Pennsylvania Turnpike Commission

On June 2, the Pennsylvania Turnpike commissioners gathered behind closed doors for a meeting that was about to dramatically change the lives of their workers.

Other than a brief public statement that they had talked about “modifications to staffing levels and benefits,” there was little hint of what was to unfold.

When the commissioners finally appeared before an online audience, they rolled through a series of votes on issues that included a half-million dollars in purchases, a six-figure contract and the staffing matter.

In just 12 minutes, the meeting was over.

For the commission, it was business as usual. But for hundreds of workers, their jobs were slashed.

The commissioners had just voted without a single word of public debate to lay off nearly 500 toll collectors and other workers in the largest mass layoff in the agency’s history.

Only weeks earlier, the commissioners had thrown a lifeline to the employees, approving a new contract amid pledges to keep the workers until 2022 — despite plunging revenues during the pandemic — as the turnpike moved to full automation.

“The whole way it was handled was just awful,” said Jock Rowe, principal officer of Teamsters Local 77, which represented a majority of the workers. “It should have never been done.”

The commission’s actions raise questions about a powerful state agency that meets mostly behind closed doors and fails to deliberate in public while making critical decisions that impact the lives of millions of people.

Though some meetings are exempt from the public, the termination of a quarter of the agency’s workforce last year amounted to the type of policy decision that should have been carried out in the open, say legal experts.

“This is public transparency 101,” said Terry Mutchler, the first director of the state’s Office of Open Records. “The play is not behind the curtain.”

In fact, the five commissioners for years have approved major expenditures, from billion-dollar bond issues to large contracts, while following a similar pattern: closed-door meetings followed by brief public voting sessions with no debate and few dissenting opinions, the Pittsburgh Post-Gazette found.

For an agency with the power to spend tens of millions of dollars and approve borrowing up to $1 billion in a single meeting, the practices of the commission have enraged some legislators and baffled open-government advocates who have long fought for transparency in the public sphere.

One government watchdog group has gone so far as to challenge the commission on its lack of transparency and seek delays of votes on major bond issues and other topics until more information can be shared publicly.

“There’s usually no discussion, no dissent, no dialogue, and we’re talking about tens of millions of dollars in contracts,” said Eric Epstein of Rock the Capital and a frequent meeting attendee.

During the last 11 decisions to raise the tolls on a road system that has become one of the nation’s most expensive to drive, there was no public debate, records show.

In the past five years, the commissioners have cast more than 700 votes to spend money with only one dissent the entire time. The average length of the meetings: 12 minutes, records show.

Lack of transparency

Under the state’s Sunshine Act — a law passed in 1957 to ensure open government — any votes and deliberations among a quorum of commissioners must be held in public. Exceptions allow members to speak one-on-one with each other and to gather to receive information from staff.

One of the goals is to allow everyday citizens to witness the decisions that impact their lives — in this case, people who drive on the turnpike as well as those taking mass transit in the state’s two biggest cities.

Commission Chairwoman Yassmin Gramian, who is also the state’s transportation secretary, defended the agency’s efforts to be transparent, saying commissioners handle any disagreements in private so they can appear in public with everyone on the same page.

Ms. Gramian said she contacts her colleagues individually before every public meeting to discuss each issue coming up for a vote so that disputes don’t have to take place during the meeting.

“I think it’s a consensus among all the commissioners, and I like it,” Ms. Gramian said in a recent interview. “I don’t like the boards that debate in front of the public and they start yelling at each other like the British Parliament.”

Ms. Gramian acknowledged the Sunshine Act guards against how many members of an agency can gather to discuss issues they plan to vote on. So to abide by the law, commissioners keep any conversations about agency business to one-on-one sessions.

“I can assure you that before we go to that public meeting there’s a lot of debate and evaluation and assessment that goes on,” Ms. Gramian said.

Commissioner John N. Wozniak, a former 36-year state legislator from Johnstown, described the chairwoman as a “clearinghouse” for individual commissioners.

“On occasion we talk to other members or we use her as a focal point to say, ‘I’ve got an issue here,’ ” Mr. Wozniak said.

