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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
JANUARY 17, 2011 | Policy Report by COMMONWEALTH FOUNDATION
80 Ideas for a Prosperous Pennsylvania
A Blueprint for Transforming the Commonwealth
Pennsylvania must undergo a rapid transformation to reverse the poor policy decisions that have eroded economic freedoms and brought the state to its present condition. To provide a roadmap for success in this critical endeavor, the Commonwealth Foundation has compiled a list of 80 policy recommendations for Gov. Corbett and state legi
Recent Blog Posts
JANUARY 11, 2012
Turnpike Commission Defends Ballooning Debt
Following our post yesterday, the Pennsylvania Turnpike Commission wanted to make sure we saw their response to Auditor General Jack Wagner's warning on their growing debt.
The Turnpike Commission wanted to ensure bondholders that, "the PTC remains committed to meeting all its financial obligations—including obligations to bondholders—by sound management of our debt load and by reinvesting in our toll-road system."
But while bondholders (and bond attorneys) may rest assured, taxpayers and drivers should not.
Act 44 may not result in a default—as a government monopoly, the Turnpike Commission can raise tolls without threat of competition, and bonds are further backed by Pennsylvania taxpayers—but that doesn't make it sound policy.
The Turnpike Commission's Annual Financial Report (see page 24) shows that the PTC lost $523 million, $1 billion and $891 million respectively each of the last three years. That should worry taxpayers and motorists.
Indeed, Moody's rating agency latest grade of Turnpike bonds gives it a "negative outlook." Why? The Turnpike Commission needs to keep raising tolls.
The negative outlook reflects the possibility that larger than currently forecasted toll rate increases will be necessary to maintain sound financial operations and targeted debt service coverage levels. The outlook also incorporates the possibility that the turnpike could be tapped to pay for more of the state's growing unfunded infrastructure needs.
Let's not forget, Act 44 was created as an alternative to leasing the Turnpike to a private investor and manager. The claim was that a private company would ... wait for it ... raise tolls!
So is the commonwealth better off having borrowed $5 billion under Act 44 compared to getting $12 billion in an up-front lease payment?
The Turnpike Commission's persistent defense of Act 44 might make one think that its Chief Operating Officer is the Senate staffer who wrote the offending legislation.
posted by NATHAN BENEFIELD | 01:38 PM | 0 comment
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 | 0 comment
