JANUARY 10, 2012

Wagner's Warning on Turnpike Debt Not Exaggerated

Auditor General Jack Wagner claims the Pennsylvania Turnpike Commission is in a state of fiscal crisis following a 181 percent increase in long-term debt since 2007. This shouldn't surprise  anyone; in fact, we predicted Act 44 of 2007 would burden taxpayers for a generation.

Act 44 empowered the Pennsylvania Turnpike Commission to issue billions in new bonds and raise tolls on the Turnpike every year (as well as erect toll plazas on the un-tolled Interstate-80). Following the rejection of I-80 tolling, the Turnpike Commission must pay $450 million to PennDOT each year, almost entirely covered by issuing debt, with toll hikes needed just to pay off the interest.

Turnpike tolls jumped 25 percent in 2009, and continue to increase every year—cash rates are increasing by 10 percent in 2012. Imagine how different the conversation would be today if the legislature had approved the Turnpike lease, which was projected to generate $1.6 billion annually. Instead of frantically searching for a way to repair our crumbling infrastructure and saddling taxpayers with interest of approximately $11 billion over the next 35 years, the state would be collecting interest upwards of $3 million per day.

Thankfully it's not too late to leverage private capital to fix our transportation debacle. A Turnpike lease might be off the table for now but utilizing public-private partnerships (P3s) for new projects is a feasible solution. P3s are the emerging paradigm in transportation funding of new projects because a competitive system is more efficient and effective than traditional single-provider systems.

When Massachusetts turned to competition for its highway maintenance, nearly half of the contracts were won by employee groups that competed. Massachusetts was able to lower labor input costs by 37 percent and received greater productivity in return. Enabling public-private partnerships is a great way to stretch limited tax dollars further.

posted by ELIZABETH STELLE | 01:36 PM | 0 comment

JANUARY 9, 2012

Chart of the Day: Pennsylvania Transportation Spending

Many advocates and industry representatives have been calling for increasing transportation spending in Pennsylvania. Yet over the past 16 years, state transportation spending has increased by 127 percent, a fact tax and spend advocates often fail to mention.

posted by NATHAN BENEFIELD | 05:28 PM | 1 comment

JULY 12, 2011

Turnpike Tolls Totally to Transit?

Amid all the budget turmoil, PA Independent notes the Governor's Transportation Funding Advisory Commission is looking to use tolls on Turnpike drivers—those going to the state as part of the Act 44 payments—entirely to fund transit programs (mostly in Philadelphia and Pittsburgh).

Under current law, the Pennsylvania Turnpike Commission must transfer $450 million annually from its tolling revenue to PennDOT with $200 million going to highways and $250 million for mass transit. The advisory commission will recommend using all $450 million for mass transit, with the loss in highway funding being made up by other recommendations being pressed by the commission. ...

The Pennsylvania Turnpike Commission has increased tolls in each of the past three years, ranging from a 25-percent increase in 2009 to a 3-percent increase in 2011. Tolls will increase for each of the next 46 years as part of the annual stream of revenue between the Pennsylvania Turnpike Commission and PennDOT.

Schoch said 70 percent of the turnpike’s toll revenue comes from the state’s urban areas, making the transfer of toll dollars to mass transit a worthwhile move. “The idea is that we’re charging people in the urban areas a little more to make the choice to drive rather than ride transit, and that money is going to go back to those urban areas for transit investment,” Schoch said.

The Commission concludes that no additional funding should be provided for highways, bridges and transit unless a series of parallel actions are taken to reform funding structure and a number of transportation business practices.

posted by NATHAN BENEFIELD | 06:30 PM | 0 comment

DECEMBER 6, 2010

Super Rendell Finds Bailout For Failing Port Authority

Gov. Rendell has "found" $45 million dollars of Federal Transportation Funds (for Economic Development) to bail out the failing Port Authority. Proponents claim it as a success, stating that it will save more than 500 jobs and postpone cuts to bus and port services.

Pittsburgh's Port Authority was projecting a $47 million deficit in its 2010-2011 budget. In order to prevent the Port Authority's threatened closing of 45 bus routes and stoppage of some weekend and night services, Gov. Rendell thought it to be in the best interest of the taxpayers to save these jobs and fund the deficit.

Unfortunately for Pennsylvanians, anytime the government says it saved jobs, it's usually far from the truth. Take a similar situation where the governor found $700 million to give to SEPTA, PAT, and other transit agencies to "give them time to find a solution." They didn't—with costs still rising, these organizations are pushing to tax other sectors of the economy in order to subsidize themselves. If anything, all this $45 million does is postpone the reforms necessary to make the Port Authority cost efficient.

The last question one should ask is: with a multi-billion deficit, and constant moaning about structurally deficient bridges, why was $45 million just laying around for Gov. Rendell to give away?

posted by NICHOLAS FETT | 00:00 PM | 0 comment

SEPTEMBER 14, 2010

PA House Democrats Unveil Transportation Tax Plan

Today, the Pennsylvania House Democrats put forth their proposal to raise taxes for transportation projects, as reported by PA Independent, which also provides a detailed outline of the plan.

The proposal would provide $1.3 billion in transportation funding, $500 million for transit agencies and $785 million for roads and bridges.

The funding would be paid for through three tax and fee streams: the proposed "oil companies profits tax" ($477 million, some to be used in the General Fund), an increase in the oil company franchise tax (effectively a gasoline tax increase of $412 million), and raising vehicle and driver fees ($433 million).

