DALLAS - An Oklahoma state senator is trying to mount a public campaign to stop a $689 million state turnpike project that goes before two state bond oversight commissions for approval on Monday.
"I want to put out a call to Oklahomans: Stop this turnpike package," Sen. David Herbert, D-Midwest City, said last week. "We must not allow this amount of indebtedness to be jammed down our throats in the last hours of a lame duck administration. I ask the people, political candidates included, and especially the gubernatorial candidates, to address this issue at once."
Herbert said the six-member Legislative Bond Oversight Commission should demand a full legislative investigation of the project pushed by outgoing Gov. David Walters. The project will almost double the bond indebtedness of the Oklahoma Turnpike Authority, Herbert said.
The $689 million project would add 75 miles to the 560-mile Oklahoma turnpike system and improve the state's two oldest toll roads. Plans call for issuing $594.6 million in revenue bonds later this year to pay for the project as well as using some cash and other moneys to fund the remainder.
Over all, the project would increase bond indebtedness 87.8% from the $686.7 million in current outstanding debt, Oklahoma bond adviser Jim Joseph said. Herbert said that debt load, plus several other problems, indicates the state is making a bad move.
"We must freeze any new projects until we have a handle on maintenance, operation, and debt reduction for what we already have," Herbert said.
Among his chief concerns with the project:
* Ongoing Federal Bureau of Investigation probes into Turnpike Authority bond issues from 1989 to 1992. "The FBI is apparently all over the past projects of the authority, looking into questionable investments, which means we could have some bad investments about to blow up in our face or have already lost money we believe to be safely invested," Herbert said.
* Tolls must at least double if the debt load doubles. "We are going to add 75 miles to our 560 miles and double our indebtedness. How can any clear-thinking person believe this is a good idea for the people of Oklahoma?" Herbert said.
* The authority has not made a payment on principal indebtedness since 1988.
The Oklahoma Turnpike Authority disputes many of those allegations and said it intends to move ahead with the bond issue as planned if it receives approval from the legislative and executive bond oversight commissions early next month.
In a news release issued late last week, turnpike officials said the authority was aware of investigation by the FBI and the Securities and Exchange Commission into secondary transactions related to the authority's issues for 1989 to 1992. However, they maintained that the transactions "do not directly involve the Turnpike Authority."
"Furthermore, independent Turnpike Authority advisers have concluded that any such review of past transactions will have no impact on upcoming bond issues," turnpike officials said.
They also disputed Herbert's contention that they had not paid principal on debt since 1988. "The Oklahoma Turnpike Authority has paid $5.05 million in principal and $242.37 million in interest to bondholders since July 1989," officials said.
In addition, they said, toll rates would be increased less than 35%, after inflation, in the next five years to pay for the turnpike project.
Meantime, Joseph said the project would add considerably to the debt load of the Turnpike Authority. He said the 35-year bonds would push annual debt service to $95 million annually from $51.5 million. "It is a lot of debt, and it is a lot of debt to sell in a short period of time," he said.
Joseph said he had some concerns about the debt being sold competitively and in one issue, and has expressed those concerns to the Turnpike Authority. He contends that a series of smaller issues sold on a negotiated basis could be more cost effective and efficient.
Authority spokeswoman Mary Kay Audd said the agency has not made a decision yet on whether the bonds will be sold in one large issue or multiple issues. She said it would be based on a market analysis presented by the authority's financial adviser, Evensen Dodge Inc., at the Turnpike Authority's board meeting on Oct. 20 and contingent on approval by the bond oversight commission.
A spokesman for Gov. Walters said the state's administration is not concerned about Herbert's opposition and is "guardedly optimistic" that the turnpike project will be approved by the oversight commissions.
"I don't think Sen. Herbert can cause any problems," spokesman Steve Hill said. "He is a singular voice out there."
The turnpike project has been controversial since Walters proposed it last year and chose not to run for reelection.
The project, now scaled down to $689 million, is expected to be approved by the five-member Executive Bond Oversight Commission, but some sources said they are not certain it will be approved by the Legislative Bond Oversight Commission.