What to do About the Transportation Crisis?

The Pennsylvania Transportation and Funding Reform Commission is currently holding hearings on the funding “crisis” in transportation. From 1995-96 to 2005-06, while inflation increased 28%, transportation spending in the state budget increased 81%. This includes a 30% increase in Mass Transit funding, a 55% increase in assistance for local roads and bridges, an 86% increase for state highway and bridge maintenance, and a 125% increase in state highway and bridge construction and reconstruction. While some would argue that the funding crisis is a lack of funds; the real crisis is in the spending of those funds.

The funding crisis will not be solved simply by raising taxes and spending more. We can and must learn how to better spend the billions of dollars we are already gathering in taxes from citizens. This will require improvements in funding effectiveness and efficiency. Here are some solutions.

First, mass transit costs should be borne by those who benefit from it. That is, transit riders and local governments. Pennsylvania’s mass transit systems receive a higher proportion of funds from state government than most systems across the nation—this disparity needs to change. While many argue that mass transit benefits low-income riders who could not afford higher fares, the solution to that problem is to subsidize low-income riders through tax credits or vouchers instead of providing massive grants to transit agencies with little or no incentives to provide high quality or efficient services.

Second, various competitive contracting options should be considered. Pennsylvania law should encourage public-private partnerships in road construction and repairs. Contracting out the management functions of mass transit agencies would reduce the cost of bureaucracy.

Leasing the Pennsylvania Turnpike could also generate a tremendous windfall for transportation funding purposes. Recent leases of toll roads include the $1.8 billion lease of the Chicago Skyway and the $3.9 billion lease of the Indiana Turnpike. Given that the Pennsylvania Turnpike is longer, and has higher tolls, we should expect a lease to generate substantially greater revenue. With new technologies, we should pursue tolls on more highways (particularly on any new projects) and leasing management of those roadways.

Third, we should reduce overspending on road construction and repairs. All construction and maintenance projects should be awarded through competitive contracting. We must ensure we get the best deal, and make sure that cost overruns are borne by the private contractor, not taxpayers. Further, we should repeal prevailing wage laws on highway construction projects. The prevailing wage rates set by the state Department of Labor and Industry are frequently 20% higher than the average wage for similar work on a privately funded construction project. A 20% reduction in labor costs would save the Commonwealth and its taxpayers hundreds millions of dollars in transportation spending.

Finally, we must get politics out of the process of setting transportation priorities. Federal and state transportation funding should not be used to fund the pet projects of politicians, which in the process leave fewer dollars for necessary repairs to our core infrastructure.

Over $706 million—nearly half of the federal highway dollars for Pennsylvania—was earmarked for pork-barrel projects. These spending priorities were not set from an evaluation of needs from the Pennsylvania Department of Transportation, but by members of Congress. These projects include: $2.4 million for a pedestrian overpass at Villanova, $8 million for pedestrian and bike trails along the North Delaware Riverfront, $1 million for a “Child Passenger Safety” program at the Children’s Hospital of Philadelphia, and over $7.1 million for projects at the Philadelphia Zoo. My “favorite” pork-barrel project is the State Street Promenade in front of our offices in Harrisburg, where federal and state transportation funding has been used not to repair a dilapidated street, but to tear all up the trees and replace the sidewalks with thousands of bricks. Why? To improve the view from the state Capitol building down to the Susquehanna River, at taxpayer expense. If we are in such a funding crisis, with our major highways and bridges in disrepair, why are we spending hundred of millions of dollars on pork like this? We need to keep political interests away from determining our priority projects and focus on the true needs for transportation funding in Pennsylvania.

We must become more efficient and more effective in how we spend our tax dollars on transportation. Competitive contracting, repealing prevailing wage laws, and eliminating pork projects would free up hundreds of millions of dollars to be redirected at improvements in our core transportation infrastructure. Privatization measures could generate billions of dollars for rebuilding our highways and bridges, while reducing our management costs. Finally, funding reform and the use of competitive contracting for our mass transit systems would reduce the burden on state government and on taxpayers.

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Nathan A. Benefield is a policy analyst with the Commonwealth Foundation (www.CommonwealthFoundation.org), an independent, nonprofit public policy research and educational institute based in Harrisburg. This Commentary is edited from testimony presented before the Transportation Funding and Reform Commission.