Editorial: Give the Pike a hand

Staff Writer
Mount Shasta Herald

Homeowners and investors seduced by subprime mortgages aren't the only ones whose financial plans have fallen victim to the shocks rattling the financial markets. The Massachusetts Turnpike Authority refinanced millions of dollars in debts in 2001 and 2002, investing in complicated, speculative instruments called "swaptions" to get out of some bond payments its cash flow couldn't cover.

That decision had as much to do with politics as with accounting. The state Legislature dropped the Big Dig in the Turnpike Authority's lap in 1996, and as the cost overruns for the massive project mounted, the Pike scrambled to cover them. With the Democratic Legislature and the Republican governor unwilling to pony up more cash, TPA chief Matt Amorello chose to borrow instead and bet that interest rates would stay low.

That bet didn't pay off. The cash-strapped Pike, now under new management, is facing unanticipated debt payments this year that could run to $175 million. Left to its own devices, the TPA has just one place to turn to meet those payments: more toll increases.

To head off that possibility, Gov. Deval Patrick is proposing refinancing $800 million in Pike debt. Instead of backing that up with cash reserves, he's proposing having the state back up the loans. That maneuver shouldn't cost anything, the administration says, and could save the Pike $200 million.

The House has approved the proposal, and there is support in the Senate. The main opposition to it is coming from state Treasurer Tim Cahill, who is calling it a reckless bailout and a threat to the state's bond rating.

Cahill needs to remember that the Big Dig isn't a private company being bailed out. It's a public investment the state's elected leaders undertook to benefit all Massachusetts residents.

Cahill also should remember that Mass. Pike tollpayers are his constituents too. They are already paying 58 cents out of every toll dollar collected east of Rte. 128 to pay for the Big Dig, a road that South Shore residents, including Cahill, get to use for free.

There is plenty of blame to go around for the Big Dig's cost overruns, and former Pike officials deserve their share. But responsibility for paying the bills should rest on the entire state, not just Pike tollpayers. Cahill should understand that solving this problem is as much his responsibility as that of anyone else.

MetroWest Daily News