Proposed Solutions to Fix State’s Ailing Transit System

HARRISBURG – The bipartisan Transportation Funding and Reform Commission issued a final report Monday, offering a funding solution to pay for critical improvements to Pennsylvania’s highways and bridges and for public transit, which provides 413 million rides a year across the state.

Transportation Secretary Allen D. Biehler, who chaired the commission, said, “Not only is the commission proposing a solution to ensure Pennsylvanians have a better transportation system, but it also is recommending management and financial practices for the Department of Transportation and transit agencies to make sure all investments are made wisely and efficiently and that service is improved. We want to make sure that those paying the bills get the best value for their investment for many years to come.

“Our highway and bridges and public transit systems are critical to the economic well-being and success of our businesses and communities,” Biehler added. “Providing a sound transportation system will not only benefit the companies that operate in the commonwealth, but will enhance the quality of life for all our residents.”

The commission recommended $900 million in additional funding for highway and bridges and $760 million in targeted public transit funding.

If the recommendations are adopted, the average driver would pay $7 more per month so the state could fix deficient bridges, improve the quality of the most heavily used roads, modernize traffic signals and implement new safety features to reduce highway deaths.

The new funds for public transit would mean a change in realty transfer taxes that would add about $5 a month to a 30-year, $150,000 mortgage.

The nine-member bipartisan commission said its 16-month long assessment confirmed “that Pennsylvania’s public transportation and highway and bridge systems are in crisis, both in terms of inadequate funding for operations, capital improvements and maintenance as well as deteriorating physical conditions.”

The highway and bridge investment would:

• Eliminate poor ride quality in five years on all highways carrying more than 2,000 vehicles a day and on 50 percent of highways with lower traffic volumes.

• Reduce the percentage of structurally deficient bridges to the national average in 17 years.

• Implement additional safety features targeted to reduce fatalities by 25 a year.

• Modernize two-thirds of all traffic signals over 10 years.

• Install real time traffic information and management systems in major urban areas.

• Add targeted capacity expansion projects.

The commission also recommended that PennDOT implement highway and bridge reforms and efficiencies totaling $120 million. These include:
• Taking the right maintenance steps at optimum intervals to extend the life of highways and bridges.

• Delivering projects that fit within the context of the community and provide cost effective improvements that address specific transportation problems within fiscal constraints.

• Delivering projects faster by improving decision making in the early planning stages and sharing information among the agencies that review environmental and cultural resource issues.

• Taking advantage of innovative project delivery and financing options, such as design-build and public-private partnerships.

• Linking land use and transportation. This involves integrating land use decisions and smart transportation concepts. Major capacity expansion projects would be contingent on communities having land use plans and controls to ensure the proposed project will encourage sustainable, smart growth.

The commission also urged PennDOT to develop an incentive-based funding program to encourage communities to work with planning and other partners to link land use and transportation investments.

The commission recommended these steps to raise the $900 million more for highways and bridges:
• Adjust the percentage and the ceiling of the Oil Company Franchise tax. An adjustment of about 11.5 cents per gallon would be needed.

• Raise various motor vehicle registration and license fees by $150 million.

To deal with pressing needs for county and municipally owned highways and bridges, the commission also recommended an additional $65 million for that system –- an increase of 20 percent over current annual funding. If the Oil Company Franchise Tax is the source for this additional investment, an additional adjustment of one cent per gallon would be needed.

Turning to transit, the commission concluded that “the financial underpinning of the commonwealth’s public transit program is inadequate and the program structure is dysfunctional. The program and revenue streams need to be completely revamped.”

The commission recommended a new dedicated public transit fund and a revenue-neutral swap of $589 million to set it up. A broad-based, dedicated tax, a small portion of either the sales or personal income tax, would replace existing revenue sources from the General Fund, the Public Transportation Assistance Fund and Act 3 of 1997.

In addition, the commission urged that the subsidy programs for most public transit systems be replaced with a streamlined program based on good business practices, performance-based support and sufficient dedicated funding.

