RSS FEEDS
Recent Research
SEPTEMBER 28, 2011 | Testimony by MATTHEW BROUILLETTE
Transportation Funding Must be Tied to Reform
Governor Corbett's Transportation Funding Advisory Commission identified the dilapidated state of Pennsylvania's roads and bridges and future infrastructure needs. Pennsylvania routinely finishes among the worst states in rankings of road conditions, and among the highest in the number of structurally deficient bridges. Yet P
SEPTEMBER 20, 2011 | Commentary by ELIZABETH STELLE
Public-Private Parking Prevents Tax Hikes
Facing immense fiscal and political pressures, many local governments are looking for ways to fund services without raising taxes. But officials need not curb their enthusiasm for fiscal responsibility if they simply put the brakes on being in the parking business. Pennsylvania has 41 special government parking authorities; the rest of t
AUGUST 30, 2011 | Commentary by KATRINA CURRIE, LEONARD GILROY
Preserving Penn’s Woods Proven by Public-Private Partnerships
Earlier this month, Gov. Tom Corbett suggested the commonwealth consider leasing state park operations and services. Almost immediately and without thoughtful consideration, pundits launched political fire, claiming "privateers" would exploit or commercialize our natural resources beyond recognition.
Recent Blog Posts
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
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
APRIL 27, 2010
PA Needs Infinity Dollars to Repair Roads
The Tribune Review has a story that transportation advocates are now claiming that Pennsylvania needs $3 billion in additional revenue per year just to keep roads and bridges up to standard. This is almost double what the estimated need was a few years ago, and far higher than the $400-plus million the state would have gotten from tolling I-80. It seems that when it comes to transportation - like many other areas of government spending - the solution is always "more money."
Here, however, are some free-market solution, that don't involve higher taxes on Pennsylvanians
- Transportation Funding Solutions Require Reforms and Reprioritization
- Report: The Emerging Paradigm: Financing and Managing Pennsylvania's Transportation Infrastructure
- Commentary: Five Alternatives to Tolling I-80
- Policy Brief: Mass Transit Reform: Lessons for Pennsylvania
- Policy Brief: Paying for Our Paving: Why Leasing the Turnpike Makes Good Economic and Public Policy Sense
- Reason Testimony: Modernizing and Expanding Pennsylvania's Transportation Infrastructure through Public-Private Partnerships
posted by NATHAN BENEFIELD | 09:29 AM | 0 comment