The proposal includes a few reforms as well, including legislation to enable public-private partnerships in transportation projects.

For more on Pennsylvania transportation issues, visit our Transportation Special Session Survival Guide.

posted by NATHAN BENEFIELD | 04:00 PM | 1 comment

SEPTEMBER 7, 2010

PA's Highways Remain Poorly Managed

Pennsylvania ranks 38th in the nation in state highway performance and cost-effectiveness, according to Reason's latest Annual Highway Report. While the Keystone State's ranking remains unchanged, nationally highway conditions are the best they've been in 19 years.

The recession is partly responsible for the improvement in road conditions. People are driving less, which has helped slow pavement deterioration, reduced traffic congestion, and decreased fatalities to the lowest levels since the 1960s.

Pennsylvania ranks 26th in total highway disbursements, 30th in fatalities, and 24th in urban Interstate congestion. Pennsylvania’s best rankings come in state-controlled highway miles (4th), state highway agency miles (8th) and urban Interstate condition (18th). Pennsylvania’s lowest rankings are in narrow rural lanes (50th) and deficient or functionally obsolete bridges (49th).

Overall, North Dakota, Montana and Kansas have the most cost-effective state highway systems. Rhode Island, Alaska, California, Hawaii and New York have the least cost-effective roads.

The full Annual Highway Report rankings are available here.

posted by ELIZABETH STELLE | 10:01 AM | 0 comment

AUGUST 30, 2010

Pennsylvanians Have Good Reasons to Oppose Higher Fuel Taxes

Grove City College economist Tracy Miller explains why Pennsylvania drivers are resistant to a higher gasoline tax. In contrast to prior periods when the tax was viewed as a user fee, today's highway funds (federal and state) are diverted to mass transit, as well as recreational and pork projects, rather than fixing bridges:

Recent strong opposition to increases in fuel taxes does not mean that Americans are less willing than before to pay taxes in order to have better roads. What it does reflect is voters’ opposition to money paid in fuel taxes being used for purposes other than highway spending. In recent years, almost 20 percent of money paid into the Federal Highway Trust Fund (FHTF) has been spent on mass transit. In addition, FHTF money is being spent on recreational trails, historic preservation, and scenic easements. Besides the FHTF money allocated for non-highway purposes, a growing share is used for earmarks that reflect the political priorities of members of Congress rather than the priorities of highway users who pay gasoline taxes.

Why should federal fuel taxes, which are paid by rural and urban drivers alike, be used to pay for public transportation, which primarily benefits residents of large metropolitan areas? In Pennsylvania, 90 percent of transit-operating grants is paid to the Southeast Pennsylvania Transportation Authority and the Port Authority of Allegheny County (PAAC). But only 50 percent of the state's population lives in the Philadelphia and Pittsburgh areas served by these transit agencies. In these two metropolitan areas, less than five percent of local trips are on public transportation while almost all the rest are by automobile.

posted by NATHAN BENEFIELD | 11:59 AM | 0 comment

AUGUST 26, 2010

Turnpike Commission, PennDOT Fight Over Their Spoils

The Patriot News today reports that the Pennsylvania Turnpike Commission (PTC) and the PA Department of Transportation (PennDOT) are arguing over how much money the PTC has to pay PennDOT this year. The Turnpike Commission says $450 million, PennDOT says $922 million.

Act 44 specified the amount the PTC pays the state, but also included a clause that the amount would be $450 million if there isn't tolling on I-80. As it turns out, there is disagreement as to when that $450 million kicks in.

Really, who would have ever guessed the rushed, misguided, and ill-conceived legislation that became Act 44 would have had major oversights like this?

Of course, the Turnpike Commission has already increased tolls -- including another 10% increase on cash-payers scheduled for January -- to make their payments. Or rather, to pay off their debts, as all the payments to this point under Act 44 have been made with borrowed money, to be paid off with future tolls (and backed by Pennsylvania's gas tax).

What this really amounts to is two agencies arguing over who reaps the spoils of their plot to fleece Pennsylvania motorists.

posted by NATHAN BENEFIELD | 02:05 PM | 0 comment

AUGUST 23, 2010

The A-Team View of Taxes

As a kid growing up, I used to love watching the A-Team every week. Each week the A-Team would find someone in trouble, usually due to a violent gang of bullies, but the A-Team would be able to out-think and out-fight the bad guys.

Amazingly, though the A-Team fights typically included hundreds of rounds of machine gun fire, a few explosions, a good fist-fight (with someone being thrown through a table or a plate glass window), and at least one car being flipped over during a chase, no one was ever killed or seriously wounded (except in one episode where Murdock got shot, and Mr. T had to give him a blood transfusion).

As ridiculous as this premise seems, it is exactly the view Pennsylvania Governor Ed Rendell holds in regards to taxes. No matter how much the state takes from residents, no one will be harmed.

Lately, he's applied this thinking to his proposed increase in motorists fees and tax on big oil companies - but he's also referred to the ease with which taxpayers could eat his income tax increase, or any of his dozens of tax proposals.

However, you can't take more money out of the pockets of Pennsylvanians and expect there to be no effect. People may not "lose their homes," but they will reduce spending elsewhere, with real economic consequences.

posted by NATHAN BENEFIELD | 03:10 PM | 0 comment