Past modifications to the public transit subsidy program have produced structural failures, disappointing revenue results and unintended consequences. These include nonsensical fare structures, weak asset maintenance practices and the inability to expand service in growing areas. The commission’s recommended $60 million in savings for public transit could come from restructuring or eliminating underperforming transit routes, using purchasing pools, making fare policy adjustments and reducing labor/management costs through improved productivity and the exploration of competitive contracting.

The net need of $760 million a year for public transit should be divided 75-25 percent between state ($576 million) and local ($184 million) sources, the commission urged.

At the state level, the commission said, the Realty Transfer tax represents the best and most appropriate option for raising $576 million in additional state revenue for public transit. The county-by-county proceeds from the Realty Transfer tax closely align with public transit ridership. The commission recommended an increase of 0.89 percentage points in the tax to generate the needed $576 million.
Since transit agencies are locally controlled, the commission said, locally generated funds need to be part of the public transit picture.
The commission recommended the General Assembly enact legislation to enable counties and municipalities to raise revenues to underwrite $184 million needed for public transit. This money could be raised by up to a 0.25 percent local sales tax, a 0.20 percent earned income tax or a 0.50 percent local realty transfer tax.

To help ease the tax burden for underwriting public transit, the state should permit use of public private partnerships and explore the use of additional bonds for capital projects, the commission said.

The added investment in transit would:

• Stabilize current public transit services across Pennsylvania and bring all the systems to a state of good repair within 12 years.

• Expand the rural Persons with Disabilities program to all counties. (Philadelphia and Pittsburgh are already covered with paratransit and fixed route services.)

• Expand service in targeted areas and provide for targeted fixed passenger rail or bus guideway expansion.

• Provide increased support for intercity passenger rail and continuing support for intercity bus services.

“We believe our recommendations will produce solid business practices that will stabilize and grow transportation services,” Biehler said. “We believe such changes are in the best interest of everyone who relies on transportation for work, health and play. We can either make prudent additional investments now, or be forced to pay more tomorrow to fix these pressing transportation problems.”

Transportation Funding and Reform Commission Final Report Fact Sheet


Highways and Bridges:
New investment needed – about $900 million:

• Increase Oil Co. Franchise Tax by 11.5 cents.
• Changes to Motor Vehicle Registration and License Fees.
• Public-Private Partnerships.

Increased Spending for Municipal Highways and Bridges:
$65 million a year added investment:

• Additional increase of Oil Co. Franchise Tax by 1 cent.

PennDOT Savings Opportunities:
$120 million savings from:

• More disciplined asset management practices.
• Accelerate smart transportation and project cost-saving initiatives.
• Streamline the delivery process.
• Take advantage of public private partnerships for innovative project delivery and financing.
• Link land use and transportation.

$120 million reduces overall need from $1.013 billion to about $900 million

Transit Reforms:
• New Dedicated Funding Source
     • Small portion of sales or personal income tax.
     • $589 million using a re-allocation of existing sources.
• Overhaul program and revenue streams.
• Link transit funding to need and performance.
• Explore competitive contracting with private industry.
• Restructure routes and improve labor productivity.
• Revised fare policy to keep track with inflation.
• Operating funds distributed based on a formula using passengers and vehicle hours.
• Incentives to increase ridership, improve financial efficiency and increase local contributions.
• Create oversight and management controls to hold systems accountable to PennDOT.

Transit Revenue Recommendations:
$760 million net new investment:

• Create a 75-25% state-local funding partnership.
     • State Level – $576 million from State Realty Transfer Tax.
     • Local Level – $184 million from either local sales tax, earned income tax or local realty transfer tax.
• Legislation is needed to grant taxing authority to local government.
• $60 million in cost savings reduces needs from $820 million to $760 million.
• New revenue buys stabilized service, some expansion, statewide Persons With Disabilities service, state-of-good-repair infrastructure & some fixed guideway projects.

GantDaily Editor’s Note: GantDaily attended the State College session in September. Find out what other Central Pennsylvania residents had to say here.

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