By Andrew Abramczyk
Pennsylvania has a traffic problem. Philadelphia is the second most congested city in the nation, according to the INRIX transportation consultancy, while drivers in places like the Lehigh Valley, Chester County and Lancaster County endure traffic jams in the middle of farmland. PennDOT rates less than one quarter of non-interstate highways as being in good condition.
Better mass transit could reduce road traffic in densely populated areas, but people outside city centers can’t use a transit system that doesn’t reach them. On the other hand, if transit isn’t widely used, it isn’t financially viable to expand.
To complicate things further, Pa. state government has been consistently underfunding every transport option: roads, transit and multimodal alternatives. According to a new PennDOT report, the state funds surface transportation at only about half the needed annual level. The department collects and spends about $8.5 billion annually for surface transportation, or about $665 per state resident, but PennDOT claims to need double that.
A gap of such size is alarming, but not unbelievable. Large and complex networks are expensive. Ask yourself: how much do you spend per year for your cell phone? How much do you spend for cable TV? How much do you spend for water and electricity? What does a plane ticket cost? These expenses all go to maintain other networks, and they probably add up to much more than what we pay to use the roads. Moreover, the public pays extra for transportation already: lost time spent in traffic, car repairs, noise, frustration and pollution are all real costs, and probably total up to thousands of dollars per family. Transportation should be a state spending priority, even if that means trimming budgets elsewhere.
What is Pennsylvania Funding?
Up to now, Harrisburg has prioritized everything except transportation. About one third of the state operating budget is for K-12 education, and another third goes to Medicaid and welfare. Everything else, including transportation, is in the remainder. The fastest growing spending categories for Pa. are K-12 education, Medicaid and university education. Each of these categories is growing faster than tax revenue, which means, if nothing changes, these items will someday crowd out everything else. Much of this spending growth achieves nothing: politicians keep spending more either because the funds are allocated by statutory formula, or because doing so makes them look charitable. They seem not to grasp the idea of diminishing return: that an additional dollar of spending does not necessarily deliver better results.
Up to now, Harrisburg has prioritized everything except transportation.
For example, Pennsylvania spends $19,000 per K-12 student, per year (state and local spending combined). Contrary to the media narrative, total funding per pupil is close to equal across rich and poor districts. Per-student spending has increased 40% over the last twenty years, not including inflation. Are kids 40% smarter today? Are they even 1% smarter? The question answers itself. Welfare and Medicaid grow every year even as its client population grows less healthy, and more dependent. The state also spends about $900 million per year on unnecessary corporate giveaways, according to the Commonwealth Foundation (disclosure: I am a fellow of the Commonwealth Foundation, though I am writing here in a personal capacity). These giveaways have enabled major abuses like the recent theft of $6 million in taxpayer money — but the money keeps flowing.
Infrastructure spending surely includes its share of waste, fraud and abuse as well — but in the end, the roads and rails do work. They provide the benefits promised, unlike quite a lot of other big-budget items we’ve funded in their place. State government should prioritize things that work.
Skimming for SEPTA
Beyond failing to prioritize transportation overall, politicians have diverted funds away from the statewide highway system and into the Philadelphia region. Specifically, Pa. state government provides about half the annual funding for SEPTA, the Philadelphia regional mass transit system. There is no reason why the Philadelphia region, with all its concentrated wealth, should be drawing resources from the rest of the state.
The arrangement is a murky political bargain, encoded in Act 44 of 2007 and Act 89 of 2013. Under those acts the state transfers money annually from the Pennsylvania Turnpike, as well as 4.4% of sales tax revenue, to the state’s mass transit accounts The mass transit accounts, in turn, make grants to several systems around the state including Pittsburgh’s PAAC— but about about 70% of grants go to SEPTA. Overall, the state spends about $1.7 billion per year on transit in and around our biggest cities. As a political win for SEPTA and Philadelphia, this arrangement is remarkable. Why suburban and rural legislators consented to it is a mystery. (The deal has also nearly bankrupted the turnpike, but that is another story).
User Fees for Commuters?
Another reason why transportation is underfunded is technology. The main source of transportation funding are gas taxes. Cars have been getting more efficient for years, and the growth of gas tax revenue has dropped to the rate of inflation or less. Widespread adoption of electric cars would cause revenue to fall off completely.
Next year, payments from the turnpike to mass transit are scheduled to taper off. This, together with the inadequacy of the gas tax, is prompting a major transportation rethink. Policy outputs so far include the aforementioned PennDOT study and a legislative task force report authored by state Republicans. SEPTA and the Turnpike have teamed up to produce the Southeast Partnerships for Mobility joint report, and the Turnpike partnered PAAC to produce a similar one for the Pittsburgh region. State senator Wayne Langerholc has introduced an omnibus transportation plan. Older plans are also still available: a 2006 commission report, for instance, contains ideas for improving SEPTA, including workforce reform and the attachment of stronger accountability measures to state grants. It is the best report on the topic that I have found.
