didn’t begin until after World War II, with the first section, from York to Portland, completed in 1947 and an extension to Augusta opened in 1956. At that point, free interstate highways took over as the federal government assumed a new financial role in road building. States largely abandoned the original toll road model, and in Maine the interstate system ends in Houlton, much to the chagrin of northern Aroostook County.
The MTA is actually 30 years older than Maine's DOT, created from the old State Highway Commission when the Legislature authorized cabinet-style government in the early 1970s under Gov. Ken Curtis. Curtis consolidated more than 150 independent boards and commissions, but left the MTA on its own.
The Legislature has often been of two minds about the turnpike authority’s independence. In 1963, lawmakers decided that tolls should be eliminated, along with the MTA, when the original construction bonds were paid off. But that direction began to waver during the administration of Gov. James Longley, an independent elected in 1974.
George Campbell was Maine’s transportation commissioner from 1980-83, and now has the same job in New Hampshire. As he recalls it, “Longley didn’t want to raise the gas tax a penny, as the Legislature tried to do.” That’s where the idea of raising turnpike tolls, and transferring revenue to the DOT, came from.
That compromise then led, under the Brennan administration, to the 1982 decision to keep the tolls and the MTA, while also requiring the turnpike to pay for Troop G, the State Police division that patrols the toll road.
At that point, the turnpike was transferring $4.7 million annually to the DOT, with the statutory amounts doubled and then redoubled, to $17.4 million. But during the 1990s, the requirement to transfer 25 percent of “operating revenue” was replaced by the entire “operating surplus,” which in practice has led to fast-diminishing cash transfers.
Since financing a $34 million bond in 1996 for MDOT, the turnpike has made no more transfers. The bond repayment costs $2.4 million annually, though Neil Libby points out that the MTA participates in joint projects with MDOT – including the new West Gardiner service plaza – that cost the MTA an additional $6 million a year.
For many lawmakers, that amount is not enough, and they want to reopen the debate about cost-sharing and oversight. Some want to go further – to revive the earlier concept of moving the MTA into MDOT, investigate leasing the road to a private operator, or even removing the tolls and increasing the gasoline and diesel taxes to compensate.
The differences start with what people think the Maine Turnpike Authority is.
“In terms of how it functions, it’s really more like a private business than a public agency,” said MTA spokesman Tompkins. That explains, in the MTA’s view, its habit of donating to transportation groups like the Maine Better Transportation Association and seemingly unrelated nonprofits, including GrowSmart, Maine Audubon and Maine Preservation, where Violette served on the board.
The gift cards were the most controversial part of that program, and Gerard Conley Sr., longtime chair of the MTA, said the board wasn’t aware of the donations. Tompkins said the staff was aware, though not of the details. “Some of them Paul put on his credit card, others were authorizations for checks,” he said Tuesday.
Overall, Deputy Director Libby said, the MTA is in business “to provide a product to customers at a competitive price.” In his view, the MTA does not need to apologize for its independent status, and has accomplished its basic task of providing a well-maintained road at rates below the national average.
Such talk is a red flag for many legislators. “It’s a public agency, using public money for a public purpose,” said Sen. Bill Diamond, D-Windham, a long-time member of the Transportation Committee and former co-chair of the Appropriations Committee. “The sun should shine on the turnpike authority, and that should start now.”
N.H. does it differently
If the Legislature does decide the MTA shouldn’t remain independent, it doesn’t have far to go for a model. Neighboring New Hampshire has always located its turnpike authority within the DOT, although – as Libby points out – much of the agency structure, including an executive director, is common to both states.
“You wouldn’t really save much money, because most of the positions would still have to be filled,” he said. Other believes there could be significant savings. But money isn’t the primary issue for most legislators – direction and control are more important to them.
New Hampshire commissioner Campbell once served on the MTA as the MDOT member, so he’s familiar with both systems. In both states, toll revenues must be separated from other sources in an "enterprise account." But in other respects, life is very different for the New Hampshire toll road. For instance, last Friday, Campbell spent the afternoon in Concord in legislative hearings, trying to convince lawmakers that cutting the toll-collecting staff by half wasn’t a good idea.
MTA officials are not called on to undertake such missions; the provision that the Legislature “approve” its budget is largely pro forma. Lawmakers can’t make any changes, unlike in New Hampshire.
In terms of getting things done, Maine lawmakers point to New Hampshire’s success in completing its open-road tolling facility at Hampton, which allows EZ Pass customers to drive through at highway speed. The MTA has been bogged down in a dispute with the town of York for more than two years in its attempt to implement open-road tolling. The reason, in large part, is “the pure arrogance of the Maine Turnpike Authority,” said Rep. Cebra. “People dug in their heels” after the MTA “botched” its public relation campaign, he added.
Potential legislative interference is a constant undertone in the OPEGA report, which made clear a concern that actions by lawmakers – rejecting toll increases, for instance – could undermine credit ratings.
Yet the two state turnpikes have almost identical credit ratings, with both maintaining about 100 miles of tolls roads. There have been no apparent ill effects from legislative budget review in New Hampshire.
Campbell said the New Hampshire system's ability to do unified planning has been an asset. He proposed legislation two years ago that would have “aggregated” all the interstates in New Hampshire – there are “free miles” on I-89, part of I-93 and Route 101 – to permit toll revenues to be used to maintain the entire system. Federal rules require such spending to be “related” to the actual toll road system, but in practice there’s some flexibility.
