WASHINGTON, Feb 6 (Reuters) - Despite expectations the number of U.S. toll roads will grow this year and more drivers will take them, Moody’s Investors Service is keeping its outlook for the sector negative for the fifth straight year because of the sluggish economic recovery.
“Negative credit pressures continue to outweigh positives,” the rating agency said in a special report on Wednesday. “These pressures include a continued weak pace of economic recovery and the potential fiscal tightening in the U.S. which could drive the economy back into recession in 2013 and negatively affect toll road traffic and revenue.”
Moody’s said “a prolonged period of persistent high unemployment, slow wage growth and declines in discretionary income” could make drivers and taxpayers resistant to any toll increases, while rising gasoline prices could limit growth in toll-road traffic.
State and local governments, still suffering from sluggish revenue growth, are relying on money collected by the roads to fund other infrastructure projects. That is leaving the roads themselves with less operating cash and fewer funds for their own capital works such as repairs, Moody’s said.
They are using “toll roads as ‘cash cows,’ an alternative funding source for non-tolled projects, thus raising leverage without increasing toll road capacity or demand,” Moody’s said.