Nowhere is the commission’s impact more important than when making financial decisions.

During a single meeting last month, the commissioners approved a $400 million line of credit; $10.4 million in agreements; more than $500,000 for acquiring rights of way; nearly $17 million in purchase orders; a contract worth more than $600,000; and change orders totaling $1.8 million.

All the votes were finished in 13 minutes — with no public discussion.

Staggering debt

The pattern of unanimous voting continues to play out while the commissioners gear up to award hundreds of millions of dollars in contracts to companies competing for lucrative jobs as the turnpike recovers from the pandemic.

They are also facing the cost of a staggering debt from past projects and other obligations that will impact motorists and consumers for decades to come.

With toll revenues plummeting during the pandemic, commissioners said they were forced to speed up the layoffs of 492 workers last year to save money. The estimated savings: about $100 million.

Nearly two weeks after the vote, the state Senate’s Transportation and Labor and Industry committees held a joint hearing during which they lit into commissioners and top turnpike officials.

Senators expressed anger, not just over how the commission failed to keep its promises to keep the workers on board through this year, but about how the lawmakers were kept out of the loop by the very people whose nominations they had previously confirmed.

The senators noted that Ms. Gramian had appeared before them several times leading up to the June 2 layoff vote, including during her confirmation hearing a week earlier. And not long before that hearing, turnpike CEO Mark Compton had testified before the Transportation Committee. Neither of them mentioned the imminent plans to cut staff.

Ms. Gramian said the turnpike commissioners talked internally about the upcoming layoffs, including discussions during the executive session before their June 2 meeting to decide on the matter.

Sen. John Sabatina, a Democrat from Philadelphia, pressed Mr. Compton for more detail about the internal talks leading up to the terminations.

Mr. Compton’s response: “We had extensive conversations with the commissioners about all aspects of the layoffs.”

Ms. Gramian testified that she had also informed Gov. Tom Wolf about the plan for the layoffs prior to the commission vote — a statement that angered state Sen. Camera Bartolotta and her colleagues.

Ms. Bartolotta, a Republican from Monongahela, even asked the commissioners whether they had already made their decision on the layoffs prior to the public vote.

“This was not something that was decided upon and voted upon on June 2. It was a decision that was made prior to that, and the commission just basically went through the motions on June 2. Am I off base on that?” Ms. Bartolotta asked longtime Commissioner William K. Lieberman, a Pittsburgh insurance executive.

Mr. Lieberman said commissioners did have a “very long and extensive discussion” about the layoffs in the executive session but made no decisions until the public vote.

‘An agency that hits people in their pocketbooks’

However, legal experts interviewed by the Post-Gazette said executive sessions are supposed to be held to protect individuals in personnel matters, not to shield officials when talking about massive staffing changes.

“The statute uses the word ‘specific’ — a specific employee, public official or public appointee,” said Melissa Melewsky, media law counsel for the Pennsylvania NewsMedia Association.

Since 2016 there have been only six meetings — less than 5% — when “no” votes have been cast — all by Mr. Lieberman.

He did not explain his votes.

Of the five commissioners, two agreed to be interviewed by the Post-Gazette — the chairwoman and Mr. Wozniak; the others either declined or did not respond to repeated interview requests.

But in an interview granted two years ago with The Philadelphia Inquirer, the longest-serving member of the commission, Pasquale “Pat” Deon Sr., who is also chair of the Southeastern Pennsylvania Transportation Authority, explained his philosophy about running the board of a public agency.

The Inquirer noted that Mr. Deon said he tries to reach consensus through private discussions and could recall only two votes of the 15-member board that weren’t unanimous.

“‘We have dissent; we have debate,’ said Mr. Deon, who has been on the turnpike commission for 18 years. ‘But the bottom line is we don’t do it at the board meeting.’”

Although the commissioners have raised tolls every year since 2009 to help fund a mushrooming debt that has reached record levels, at no point in the past five years have the commissioners publicly debated any of the strategies they’ve adopted to take on what’s grown into a financial crisis, including last year’s mass layoffs, record show.

