AUGUST 6, 2010

SEPTA's Extravagant Spending

Earlier this week, the Pennsylvania Senate Transportation Committee heard testimony from SEPTA officials defending their lavish spending habits during a state transportation funding crisis.

Senator Rafferty expressed concern, saying:

Perception is reality. In [these] tough economic times when we’re making cutbacks … when [people] hear reports about Christmas dinners and they hear reports of gifts, I think the [SEPTA] chairman and the board ought re-evaluate that position. (Subscription)

Fox 29 found SEPTA officials spent:

• $15,000 on three Christmas parties for their unpaid board,
• $1,100 at the Fountain Restaurant for a going away party for a former General Manager,
• $3,600 for a meet and greet with legislators at a Harrisburg Restaurant,
• and $18,000 on three first-class tickets to Seoul, while another executive made the same trip for $1,300.

SEPTA, like PHEAA and other state entities that compete (or would, if not for laws granting them a monopoly) with private companies, is continually criticized for luxurious spending. So why does it continue? It continues because these entities are not accountable to their customers or beholden to a bottom line. As long as they have friends in Harrisburg, the taxpayer abuse will continue.

Mass transit services can be provided more effectively and cheaply by competitive contracting. It's the only way to stop SEPTA's overspending while dramatically improving mass transit service.

posted by ELIZABETH STELLE | 02:48 PM | 0 comment

AUGUST 4, 2010

Fact Check: Oil Companies Profits Tax

For claiming he's "not a crazy tax guy", Gov. Rendell sure does propose a lot of new taxes. His latest plan regurgitates his 2007 idea to tax Big Oil to fund transportation (and would impose a few other taxes and fees on Pennsylvania drivers).

Let's review some facts about a "windfall profits tax" on Big Oil:

• Tax Foundation: Oil Companies pay plenty in federal, state, and local taxes
  
• Cato: Windfall taxes on oil have been tried, and failed
• US News: Oil profits are tomorrow's investments
• Post-Gazette: Will Oil tax be passed on at the pump?
• PolicyBlog: Taxing Oil - Windfall profits taxes increase prices
• Tax Foundation: Real people are harmed by windfall profits on oil - including state pension funds

posted by NATHAN BENEFIELD | 09:29 AM | 1 comment

AUGUST 3, 2010

Fact Check: PA Transportation Spending

Gov. Rendell starts his "Tax You More" bus tour today, heading around Pennsylvania to call for more taxes to fill the "transportation funding crisis". Here are some facts about Pennsylvania transportation spending that may not get mentioned:

• Since 1995, transportation spending has increased 139%. This includes a 271% increase in mass transit, and a 116% in highway other transportation spending. In addition, transportation bonds increased by 352%.
  
• Since Gov. Rendell took offices, transportation spending increased 53% - including a 191% increase in mass transit and a 35% increase in other transportation spending. Add in a 150% increase in debt spending on transportation.

Note that despite this - and Pennsylvania spending more on transportation than almost any other state - the commonwealth has the worst roads in the country. Perhaps the issue is more than a lack of money.

PA Transportation Spending

posted by NATHAN BENEFIELD | 08:44 AM | 1 comment

JULY 29, 2010

Tough Questions for Pennsylvania Turnpike Commission

The PA Turnpike Commission (PTC) testified before the Senate Transportation Committee during this summer's special session on transportation funding. Most senators on the committee expressed concern on several aspects regarding the PTC.

Senators inquired about the new toll increase, 3% for E-ZPass users and 10% for cash paying drivers, starting January 2, 2011. Specifically, Sen. Gordner asked about news that the new toll increases will make Pennsylvania the most costly in the nation. PTC CEO Joe Brimmeier said these claims are false, and that 14 states have costlier roads.

What Brimmeier neglected to mention was the Pennsylvania Turnpike will in fact become the most expensive long toll road (roads 100 miles or longer) in the nation. It is true that some states have more expensive toll facilities, but those are limited to short range highways spurs and bridges. The Turnpike will cost 8.5 cents per mile after the toll increases.

The PTC is also $6.5 billion in debt, a debt that has nearly tripled in the last three years. Last month, Moody's downgraded its rating on some Turnpike bonds, and issued a negative outlook due to rising debt. Standard and Poor's also issued an analysis warning that steep increases to tolls will create public and political backlash. The CFO said the Turnpike has taken steps to address the bond issues that were not reflected at the time of Moody's downgrading.

