October 1 2006

An Overview of PEL's October 2006 Study on Transportation Policy and Funding

In October 2006, PEL completed a benchmarking study of transportation funding and conditions in Pennsylvania and five other states (OH, NJ, NY, MI, IL) to provide an objective review of state policy and funding practices. A diverse group of organizations funded and advised the study because of a shared concern for the future of transportation and its impact on the economy and vitality of the state. They represent a broad spectrum of interests, including business, construction, land use and planning, development, and environmental.

The study confirmed what many motorists and transit riders already know: Pennsylvania’s transportation systems are in bad shape –financial and physical, roads and public transit. Each state in the study faces similar struggles, including many competing priorities for government resources and dedicated funding streams that don’t keep pace with escalating costs. But there are differences, too, and lessons to be learned for Pennsylvania.

Four key findings emerged from the Pennsylvania Economy League study:

  • First, regions should have a strong role in decision-making, taxing authority (including the decision not to tax), and pursuing alternative financing. Many states use dedicated regional taxes to pay for transportation, particularly transit. Each region has unique needs that should be addressed regionally. Our IssuesPA poll data shows support for a stronger regional role, including a dedicated regional tax for regional transportation projects. 
  • Prudent use of debt – like a traditional home mortgage – is a way to align the cost of infrastructure with the useful life. Pennsylvania’s reliance on debt for transportation infrastructure is relatively low. Prudent use of debt would include a dedicated revenue source to retire debt obligations. 
  • One of the problems that got us here is the relatively slow growth of the dedicated transportation revenues – mainly fuel taxes and registration fees. Funding streams for transportation should be dedicated, predictable, and able to keep pace with inflation, at least. Flat, one-time fee or cents-per-gallon increases would provide only a short-term fix. New sources of revenue should be able to grow naturally to help keep pace with increasing costs. 
  • Finally, Public Private Partnerships (PPP’s) should be considered as part of the solution, not a silver bullet. A long term lease of the turnpike is just one example. Others can accelerate the design-build cycle, encourage innovative problem-solving, and more. Lawmakers should consider a full range of PPP’s– and carefully study the outcomes of PPP’s in other states to learn from their experiences – good and bad. While selling the turnpike isn’t the silver bullet, it can be one piece of a larger puzzle.

To review PEL’s full study, use this link to download the report.