David Thornburgh, president and CEO of the Committee of Seventy, a Philadelphia group that promotes openness in government, said that because the agency has such a dramatic impact on the lives of everyday Pennsylvanians, it has more of a duty to be open.

“This is also an agency that hits people in their pocketbooks. And even as we’re all using toll-by-plate or E-ZPass or whatever, it’s a substantial chunk of money that it takes when you drive, as I have, many times across the commonwealth,” Mr. Thornburgh said.

To this day, the turnpike owes a record $14.5 billion from prior projects, mass transit, and the funding of the state’s maintenance of roads, bridges and tunnels.

‘Extremely expensive toll road’

Created in 1937 as the country emerged from the Great Depression, the turnpike commission was launched to oversee the birth of what was dubbed “America’s first superhighway.” What began as a 160-mile stretch of mostly four-lane road, described by the agency as an “engineering marvel,” has evolved into a 552-mile network of roadways critical to commerce and tourism.

It has also become notorious for its cost.

In Pennsylvania, a five-axle truck crossing the state on the turnpike pays 68 cents per mile, while in New York it costs 28 cents and in Ohio it’s 18 cents, according to Darrin Roth, vice president of highway policy for the American Trucking Associations.

“This is an extremely expensive toll road, probably the most expensive one in the country,” Mr. Roth said.

For decades, the commission’s duties were relegated to managing the turnpike system, which runs from the Delaware River through the Allegheny Mountains to the Ohio border.

Its role would change dramatically in 2007, when the Legislature and then-Gov. Ed Rendell tasked the agency with addressing the state’s crumbling roads and bridges and helping to fund mass transit through payments to the Pennsylvania Department of Transportation — $9.65 billion by 2057. The turnpike would have to take on new debt to carry out those functions.

But toll revenue — the money maker for the turnpike — isn’t enough to fund the payments. The only way to finance them, all while keeping the turnpike in working order, is to borrow money through issuing bonds, and to keep borrowing year after year.

The strategy would lead the turnpike commission to make more than $168 million in payouts to law firms, banks and financial consultants over the past decade to oversee its bonds, records show.

But the terms of nearly all of those arrangements — the awarding of fees and commissions to those firms — have never been divulged to the public or discussed at an open meeting.

On March 2, for instance, the commission unanimously approved the hiring of several law firms and underwriters — including Duane Morris in Philadelphia and PNC Capital Markets in Pittsburgh — to shepherd a bond issue of up to $250 million.

The details of those arrangements were not disclosed during the meeting, providing no hint as to how much was paid out or why one firm was selected over another.

In the wake of scandal

The lack of transparency comes after the agency was overhauled in the wake of a scandal years ago that involved top turnpike officials and put the agency on notice that it needed to clean up its practices.

An investigation by a grand jury led to charges in 2013 against eight people, including the turnpike commission’s then-CEO, a powerful state senator and vendors, in a “pay-to-play” scandal.

The probe exposed how campaign contributions and secret gifts of travel, entertainment and cash paved the way for some vendors to secure contracts from the turnpike commission.

That same year, the commission was warned by the state auditor general that it was allowing too many people — including consultants and contractors — to travel for free on the turnpike, costing the state millions of dollars.

The agency responded that it was allowed to grant the perks, and that it would do a better job of tracking the costs.

But in two subsequent reviews, the auditor general continued to point out the perk was still in place and recommended the agency, in the interest of transparency, post the amounts of toll-free travel given to contractors and others.

The agency repeatedly rejected the suggestion.

Toll-free travel and layoff decisions aren’t the only areas in which the turnpike has opted not to divulge information.

That lack of disclosure about some of its financial dealings — including the risks the agency is taking with public dollars — underscores how little the agency reveals about decisions that involve hundreds of millions of dollars.

For years, the turnpike commission has been forced to borrow by turning to the bond market to pay for its enormous obligations.

Along the way, it adopted a special tool known as “swaps” to lower the cost of borrowing and, at the same time, hedge against the risk of rising interest rates.

