| TCI-PAC 2009 Transportation Position Statement |
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| What are Current Needs? |
The 2006 Transportation Funding and Reform Commission estimated the shortfall in highway funding at $960 million per year. That sum included only the resources needed to maintain and repair the existing infrastructure; it did not accommodate expanded highway or transit capacity, and it did not include the funding required to maintain local (i.e., non-state or federal) roads. |
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| Actions since 2006 |
Act 44 of 2007 increases tolls on the Pennsylvania Turnpike and borrows against that future toll revenue; part of Act 44, the tolling of Interstate 80 has been stalled. The effect on highway funding is about $500 million per year, until 2010.
In 2008, the governor and the legislature approved a one time borrowing of $350 million to expedite the repair of 411 structurally deficient bridges. The proposed private lease operation of the Turnpike has failed to gain wide support. None of these measures come close to alleviating Pennsylvania’s highway funding gap. They also do not provide a vision for future transportation infrastructure. |
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| Impact of inflation on construction costs |
Meanwhile, costs for construction materials have increased dramatically in recent years – by 17 percent since the shortfall was calculated in 2006. Regardless of the new revenue that has been generated, the resources required to meet Pennsylvania’s highway maintenance needs are significantly greater in 2008 dollars than in 2006 dollars. |
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| Gas-tax revenue declines |
The Motor License Fund has experienced a significant decline in revenue as higher gasoline prices and an uncertain economy have kept drivers off the road. In Fiscal Year 2007-08, gasoline tax receipts were off by about $88 million compared with projections. For the first four months of FY 2008-09, gas-tax revenue was off by 8.2 percent, a trend that would create a shortfall of nearly $238 million if it were to hold through June 2009. |
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| Impact of debt service |
The debt service on the $385 million borrowed in FY 2008-09 is just under $30 million per year for 20 years. The debt service comes from the MLF, thereby reducing MLF revenue by another $30 million per year. The governor’s plan to borrow a total of $1 billion for expedited bridge repair over the final three years of his administration would cost about $300 million in debt service over the next 20-plus years. |
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| What lies ahead |
Looking ahead to FY 2010-11, Highway revenue from Act 44 will decrease by $200 million per year beginning in FY 2010-11, a result of the rejection of the I-80 tolling plan by the Federal Highway Administration. The current economic volatility makes it hard to predict the impact of inflation and to project revenue.
The fact that the highway system is underfunded is likely to lead to additional catastrophic failures, such as the Birmingham Bridge in Pittsburgh, the I-95 bridge in Philadelphia and the collapse of the bridge onto I-70 near Washington, Pa. in 2005. At the very least, needed roadway repair and capacity projects are on hold while PennDOT is forced to expend the vast majority of its resources on fixing bridges |
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| Won’t the Federal Stimulus Package Fund our Transportation Needs? |
No. We must develop infrastructure investment at the state level and not believe we can rely on a one-time influx of short-term money as a long term funding solution |
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| What is the solution? |
Before we answer that question, we must stop thinking merely in terms of cost and start thinking in terms of investment. We must answer the question: “What kind of transportation system do we want in 10 years, and how to we get there?”
We must develop a vision of the future transportation system and how it will benefit Pennsylvania in terms of enhanced commercially activity and quality of life. |
- What if we provide highway and rail capacity to handle the influx of freight movement that is coming in the next five to fifteen years?
- What if we provide the transit capacity to move workers around our metropolitan areas to make access to jobs easier?
- What if we provide port connections to make Philadelphia and Pittsburgh commercial gateways?
- What if we provide highway capacity to improve the safety and mobility needed on our major highways?
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Second, we must begin to seek a comprehensive solution instead of piecemeal. Previous measures have not done the job because they tend to pit geographic regions and motorist classifications against one another and still do not answer the question of what kind of infrastructure do we want and how do we get there?.
Third, we need to make a distinction between general taxation and user taxes and fees. User taxes and fees, whether based on tolling, fuel consumption, or the miles someone drives, more accurately assess the cost for the use of our highway assets. They also give the motoring public some measure of individual control over how much they pay.
Potential actions include: |
- Toll all of Pennsylvania’s interstate highways. The current toll schedule for the Turnpike, plus the proposed toll schedule for I-80 that was rejected, would have raised $270 million per year by 2013. Tolling all 1758 miles of our interstate highways would either raise more money, or moderate the required tolling levels, or both, and it would not place a disproportionate burden on any single geographic region. We should begin working immediately with our congressional delegation to lift the federal restrictions on tolling.
- Raise the cap on the Oil Company Franchise Tax. The current cap of $1.25 should be raised to $1.75, with 3 percent annual increases. This would raise $500 million per year, with growth to accommodate inflation.
- At the same time, the declining gas-tax revenue in recent months illustrate why we should begin looking at a miles-driven user tax and convert from the consumption-based gasoline tax. A miles-driven approach is more fair and equitable given our national energy policy, which emphasizes conservation and alternate fuels. We should begin planning now for replacing the current 12-cent-per-gallon gas tax with a miles-driven fee.
- Increase registration, title, licensing and inspection fees to raise an additional $100 million, and dedicate that to local roads.
- Cap State Police funding from the Motor License Fund and begin shifting the responsibility back toward the General Fund. Three-quarters of the State Police budget now comes from the fund that was created to pay for highway projects.
- Enact enabling legislation for P3 projects, including for unsolicited proposals. Regardless of whether the Turnpike lease idea comes back, we believe the greatest opportunities for P3s are in building new capacity.
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| Will it be accepted? |
| The measures described above would provide nearly $1 billion a year in highway funding, not including what might be spent on P3s. It would cost a typical motorist an additional $8 per month (“typical” = someone who drives 15,000 miles per year in a vehicle that averages 25 miles per gallon). Our subsequent public opinion research revealed that 56 percent of Pennsylvania voters would be willing to pay at least an additional $8 per month in order to solve this problem. |
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We believe Pennsylvanians will support a moderately priced, fair and equitable solution –
IF it solves the problem. |