The House approved the bill, but it was rejected in the Senate. This year Campbell is back with a “consolidation” proposal that essentially does the same thing.
Maine has a much larger proportion of “free” interstate roadway — about 260 miles — but some advocates for change say such a system could level the playing field, at least between roads such as I-295 north of Portland, which records the highest vehicle counts in the interstate system, and the turnpike. The MTA has proposed widening the turnpike through Portland, while DOT says it can’t secure funding for a similar step on I-295.
Ending tolls would eliminate precious funding source
Another factor that could bear on the issue is the unwillingness of Congress to even consider a federal gas tax increase to fund a new six-year federal transportation bill. As now designed, the measure is about $100 billion short of its spending targets, and the federal highway fund has already been “borrowing” from the treasury with no sign that it will be able to pay back the loan.
At a recent gathering of state transportation commissioners, U.S. Transportation Secretary Ray LaHood proclaimed, “We like tolling.”
The message to Campbell was clear. “He said it three times, very emphatically. If we’re going to raise any new money soon, it’s not going to come from the (federal) gas tax.” Such a policy could make states’ toll-gathering ability, and the means to share the revenue, even more important in the years ahead.
New Hampshire hasn’t raised its fuel taxes in 20 years. Maine has, but the inflation indexing used since 2005 is opposed by LePage, who’s vowed to repeal it. He’s included a $20 million transfer from the general fund to highways in fiscal 2013 to compensate.
The Maine Turnpike last raised its tolls in February 2009 — the increase at the York toll station was from $1.75 to $2, for example — and plans another increase in 2013-14, although the amount is not yet known.
Campbell said it’s possible interstates that don’t have tolls could get them. He’s suggested that method to help fund a planned $800 million widening of I-93 from Salem to Manchester – but received a decidedly frosty reception from legislators.
In Maine, the Transportation Committee has discussed the possibility of “tolling” I-295 and I-95 from Augusta to Bangor, though there are few takers. For now, it appears more feasible to raise tolls where they now exist than extend them to new locations.
Highway engineering is another place where the MTA will get new scrutiny. National engineering firm HNTB has had the contract – including both design and construction supervision – since the very beginning, and it has been renewed annually for the last 70 years. MDOT has its own in-house engineering staff, but the MTA does not.
To Campbell, it makes sense to have in-house capabilities, even though New Hampshire does contract for about 70 percent of its design services: “If you don’t have your own staff to read the plans, how do you know how good they are?
Based on suggestions made by the OPEGA report, the MTA will begin soliciting bids for about a third of the $5.7 million in work now done by HNTB, starting next year.
Change in the wind
One framework for deciding the MTA's future is a bill filed by Sen. Douglas Thomas, R-Ripley, that would study privatizing the turnpike, turning it over to MDOT or creating stronger ties between the MTA and MDOT. The bill, LD 208, has not yet been scheduled for a public hearing before the Transportation Committee.
Leasing to a private operator seems to have the least support, initially. Deputy Director Libby says that the two states that sold 99-year leases to private operators, Illinois and Indiana, are not necessarily happy with the results. “There’s typically a big upfront payment” — $1.8 billion in the case of the Chicago Tollway — “but then the public loses all rate-setting authority for a hundred years.” Toll increases seem to be much larger and come quicker with a private operator, he said.
Asked for his own take, Thomas said he didn’t necessarily support any of the options in his own bill. He said he’d be concerned that the lease payments might not support even the existing debt obligations of the MTA, “and if they defaulted, then we’d be on the hook.”
As for merging with MDOT, he said, “Sure, the governor wants it to happen so he has more control. But what’s to say that the bad guys (at the MTA) won’t be succeeded by other bad guys?”
If it were up to him, Thomas would remove the tolls altogether, as originally planned. “That promise was made a long time ago, but it was still a promise.” He said he’d even “consider” an increase in fuel taxes to compensate, “and you know all about my position on taxes.” Thomas has been a leading opponent of fuel tax increases during his tenure on the Transportation Committee, where he’s served in both the House and Senate.
Thomas acknowledged that his is a “minority opinion,” and that does seem to be the case. Replacing toll revenue with other taxes isn’t likely to be more popular with the Legislature in 2011 than it was in 1982, when the final decision to keep the tolls was made.
MTA Deputy Director Libby points out that while out-of-state vehicles account for 40 percent of turnpike traffic, they account for 60 percent of toll revenues, thanks to commuter and EZ Pass discounts available only to Mainers.
New Hampshire has a higher proportion of out-of-state use – more than half – and some states have even more.
“Delaware has about 90 percent out-of-state drivers on their section of I-95 (the Delaware Turnpike),” Campbell said. “They finance practically their entire transportation system that way.”
Gov. John McKernan, a Republican, proposed abolishing the MTA and merging it with MDOT, although he didn’t strongly push the bill. Independent Angus King campaigned hard on the issue, only to do an about-face once in office, saying the state couldn’t borrow as cheaply as the MTA. Other observers say this isn’t necessarily so, citing the New Hampshire example, and say there could be some administrative savings in a merger.
Said Libby, “Governors like the idea of a merger until they look at the details, and see that it’s not so simple.” Yet today's political environment may prompt a different outcome.
Not only is the forced resignation of the MTA executive director coming at the outset of a new administration, but there’s a renewed emphasis on accountability in government, and a new appreciation of the limits of existing funding.
Sen. Katz said the OPEGA committee's inquiries may be just the beginning. "The first question we had to consider was whether the status quo was acceptable. And we've already answered that — it's not."