The way it works: The agency trades the interest rates of its bonds with the interest rates of another bond issuer.

But a former state auditor general has warned that such a strategy can backfire for many reasons, including a slight change in interest rates, resulting in net losses.

“We reiterate my position that government entities should not gamble with taxpayer[s’] monies and, therefore ‘swaps’ should not be used as an instrument for financing debt,” warned Jack Wagner in his 2013 audit. “In our opinion, these highly complicated financial instruments are too risky and should never be used to finance public debt.”

The commission pushed back, saying the strategy has saved the agency money and allowed it to keep borrowing at prudent costs.

In an interview with the Post-Gazette, turnpike Chief Financial Officer Richard Dreher said the agency has been “good stewards of our customers’ revenues.”

“The swaps we’ve entered, I would argue that there’s minimal to low risk. We’re conservative in our use of swaps,” Mr. Dreher said.

But in at least the past five years that the agency has engaged in a strategy of swaps, commissioners have not discussed them publicly or talked about the risks, records show.

Even when the Post-Gazette requested the most recent report that details any potential losses with the transactions, the agency refused to release it until the newspaper appealed the decision to the state Office of Open Records.

Millions to consultants, bankers and lawyers

To keep floating the bonds, the commissioners regularly cast votes to hire dozens of consultants — including lawyers, underwriters and bankers — to bring them to market.

But at no point do they explain in public how much they would be paid.

Year after year, the agency spends millions of dollars — ranging from nearly $8.2 million in 2019 to over $61 million in 2012 — to cover the costs of one of its most critical functions.

Although the agency does not divulge the money it pays the firms, one exception is the boutique New York City firm that advises the turnpike on its swaps.

Since December 2017, the turnpike has paid the firm of Mohanty Gargiulo more than $577,000, according to information obtained through an open-records request.

Mr. Wagner, the former state auditor general, warned the turnpike in 2013 about making such payments.

“In addition to the possibility of losing money through incorrect fiscal assumptions, public funds can be wasted on financial advisors, legal fees, and underwriting fees, especially if these services are not competitively bid and evaluated for independence,” he wrote.

As recently as this month, Mr. Epstein, of Rock the Capital, appeared at a meeting and openly complained the agency was failing to disclose the fees that would be paid to the firms chosen to manage a $600 million bond issue.

“I … urge you to actually discuss these issues. You’re talking about a $600 million bond,” Mr. Epstein said. “What I’m simply asking for … are terms that are defined, enumerated and accompanied with enforceable and verifiable real legal language.”

Carl DeFebo, a commission spokesman, told the Post-Gazette the agency does not divulge detailed information about payments to law firms, banks or advisers that help carry out the deals.

The approval of the bond issue this month is expected to pile even more financial obligations onto an agency already buried in debt — a concern flagged by the previous auditor general just two years ago.

In releasing his 2019 audit of the turnpike, Eugene DePasquale called the debt situation facing the agency a “road to ruin” because of what he termed “unsustainable” toll increases.

“Hiking tolls year after year while hoping that E-ZPass users won’t notice is not a sustainable revenue plan and it causes a financial hardship for motorists,” Mr. DePasquale said at the time in a news release.

The financial strain on the agency is expected to ease after the next fiscal year, when payments to PennDOT are projected to drop by $400 million per year, but tolls will continue to rise for the next three decades.

The turnpike’s debt still remains massive, more than the entire state of Pennsylvania’s total obligations.

Beyond the financial costs, the commission’s decisions affect its 1,300-member workforce — as well as the hundreds who were terminated last year.

Ms. Bartolotta was one of the lawmakers who ripped into the agency in public for not alerting the Legislature to the possibility of layoffs and trying to work together to find an alternative,

“There is no collaboration, there is no transparency. It is absurd,” said Ms. Bartolotta, who chairs the Senate’s Labor and Industry Committee.

“That’s not how things get done. That is not what executive sessions are for. That is not what public meetings are about. And that is not what the role of the turnpike commission, the commissioner and the role of the General Assembly should be.”

Jonathan D. Silver: jsilver@post-gazette.com

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