Too much debt even under normal circumstances, plus, now, derivatives entered into years ago are coming due. Question why an agency in the business of maintaining a road would enter into the interest-rate speculation business in the first place, but nevermind.
What to do.
1: The Deval Plan. Liquidate the agency; raise the tolls. It’s inevitable really. The only open question in this plan is what’s to become of the debt. The biggest question is the one the Governor didn’t address, but the presumption is of course that it’ll be refinanced with some sort of general obligation (GO) bond. What this might do to Mass bond ratings is unknown, but with 25% of the total Mass debt in variable debt, a single point rise in rates costs the state around $40 million per year.
2: Toll I-93 and combine the Pike revenues with I-93 revenues to fund the debts. This was off the table early. Why? Probably, political heat.
“The buck stops there, not here.”
3: Leave the agency standing but fund it with GO bonds. Probably a horrible idea, since it solves the revenue side without addressing the Pike overhead and costs.
4: Sell the Pike. Why not? Isn’t this the best answer? Or, if not the entire pike, there must be some serious Real estate owned or right-of-way plus abutting real estate with huge commercial value to a mall owner, restaurant, etc…
5: Tax increase. Gas tax is coming; you can see in the distance.
6: Go hat-in-hand to Washington seeking a bailout. Everyone’s doing it.