Oklahoma governor's troubles stalling turnpike project, some policymakers say.

DALLAS -- The proposed $1.6 billion Oklahoma turnpike project which would expand the nation's largest toll road system by more than 50% is in trouble.

With Oklahoma Gov. David Walters indicted and facing possible impeachment, several sources close to the project predicted that it will be postponed and that the governor will prune the plan's cost to less than $1 billion.

"The goal was to complete the financing by the end of the calendar year, and I don't think that is possible anymore," said Jim Joseph, the state's bond adviser.

Oklahoma Sen. Dave Herbert, D-Midwest City, who is leading a drive in the Legislature to curtail the project, agreed that delays seem likely.

"The Legislature would not stand still for the size of the project," Herbert said. "We need another turnpike like we need a hole in the head."

Initially, the ambitious program seemed to be progressing relatively smoothly. The Oklahoma Legislature earlier this year approved studying the turnpike's feasibility, and Gov. Walters drafted a five-year plan that proposed rehabilitating two existing turnpikes and adding 11 sections -- 270 miles in toll roads -- to the 563-mile system.

Several months later, the Oklahoma Turnpike Authority requested proposals for underwriting the $1.6 billion of revenue bonds to finance the project. In September, officials interviewed 12 investment banking teams selected from a field of more than 40.

But signs of trouble emerged as reports surfaced of sealed grand jury indictments against Gov. Walters for violating the state's election finance laws.

In October, Walters made a plea bargain that prompted public controversy and calls for impeachment. He pleaded guilty to one misdemeanor count of violating the state's campaign laws in 1990 by accepting contributions that exceeded the $5,000 legal limit from an individual or corporation. In exchange, prosecutors dropped eight felony counts against the Democrat as well as six perjury and two conspiracy charges.

The public and political outcry spilled over into the turnpike project and to the six-member turnpike authority board, all Walters' appointees.

"A lot of legislators are speaking out against it," said Mike McCarville, a Republican and political analyst who publishes the McCarville-HillReport newsletter. "That program is in deep, deep trouble."

During the past week, Sen. Herbert asked the 148 other state legislators to sign an unofficial resolution that would freeze any action on the turnpike until the Oklahoma Legislature convenes in mid-February.

Herbert. who estimates that more than 60% of both the state Senate and House would support his resolution. said he plans to present copies to Walters and the Oklahoma Turnpike Authority after Thanksgiving. "It's too big of a bond-deal," Herbert said. "I think it's evident that they are doing the deal just to do the deal."

At this point, the project does not have to go back to the Legislature and could simply be approved by the Turnpike Authority Board and by both the legislative and executive bond oversight commissions.

"The only things that stand between us and a bond issue are the feasibility studies and a determination that it fits within the financial framework of the Oklahoma Turnpike Authority," said Terry Young, the agency's executive director. "One thing I can say is that we will not be undertaking projects that will be beyond the means of the turnpike system to support."

Young said the turnpike authority was still waiting for information on the feasibility of the project, including traffic and revenue predictions.

"There has been no delay," Young said. "We are slowly and deliberately looking at projects before us."

Several others disagree with Young, however, saying the delays are obvious. Still others said they expect the Legislature to look at the issue again.

"I don't think there is any doubt that if the bonds haven't been sold before the full Legislature convenes in February that the legislators would review the project as a matter of course," Joseph said.

Vincent Matrone, managing director for municipal finance at Rauscher Pierce Refsnes in Dallas, which bid on the project, attributed the sale delay partly to the magnitude of the project as well as politics.

"We told the turnpike authority it was an overly complex and ambitious program," Matrone said. Under the initial proposal, the number of revenue bonds to be issued for turnpike expansion would be the largest in the nation outside of New Jersey. Oklahoma already operates the largest toll road system in the nation, despite its population of about 3.1 million people.

"The current system is successful," said Chris Evangel, a vice president of public finance at Moody's Investors Service. But "the concern is whether they dilute their revenue base with the expansion in the future," Evangel said.

Sen. Herbert calls the expansions "ridiculous," especially considering the traffic on some existing turnpikes.

"You can still run out of gas at the Indian Nations turnpike and still starve to death before anyone finds you," Herbert said.

This past summer, the Oklahoma Turnpike Authority raised its toll road fees an average of 17%, although the rate increases varied from highway to highway. The rate increase is expected to raise almost $15 million a year and pay depreciation costs on the state's nine toll roads.

Turnpike officials maintained the tolls had been kept artificially low and had not kept pace with inflation over the past 40 years.

But at least one group of Oklahoma residents in Chickasha claimed the toll hikes were unfair, since their toll fees went up 65% from Oklahoma City to Chickasha. In February, the residents sued the Oklahoma Turnpike Authority, claiming the rates were discriminatory.

Suits such as this have fanned the fire against the turnpike expansion, which some residents fear will unnecessarily raise toll fees to support the projects.

Turnpike officials have said the fees are likely to double in 10 years if the full program is approved, but the turnpike plans are now being pared. Walters indicated that he is dropping turnpike plans from Davis to Duncan and from Watonga to Okarche, and could retrench further.

A representative from Walters' office did not comment despite repeated phone calls, referring questions to Turnpike Authority Chairman James Orbison, who could not be reached for comment.

But Herbert said: "The governor will come up with a reduced package of about $800 million to $1 billion."

The initial plan calls for $ 100 million to rehabilitate the heavily used Will Rogers and Turner Turnpike. The largest single expenditure was to go for construction of a $270 million turnpike from Snyder, Okla., to Interstate 40.

The project was envisioned as a way to boost the state's economy and as a future link to other states. The plan was seen by some to be vital to connecting the state's turnpike system with Kansas and Texas, which would create a series of toll roads stretching from the Mexican border to the Midwest.

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