Industry Rallies to Save Highway Funds in PA

Mon May 16, 2005 - Northeast Edition
David S. Chartock

Pennsylvania Gov. Ed Rendell’s proposal to take up to $412 million in federal highway funds and use it for operating expenses to bridge funding gaps at transit agencies in Philadelphia and Pittsburgh is being perceived as an ill-conceived, short-term fix with no long-term solution.

Rendell’s plan, which is intended to provide greater state funding for the Southeastern Pennsylvania Transportation Authority (SEPTA) in Philadelphia and the Port Authority (PA) of Allegheny County in Pittsburgh, has led to few solutions so far.

It did result in the formation of the Keystone Transportation Funding Coalition (KTFC), according to Bob Latham, executive vice president of the Associated Pennsylvania Contractors (APC) of Harrisburg, PA.

KTFC, Latham said, is a coalition of 30 groups, including construction unions.

“We banded together to get new funding passed in the General Assembly because whenever there is a funding bill for mass transit, it goes hand-in-hand with a capital construction funding bill,” Latham explained.

Continuing, Latham said, that in February 2005, “The governor said he was tired of waiting around and said he would take money from federal highway funds [for SEPTA and the PA].

“Then the governor moved $68 million from the Pennsylvania Department of Transportation’s program to help pay for public transit. Now, if there is no bill by July, he will take another $345 million for SEPTA’s and the PA’s operating expenses through November 2006,” Latham said.

A $400M Loss in Highway Funds

“The problem is that if this stands, there will be a loss of more than $400 million in highway funds and transit operating costs, and it would get worse over the next 18 months,” Latham said.

KTFC, Latham continued, recently conducted a statewide survey. The survey, the results of which were released April 13, 2005, shows that Pennsylvanians, by an overwhelming margin, want the state to act now to create a stable revenue base for mass transit, but not by diverting gasoline and other fuel taxes that have been dedicated to maintaining and improving state and local roads and bridges.

“Our survey of 801 registered voters shows that the average citizen thoroughly understands the debate now going on in Harrisburg over dividing limited resources between roads and mass transit and that they see a one-fare solution,” Latham said, speaking on behalf of the KTFC.

“The public understands that without good highways and bridges neither busses nor cars can move. They clearly see gasoline taxes as pay-as-you-go user fees by motorists and are willing to accept increases in license fees to ensure that needed safety and efficiency improvements are made to roads and bridges,” Latham said.

And the Survey Says …

The survey was conducted from March 30, 2005, through April 4, 2005, by Susquehanna Polling and Research for KTFC.

Survey highlights revealed that:

• 94 percent believe it is important for the state to continue to provide adequate and reliable state funding for transportation projects, such as state and local roads and bridges.

• 80 percent believe that funding for public transit is very important or somewhat important.

• 72 percent of all voters in the poll agreed that transferring federal funds to public transit is not a good solution because lawmakers may continue to rely on this method of funding in the future.

• Of the 94 percent who want stable funding for highways, 62 percent said they would accept higher vehicle and driver license fees to provide the necessary dollars for state and local road and bridge improvements.

• 37 percent support the plan to divert up to $412 million in federal transportation funding away from roads to mass transit; 56 percent oppose the plan.

• 80 percent said that they believed the General Assembly should act before June 30, 2005, to provide a more reliable funding source for the state’s public transit systems as a way to avoid the use of additional federal transportation funds for mass transit.

• 56 percent said they would be less likely to support the use of federal gas tax dollars for mass transit if the funds were taken away from the state’s support of municipal road and highway programs.

Latham said there are several potential solutions.

They include:

• An increase in the state’s real estate transfer tax;

• An increase in the gas tax, which Latham said is not favored by voters;

• Take a percentage of the current sales tax to fund operating expenses needed by SEPTA and the PA, which is not a popular idea; and,

• Address SEPTA and PA operating costs to see where and how they can be reduced.

Three Bills

To address the current dilemma, there are three measures in the General Assembly and each takes a different approach to resolving the situation, Latham said.

One of these measures is a Senate bill that would move a portion of the existing sales tax revenues to fund SEPTA and the PA’s operating deficits. Next, there is House Bill 22. This bill seeks to increase fees to motorists. Then, there is the third measure, House Bill 461, which, among other things, seeks to increase the state’s real estate transfer tax, Latham said.

House Bill 22 “is a starting point, but has constitutional problems,” he noted.

Robert Mustin, counsel to the Transportation Committee of Representative Keith McCall, minority chairman of the House Transportation Committee, said House Bill 461 is currently in the House Transportation Committee.

Mustin said the bill “raises money for transit funding and capital construction and maintenance for Pennsylvania’s highways and bridges.”