Still, Sen. Earll said the debt gives her the "heebie jeebies" and that the Senate Transportation Committee will need to maintain pressure on the PTC, and evaluate whether administrative overhead is in line with the overall budget.

Both Earll and the committee chairman, Sen. Rafferty, questioned some of PTC positions with high salaries and ambiguous names, asking about their purpose. The PTC has been successful in eliminating 15 management positions and 180 collector positions, but still has nearly 2,100 employees, and still has many more workers per mile than PennDOT.

The PTC has a long history of corruption dealing with patronage, inefficiency, and litigation.

To be fair to the PTC, the commission has made some improvements, which several of the senators attributed to talks of privatizing the Turnpike (the PTC was scared into an attempt at efficiency). The Commonwealth Foundation has touted the benefits of a Turnpike lease in the past. Some steps the PTC is taking to "act more like a private business" (in the words of the CEO) include:

• Outsourcing its plaza service to HMS Host and Sunoco, which is saving the expense of $170 million to build new service plazas.
• A partnership with State Farm to enhance road safety through the "State Farm Safety Patrol." State Farm has paid to brand PTC-owned and operated safety vehicles.
• A partnership with TransCore, to operate the "back-office" operations of the E-ZPass accounts.
• Becoming more transparent through the 2008 introduction of an Electronic Bidding System. Bids are advertised on the Turnpike website.

Many senators reiterated the necessity of having more frequent meetings with the Pennsylvania Turnpike Commission in order to promote progress and observe the debt situation.

posted by NATALIE ROGOL | 11:07 AM | 1 comment

JUNE 16, 2010

Why are PA Roads so Bad?

Some of my friends and I like to take road trips to and through the states that border PA. One of the jokes we always make is, "You can tell you're out of Pennsylvania when the road gets smooth." Okay, maybe that's a lame joke, but the really sad part is, it's true - Pennsylvania roads were rated worst overall by Overdrive magazine.

But based on what we spend, Pennsylvania roads should not be as bad as they are.

• Pennsylvania has the 13^th highest gasoline tax in the nation, at 32.3 cents per gallon. That is more than double New Jersey's gas tax.
  
• Pennsylvania also gets back more than it pays into the Federal Highway Program, the national trust fund primarily financed by the federal gas tax. Taxes paid into the program are essentially distributed back to states, explains the Heritage Foundation, "through a series of mathematical formulae that attempt to match the scope and usage of each state's surface transportation system with payments received from the trust fund."
  
• Governor Rendell admits, "Pennsylvania leads the nation in the number of structurally deficient bridges - 5,646 ..., and we have more than 7,000 miles of state roads in poor condition," but this despite a dramatic increase in funding into bridges and roads since he took office. Taxpayers spent an extra $700 million on bridges in 2009 than 2002, and an extra $400 million on roadways.
  
• Despite the revenue from the high gas tax and the payback from the Federal Highway Program, Pennsylvania's roads are lacking. PA ranks 38^th on the list of cost effective state-owned highway systems.
• Pennsylvania ranks 4^th overall in state highway and road spending, and 9^th in both spending per mile and spending per capita. The only states that rank higher on per capita spending are those with small populations, such as, Alaska, Wyoming, and Montana. Click here for a table of transportation spending by state.
  

Given Pennsylvania's high rank in transportation spending and taxes, but low ranking on road and bridge conditions, perhaps we need to look at how the money is being spent rather than simply looking for more.

posted by NATALIE ROGOL | 01:28 PM | 6 comments

JUNE 2, 2010

How Public-Private Toll Roads are Financed

Robert Poole clarifies a number of misconceptions about how toll roads are financed - particularly in the cases of public private partnerships for new projects. This is not a direct response to, but effectively refutes, a number of claims made in a recent Patriot News guest column:

First, an alphabet soup of huge tax breaks and subsidies drives private investor interest in infrastructure privatization. Second, privatization contracts require the public to guarantee revenues expected by private contractors.

