Add Moody's Investors Service to the list of those pleased with the passage of a transportation funding bill in Pennsylvania.
Moody's, one of the nation's leading rating agencies, said the phased-in plan that was signed into law last week by Gov. Tom Corbett is a "credit positive for the Commonwealth of Pennsylvania."
The funding package invests an additional $2.3 billion to $2.4 billion in roads, bridges and mass transit by the fifth year.
Moody's cited the eventual elimination of the annual funding burden that Act 44 created for the Pennsylvania Turnpike.
"By relieving the Turnpike of its Act 44 burden, Act 89 will result in less long-term debt for that agency. That is a win for all who pay tolls to travel the Turnpike," said Sen. John Rafferty, chairman of the Senate Transportation Committee, who relayed the Moody's news.
The bill will eliminate the Pennsylvania Turnpike Commission's $450 million payments to the state Department of Transportation after 2021-22, according to fiscal notes. After that, the turnpike will still pay $50 million to PennDOT every year from current revenue.
In the short-term, the continuation of those $450 million payments will add to the turnpike's debt. However, once that money is replaced with a percentage of the sales and use tax on motor vehicles and trailers, the debt incurred will begin to go down from increased toll revenue, PennDOT Secretary Barry Schoch said.
Each year annual debt service is about $35 million, Schoch said.
"Moody's said the new law is good for our state's credit rating because it provides a new and recurring revenue stream to address the state's large backlog of transportation improvement and maintenance projects," Rafferty said. "Moody's recognizes what we have been saying all along — this much-needed investment in our transportation infrastructure is crucial not just to public safety but economic development as well."
The bill uncaps the Oil Company Franchise Tax over five years and increases vehicle registration and licensing fees to provide additional funding for roads, bridges, transit and intermodal ports. At the same time, the legislation eliminates the 12-cent liquid fuels tax, as of Jan. 1.
PennDOT Secretary Barry Schoch visited the Business Journal's office this morning and talked about the transportation bill and what it means for Pennsylvania businesses and residents. Click here to see video of the interview.