Engaged citizens have plenty of reading material at their disposal, and infrastructure is shaping up as a big theme in Harrisburg this year. In truth, however, nobody knows where to find $8 billion.
For road funding, some consensus seems to be emerging around the idea of user fees. The Pennsylvania Constitution requires all highway and bridge user fees to be used solely for highways and bridges (a requirement that Act 44 and Act 89 have violated). User fees are based on the principle of “pay for what you use,” an eminently fair concept. Already, though, the advocates of user fees are hedging. The Langerholc plan aims to stop a PennDOT bridge tolling plan, undermining the user fee concept. Bridge tolling is probably the most effective and simplest possible user fee. It only gets more complicated from there.
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The next-simplest form of user fee would be corridor tolling: charging drivers to use selected major expressways in addition to the Pennsylvania Turnpike. This could be done either through a private contractor, as a public-private partnership, or as a PennDOT initiative. One problem with corridor tolling, however, is that it removes the incentive for PennDOT to improve other routes. If the free route is smooth and uncrowded, why use the toll road? A further problem, if corridor tolling is implemented through a private contractor, is that PennDOT may inadvertently sell tolling rights for less than they are worth. Contractors rely on this possibility: they maximize their profits by outfoxing PennDOT, or, worse, getting an inside deal.
For cities, congestion pricing may be an option. Congestion pricing means tolling high-traffic roads during peak hours while granting discounts or free travel for cars carrying multiple passengers. Congestion pricing encourages car-pooling and transit use, and might reduce traffic, in accord with the political proverb that “if you want less of something, tax it.” The problem is that congestion pricing requires heavy technology spending up front — not to mention its political unpopularity. Philadelphia collects a ride-hailing surcharge, assessed on car services like Uber. This is arguably a form of congestion tax. However, Philadelphia spends the tax money on items other than transportation.
The ultimate user fee would be a Mileage-Based User Fee (MBUF), charging drivers based on their individual miles driven. The idea of a government tracking device installed on one’s car is, however, profoundly disturbing (a note, however: Apple, Google, the telecom companies, and some car insurance companies track you already). A less intrusive option might be to charge drivers based on their odometer reading when their car gets inspected. It is unclear, however, how collections would work under that arrangement.
Upon consideration, then, user fees look like a complicated, partial solution at best. New road spending may just have to come from tax revenue. The government shouldn’t raise taxes, but it should cut spending on other things.
For transit funding, the answer is easier: cities and their near-ring suburbs must fund their own transit systems. According to their own reports, the Philadelphia and Pittsburgh systems draw only 11% and 4% of their operating assistance (that is, their non-fare revenue) from local sources, a completely unacceptable situation. SEPTA and PAAC may never be able to fund themselves from fares alone, but they at least need to be funded by their local regions, and if that means taxation, so be it. Evidence from other cities suggests local taxpayers see the value and are willing to pay for a good system: ballot measures for public transportation have a historical win rate of more than 80%, according to the American Public Transportation Association.
If taxpayers must pay up for better transportation, however, progressive activists need to be brought to heel. Environmental review may have been a meritorious concept in the 1970s, but it has become a roadblock to getting needed projects started. For a local example of delay and frustration, consider SEPTA’s crucial King of Prussia rail project. As Kyle Sammin points out in Broad + Liberty, the transcontinental railroad was built in less time than it has taken SEPTA to link center city with a nearby suburb.
Environmental review may have been a meritorious concept in the 1970s, but it has become a roadblock to getting needed projects started.
In a new bureaucratic twist, PennDOT and regional planning organizations have been joining the trend toward “equity analysis,” introducing into project planning a review of local racial and economic stratification. The equity approach may soon become as onerous as environmental review. If the possibility seems far-fetched, consider that in the 1970s, the environmental impact report for an infrastructure project would be a few pages long. Today, environmental impact studies can exceed a thousand pages, and their production has birthed an entire consulting industry.
In addition to paring down political review, legislators must tackle Pennsylvania’s prevailing wage law. The misnamed 1961 law increases construction costs by requiring public agencies to pay wages that exceed market wages. This is a transfer from taxpayers to politically-connected labor unions, a rule that may be worth hundreds of millions per year. The General Assembly should direct the Auditor General to calculate just how much this union handout is costing taxpayers, and how much it adds to our real infrastructure costs.
There are real, serious policy fixes that could reduce highway traffic, expand transit and help build the commonwealth most Pennsylvanians want — a state to work, live, and raise a family. None of these, however, are cheap or easy.
Ultimately, if we want to improve transportation, we have to prioritize it. If conservatives need to be persuaded that good infrastructure necessarily costs money, liberals need to revisit their concept of state government and its mission. Government can’t raise your kids, eliminate poverty, or change the fact that life is not always fair. What it can plausibly do is run some more roads and rail around town to let citizens go about their day. Let’s start with that.
Andrew Abramczyk is a writer and financial analyst based in Pennsylvania.