Neither statement is accurate; as Poole writes:

In America’s limited experience with public-private partnership toll roads thus far, there are two kinds of circumstances in which critics could identify something as a “subsidy.” First, they can point out that Congress in 2005 allowed for tax-exempt toll revenue bonds to be issued for use in PPP toll projects. All this did was level the playing field between government and the private sector when it comes to issuing bonds. As long as we’ve had a federal tax code, governments have been able to issue bonds that are exempt from taxation on the interest they pay to bondholders. Prior to 2005, PPP toll roads were at an artificial disadvantage compared with public-sector toll roads, since the latter could issue revenue bonds at (lower) tax-exempt rates, but PPP toll roads could not. Most conservatives and libertarians do not consider exemptions from taxes as subsidies. (Personally, I would like to see all tax-exemptions for bonds abolished, but until that day comes, I’m all for a level playing field.)

The other claim for “subsidies” to public-private partnership toll projects could be made in cases like the Beltway High-Occupancy Toll (HOT) lanes in Virginia and the LBJ HOT lanes in Dallas. In both cases, the government wanted a larger and more costly project than the private sector could finance, based on projected toll revenues. So in both cases, the end result was the government agreeing to pay for certain portions of the project that it required to be included and the PPP company financing the rest. And in both of these cases, the long-term agreement between the state DOT and the PPP company includes revenue-sharing, so that if the project does well in terms of toll revenue, in future years the government will get a share of the revenue as a return on its investment in the project.

...

In the vast majority of cases, toll roads - whether public-sector or public-private partnerships - are self-supporting. And their only revenue comes from people who choose to drive on them, because the time savings and other attributes of the toll road are worth more to them than the price of the toll.

posted by NATHAN BENEFIELD | 02:00 PM | 0 comment

MAY 14, 2010

F&M Poll Shows Voters Support Liquor Store Privatization

The latest Franklin & Marshall College poll spends, not surprising, a good deal of time on election-related questions, but has a few related to current policy proposals in Harrisburg.  The polls shows residents support state liquor store privatization and medical marijuana, oppose total legalization of marijuana and merit selection of judges, and don't support many of the ideas for highway funding (voters are split on a natural gas tax, as a source for road funding, though current severance tax proposals have not dedicate funds for that purpose.)

For more information on some of these issues check out these Commonwealth Foundation resources:

• Liquor Store Privatization Report and additional resources
• Transportation Special Session Survival Guide
• Natural Gas Severance Tax facts

posted by NATHAN BENEFIELD | 02:27 PM | 2 comments

MAY 10, 2010

Talking Transportation Funding

PA Independent's Eric Boehm talks with State Rep. Rick Geist about Pennsylvania transportation funding in their latest podcast.

For more info on transportation funding, check out our "Transportation Special Session Survival Guide".

posted by NATHAN BENEFIELD | 09:03 AM | 0 comment

MAY 3, 2010

Maybe Gov. Rendell Needs to Listen to Different Advisers

Pennsylvania has a massive state budget hole, and it can be chalked up to one cause - listening to the wrong people.

• Gov. Rendell put his faith in folks at the Pennsylvania Turnpike Commission, who said the federal government would approve I-80 tolling - despite rejection after rejection. The Commonwealth Foundation has been saying for three years that the plan didn't meet the FHWA program requirement. Guess what? The Obama Administration (convincingly) rejected the bid to toll I-80, and Gov. Rendell had no plan B. Now Rendell has called a "special session" to deal with this $415 million gap between planned transportation spending and revenue.
  
  
• A mere one month ago, Gov. Rendell's advisers issued a statement saying they expected state revenues to recover in April, and thus there was nothing to worry about. In contrast, the Commonwealth Foundation advised lawmakers to reduce spending to match revenues. In reality, Pennsylvania collected $400 million less than was expected.
  
  
• Gov. Rendell's budget team decided to use the MCare Fund to balance the state budget - against the Commonwealth Foundation's advice not to exhaust one-time revenue sources with deficits as far as the eye could see. Last month, the Commonwealth Court ruled that this raid of the MCare money was illegal and must be repaid; thus creating another $800 million hole in the Pennsylvania state budget.

This is why many legislators feel the need for an Independent Fiscal Office in Pennsylvania - the Rendell Administration does not, but I think we've already established that we should ignore their recommendations - but easier than that, how about lawmakers take advice from the Commonwealth Foundation.

posted by NATHAN BENEFIELD | 08:02 AM | 0 comment