Transportation Funding Solutions Require Reforms and Reprioritization
Now that the federal government has rejected the ill-conceived plan to toll I-80 for a third, and supposedly final time, Gov. Rendell and the General Assembly must implement serious solutions to the Commonwealth’s transportation funding challenges.
Few Pennsylvanians will disagree that our transportation infrastructure-roads, highways, and bridges-is a core function of government. However, most citizens will not agree to pay more taxes at the pump to pay for it. So it is time for Harrisburg to reprioritize the $66 billion of our money that it already spends.
Funding for our transportation needs will be found in redirecting spending on bike trails, beautification efforts, corporate welfare, hockey arenas, convention centers, film producers, lobbyists, and the like, and putting that money towards filling potholes, building roads, and retrofitting bridges.
In 2006, the Pennsylvania Transportation Funding and Reform Commission wrote: “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.” [Emphasis added]. Yet little to no reform has occurred to date.
Here are just some of the ideas Governor Rendell and the General Assembly could implement without any tax increases. For example, we should repeal the union-based “prevailing wage” law on all state-funded projects that tacks hundreds of millions, if not billions of dollars onto the cost of road and bridge construction and repair.
We should end the misuse of hundreds of millions of federal dollars in highway and bridge money to other purposes. And the General Assembly should move quickly to enable public-private partnerships, including leasing of the Pennsylvania Turnpike which, based on previous offers could, (by investing a lease payment) generate upward of $50 billion over the next 50 years.
Mass transit reform will also be necessary. Pennsylvania should require the competitive contracting of all transit services, and transit riders should pay their fair share of the costs rather than having their transportation choices subsidized by the taxpayers.
Competitive contracting, whereby private operators contract with the government to operate transit services, has reduced operating costs in cities across the U.S. by 20-51%, with savings of about 35% being the norm. Houston experienced savings of 26%, San Diego by over 30%, and Denver by 46%. Las Vegas, home of the largest fully contracted out U.S. system, has costs approximately 30% below systems of similar size.
Mass transit must also increase its reliance on local funding and fares rather than state taxpayers. In order to become efficient, transit agencies must be more dependent on attracting customers and meeting local needs. Currently, agencies’ funding depends on how effective their lobbyists are, not on how well they provide service. When riders pay for the cost of transit, they will demand better and more efficient services-reducing agency waste and keeping costs down.
Subsidies for mass transit should be for riders, not agencies like PAT and SEPTA. For low-income Pennsylvanians who are dependent on transit, there is a simple solution-offer fare assistance. A means-tested tax credit or voucher would allow low-income families to afford the costs of transportation and target aid to those who need it rather than subsidizing riders who can afford to pay the true cost of their trip.
Finally, we should reduce restrictions on who is and who is not a transportation provider. State regulations require transportation providers (taxis, vans, busses, etc) to apply for a license with the Pennsylvania Utility Commission (PUC). Applicants have to demonstrate safety as well as “a clear transportation need not being met.” Following that, current transportation companies may petition the PUC to deny a certificate from being granted to the applicant. This system protects existing providers from competition-and keeps prices high. Removing restrictions would create increased competition, improve service, and lower prices for riders.
The rejection of the tolling of I-80 was not a surprise. We predicted it almost three years ago because the redistribution of 40% of I-80 toll dollars to other projects, such as mass transit in Philadelphia and Pittsburgh, would never meet the federal qualifications for tolling.
Fortunately, solutions to our transportation funding challenges will not require higher taxes on Pennsylvanians. Reforms and a reprioritization of spending will allow state government to take care of its core functions in transportation, while respecting and being responsible with the taxpayers’ hard-earned money.
Matthew J. Brouillette is president and Nathan A. Benefield is director of policy research at the Commonwealth Foundation (www.CommonwealthFoundation.org), an independent public policy research and education institute in Harrisburg, PA.