Pennsylvania Turnpike’s annual toll hike of 5% begins Jan. 7

The new year ushers in hope for improvements and positive changes, but Pennsylvania motorists can count on one not-positive-for-them thing that won’t change.

Tolls on the Pennsylvania Turnpike will increase at the beginning of the year.

When the 5% increase begins Sunday, Jan. 7, it will be the 16th year in a row the state Turnpike Commission has raised rates, mostly to pay off more than $15 billion in long-term debt. A large portion of that debt occurred because the agency had been required to pay the state Department of Transportation $400 million a year to support public transit, but that payment was eliminated in 2022.

With the increase, passenger cars will see the most common toll move from $1.80 to $1.90 for those who use the prepaid E-ZPass transponder. For drivers without E-ZPass who use the Toll By Plate system, where the agency photographs their license plate and mails them a bill, the most common toll will rise from $4.40 to $4.70.

A cross-state trip from Ohio to New Jersey will increase from $52.10 to $54.60 with E-ZPass, from $105.30 to $110.70 for Toll By Plate.

The cost for the most common trip for a Class 5 tractor-trailer will go from $14.40 to $15.20 with E-ZPass, from $29.40 to $30.90 with Toll By Plate.

To encourage the use of E-ZPass over the years, those customers got a price break compared to motorists who paid at toll booths. The agency added a surcharge for Toll By Plate drivers after the agency switched to all-electronic tolling at the start of the pandemic in 2020.

Financial outlook

In a wide-ranging interview recently, turnpike Chief Financial Officer Richard Dreher explained why the agency is projecting rate hikes through 2050, outlined ways it tries to control costs and noted small areas where it can generate additional revenue.

For Dreher, the best financial news of 2023 was the decision by bond rating agencies Moody’s and Standard & Poor’s to raise the turnpike’s financial rating by one notch to AA, the first increase since 2007. Not coincidentally, that also was the year before the state-required payment for transit began, Dreher noted.

The better rating means the agency can expect to pay less interest when it borrows money or refinances old debt, which it does in chunks of several hundred million dollars or more a couple of times a year.

“It’s not a direct line, but the higher credit rating can save tens of millions of dollars when we borrow,” he said.

The rating increase reflects not only the elimination of borrowing for the PennDOT payment but also the return of rate-paying customers following the pandemic, Dreher said. Traffic plunged at the start of the pandemic in early 2020 as all motorists were encouraged to stay home, but commercial traffic — which pays higher tolls — recovered quickly and is now about 14.5% above pre-pandemic levels.

Passenger traffic has been slower to recover and remains about 4% below 2019 levels. But for the fiscal year that ended May 31, passenger traffic increased 3.2% compared to 2.6% for commercial traffic.

Even with the annual toll increase, Dreher said, the turnpike will remain in about the middle of the pack in terms of costs for using toll roads. The agency’s cost of about 15 cents a mile for E-ZPass users is below the national average of about 18 cents a mile and ranks 24th out of 47 toll facilities across the country.

The Toll By Plate charge ranks 15th out of 47.

“People continue to use the Pennsylvania Turnpike,” Dreher said. “We continue to be comparable with other toll roads.”

In fact, Dreher said, toll facilities in New Jersey, New York and Texas have adopted annual toll increases in recent years to avoid large spikes.

Overall, turnpike revenue has increased about 24% since the pandemic, including 5.9% for the year that ended May 31 to more than $1.6 billion.

Despite the generally good financial forecasts, Dreher said, the turnpike remains on course to raise rates through 2050. That includes dropping annual increases to 3% by 2028 but continuing at that rate due to the long-term debt the agency is paying off.

Debt payments will be about $800 million this year and are projected to reach their peak at about $1.2 billion in 2037 before they begin falling.

“We have not changed our toll rate assumptions,” he said. “We are on a path to reach 3% by 2028.”

Improved revenue also has helped the agency increase its capital spending, which includes projects to upgrade sections that haven’t had much work since they were built more than 70 years ago; widen the 550-mile system from two lanes in each direction to three lanes across the state; install overhead gantries to record toll payments; and remove unmanned toll plazas to create free-flowing entrance and exit ramps.

During the pandemic, the revenue crunch caused the agency to postpone some capital projects and cut spending to about $450 million for the 2021 fiscal year, a reduction of about $250 million. It was restored the next year when traffic increased and Dreher said capital spending is expected to be about $900 million annually for fiscal 2023 and 2024.

One other area that involves the turnpike is building the Mon-Fayette Expressway, the toll road that is considered a key to economic improvement in the Monongahela Valley south and east of Pittsburgh. The agency was required by state law to build that highway as well at the Southern Beltway near Pittsburgh International Airport, but the funds for that come from the turnpike’s share of state Oil Franchise Tax, not toll revenue.

The leg of the highway from Jefferson Hills to Duquesne began construction in 2023, but the northern end remains on hold until funding is available after a decline during reduced driving during the pandemic.

Dreher said that fund, which reached a maximum of $142 million before the pandemic, stood at $130 million at the end May.

Other factors

Tolls make up about 98% of the agency’s annual revenue, but other factors also affect the budget.

For more than 10 years, the agency has held its operating expenses to increases of 2% or less annually, with spending several years coming in under budget.

The biggest area for cuts has been employment. Before the system began using E-ZPass in December 2000, the workforce reached a high of about 2,200, many of them collecting or processing toll payments.

In November, employment stood at 1,358. Many of the job cuts were by attrition but the largest chunk of about 550 were toll collectors who lost their jobs during the pandemic in June 2020 when the agency moved up its plan to switch to complete electronic tolling by more than a year to eliminate contact between motorists and toll collectors.

The agency also is taking steps to reduce or eliminate “leakage,” the industry term for motorists who refuse to pay tolls. Unpaid tolls reached $170 million in June, a $15 million increase over the previous year.

The turnpike is going after scofflaws in a number of ways, including using two collection agencies; suspending vehicle registrations for 36,000 owners who accumulated more than $250 in unpaid tolls over five years; civil or criminal charges for the most egregious cases; and supporting legislation that would allow the state to deduct unpaid tolls from state tax refunds or lottery winnings. That bill passed the state Senate and is pending in the House.

“It’s important to the turnpike to have as many options as possible to collect tolls,” Dreher said. “It’s a fairness issue. We have an obligation to our customers to collect every dollar that’s owed.”

The agency also has a goal of producing $500 million in revenue over the next 30 years through ancillary activities.

To save money and generate revenue, the agency is pursuing avenues such as using property it owns in open areas to install solar fields to produce electricity. One field already is open in Jeannette, where it provides power for a maintenance facility and produces enough excess to sell about $100,000 worth of electricity each month to the power grid.

At least five other sites are in the development stage.

The turnpike’s 16 service plazas already generate revenue from concessions, but the agency is negotiating a contract with Applegreen Electric PA LLC to install electric vehicle charging stations at each plaza and share a portion of the revenue with the turnpike.

It is testing the idea of installing charging equipment under road pavement and selling the electricity to drivers so they can maintain their battery charge while driving on the turnpike.

The agency also is installing fiber-optic cable from east to west along the turnpike to transmit toll receipts from the overhead gantries to the central office. The cable will have two or three times the capacity the agency needs and the excess will be leased to other businesses, government agencies and municipalities.