Moody’s calls NDP plan to kill tolls “credit negative”

Credit rating agency hints that is expecting future moves to compensate for lost revenue

Tolls on the Port Mann Bridge vary, but for a registered car with a transponder to cross the bridge, the toll is $3.20 each way | Shutterstock

B.C.’s NDP government plan to eliminate tolls on the Port Mann and Golden Ears bridges on September 1 has drawn scrutiny from respected global credit rating agency Moody’s Investors Service.

An analyst at that branch of Moody’s Corp. (NYSE:MCO) released a statement on August 28 saying, “the government’s plan, as an isolated action, is credit negative as it will increase taxpayer supported debt and remove a dedicated line of revenue for debt repayment.”

Analyst Adam Hardi went on to say that “we assume this action will be taken in addition to other actions to be announced in the upcoming September budget update.  Any ratings impact would therefore need to take into account other possible measures that would be announced at that time.”

B.C. and Saskatchewan are the only Canadian provinces to have the highest possible credit rating from Moody's – Aaa –and B.C. has held that credit rating for 12 years. A high credit rating is important because it means that the province can borrow money at a lower interest rate than if the credit rating were downgraded.

Premier John Horgan campaigned against what he called “unfair tolls” during the 2017 election campaign but he did not rule out a system where all Metro Vancouver bridges are tolled, or other innovative tolling methods to generate revenue. 

His belief that the Port Mann and Golden Ears bridge tolls are unfair stems from the fact that both bridges affect residents south of the Fraser River. The Lions Gate Bridge and the Ironworkers Memorial Second Narrows Bridge, which lead to the North Shore, do not have tolls. Horgan's stance helped his party win six of nine seats in Surrey.

Green Party leader Andrew Weaver, who is philosophically in favour of tolls, criticized the NDP’s August 25 announcement  to eliminate current bridge tolls as being “profoundly troubling from a policy perspective.”

His numbers show that killing tolls on the two bridges come at a cost:

•180 jobs lost;

•$86 million for the rest of 2017/18 and $135 million annually thereafter for the Port Mann bridge; and

•$34 million for the rest of 2017/18 and likely more than $120 million annually thereafter for the Golden Ears bridge.

Because Translink owns the Golden Ears Bridge, the B.C. government will have to negotiate a long-term solution with Translink, Weaver said.

“The outstanding debt for the Port Mann Bridge is $3.6 billion; the outstanding debt for the Golden Ears Bridge is $1.1 billion,” said Weaver. “$4.7 billion will now be moved from self supporting debt to taxpayer-supported debt.”