Continuing, he said, the bill would provide a total of $560 million annually. Of that total, $260 million would be provided for transit funding by increasing the real estate property transfer tax by one-half of 1 percent.

The remaining $300 million would be provided for highway and bridge construction and maintenance. These funds would be raised by increasing vehicle registration fees for all-terrain vehicles, automobiles, motorcycles, motor homes, snowmobiles and trucks and truck trailers, the bill states.

It also would raise fees for drivers’ licenses, replacement drivers’ licenses, identification cards, certified copies of any public department record, and for issuing a certificate of salvage, according to the measure.

House Bill 461 also would mandate transportation entities to conduct annual management performance audits and for operational performance audits to be conducted within 18 months after the effective date of the law.

A Stalemate

Currently, Latham said, “there is a stalemate between the Republican-controlled General Assembly and Gov. Rendell.”

“A compromise is being sought by all parties,” Latham added.

Representative Richard A. Geist, majority chairman of the House Transportation Committee, said he believes “The governor has to solve this problem. It’s the equivalent to seven cents per gallon to fund mass transit.

“A solution needs to be a bipartisan effort that will benefit both mass transit and our highways and bridges. I have had discussions with my counterparts and we are in agreement that there has to be a plan put together for predictable base funding,” Geist added.

Geist called McCall’s bill, House Bill 461, “a viable proposal.”

Senate Transportation Committee Chairman Roger Madigan said, Gov. Rendell’s proposal “sounds like great public relations but horrible public policy.”

The problem, Madigan added, lies in the governor’s commitment to hold up to $360 million of additional federal highway funding in escrow to fund transit operating budgets statewide.

“This maneuver will further compound the poor condition of our highway and bridge network and leaves us with an enormous hole in the funding for public transportation in less than two years,” Madigan said.

Dedicated Funding Needed

What Pennsylvania needs, said Richard E. Wagman, chairman and CEO of G.A. and F.C. Wagman Inc., a York, PA-based general contractor “is a dedicated funding source for mass transit.”

The governor’s proposal, he added, takes more than $400 million in highway funds out of the capital program “with no indication that it will ever be returned.”

Overall, the governor’s solution will result in less employment, Wagman added.

Dan Hawbaker, president and CEO of State College, PA-based general contractor Glenn O. Hawbaker, questioned the appropriateness of the governor’s plan and the plan’s impact on areas outside Philadelphia and Pittsburgh.

“There seems to be a disagreement of how mass transit is funded and what the governor has proposed is not the answer,” Hawbaker said.

“Using the gas tax for something other than what it is intended becomes highly questionable,” he added.

“Mass transit must find a way to be made more self-supportive,” Hawbaker added.

Kim Snyder, president of Eastern Industries Inc., a Central Valley, PA-based general contractor and materials supplier, said the governor’s proposal is “a stopgap. After two years, we will have the same issues. What we need are long-term funding solutions. There’s a gamut of proposals from raising the excise tax on tire purchases to increasing the real estate transfer tax to raising the gasoline tax. I think there needs to be dedicated usage fees or taxes for funding all transportation needs.”

The Only Viable Proposal

Representative Keith McCall, minority chairman of the House Transportation Committee, said “as of today [May 2, 2005], it is the only viable proposal [House Bill 461] out there.

“By addressing both mass transit and roads and bridges in a single bill, the bill becomes a compromise,” McCall added.

Continuing, McCall said “The first concern is that there is a dedicated fund for mass transit operations and needs.

“We currently fund transit in piecemeal. This leads to deficit problems,” McCall pointed out.

McCall said his bill also provides funding to maintain the current wholesale floor price of $1.17 per gallon for gas and other fuels and it also infuses $280 million into the program. These funds are strictly used for the maintenance, repair and upgrading of Pennsylvania’s bridges and roads.

Defending the governor, McCall said the governor had no choice in using the first $68 million to bail out SEPTA and the PA.

“He had to take that action. He didn’t want to flex that money. Without it, SEPTA and the PA would have had layoffs, cuts in service and other problems.” McCall said.

Now, he explained, there is another $345 million “in a pot to go to mass transit if no dedicated funding source is dedicated. This money is taken away from funds dedicated to capital construction of bridges and highways.”

He said that while Representative Geist said the Republicans are looking at coming up with a dedicated mass transit-funding source, “currently there is nothing on the table.”

Pennsylvania’s fiscal 2006 budget is due June 30, 2005. McCall said the Republicans want “to tie something into the budget.”

Until then, it is unlikely that a bipartisan compromise will be reached, leaving the threat of losing another $345 million in dedicated highway and bridge funds hanging over the heads of the industry as well as the state. CEG