(June 26, 2013)–According to newspaper accounts, the proposed House amendment to the transportation funding legislation takes a very sensible and long overdue approach to difficult issues that have been time and time again kicked down the road. As presented earlier this week, the proposal takes on special interests and offers money saving solutions.
First, and of paramount importance, the proposed legislation would eliminate the prevailing wage requirement on some road projects. The monetary savings from elimination of the wage requirement would be substantial and, depending on the type of project, could amount to as much 20 percent of the current cost of the work. Moreover, it frees up work to bidding by non-union contractors, a freedom enhancing move.
Second, the amendment would drop the $100 add on charge for traffic violations that would be used primarily for mass transit. This provision in the Senate bill has been roundly criticized as an inappropriate and problematic method to generate funding for transit.
Third, the House proposal offers local communities tax options to increase the local share of transit funding. Fare revenue, which provides about 25 percent of total funding, combined with the 15 percent local match requirement to receive state aid means the transit service area is providing far less than 50 percent of the funds needed to operate the mass transportation system. Raising an additional five percent locally seems more than fair. By putting any transit funding levy option on a referendum ballot, local voters will have a say in how much the local transit agency has to spend.
Fourth, the amendment calls for privatizing ten percent of bus service at the Port Authority of Allegheny County (PAT) and SEPTA. Privatization is a step that was recommended years ago by the Rendell Transportation Task Force. Privatization does not mean shutting down routes and letting private firms come in. The transit agency would put routes up for bids. Authority funds, including state and Federal subsidies, would be used to pay a company that enters into a contract to provide service. The idea is to get the service delivered at a lower cost than the authority can provide it. There are successful examples in Southwest Pennsylvania and Denver, Colorado.
To be precise and more effective, this provision should be retitled as "outsourcing" or "competitive contracting" as opposed to simply privatizing. Indeed, regional transit agencies in the PAT area should be able to bid on routes that make sense for them to incorporate into their service capabilities. It is well known that the employee compensation costs at these agencies are well below those at PAT.
Finally, the House amendment greatly reduces the three year increase in funding for transit agencies, in large part due to the elimination of the $100 add on traffic violation charge.
The advocates of mass transit are all up in arms over these provisions with the usual claims that the state underfunds mass transit already. Too bad the critics never bother to look at the outlandish cost structure the authorities, especially the Port Authority, face because of a long history of excessively generous labor contracts and a massive buildup of legacy costs. Why is it so hard to understand that most taxpayers have no interest in paying more for retiree benefits at PAT that most of them can only dream about? There are many studies that illustrate the high and unsustainable cost structure at PAT. They should be examined.
The objection to eliminating prevailing wage is nothing more than special pleading for union construction workers. It is simply a mechanism to transfer wealth from taxpayers to union workers beyond what the marketplace would do through market determined wages. The right to strike by teachers and transit workers accomplishes the same result.
The objection to privatizing a share of bus service at PAT and SEPTA is predictable with claims that before PAT the private bus service was a disaster. But PAT’s outsourcing of service is not a return to the pre-public transit days. The authority would enter into contracts with providers to obtain service delivery at a lower cost than it can accomplish. It would, in effect, pass along a large share of the subsidy it receives in its payments to the private provider. There is no way a purely private bus operation can compete with a heavily subsidized public transit agency such as PAT.
Then too, opponents claim the House Republican transportation proposal is too ideological—which really means that it threatens to reduce union clout. Who are the ideologues in this? Efforts aimed at limiting the increase in taxes that would otherwise be necessary to continue on the path of funding the status quo are deemed to be ideological. Would raising taxes and rewarding past irresponsible behavior be considered non-ideological?
The opposition to the proposed House transportation legislation is of a piece with resistance to meaningful state employee and teacher pension reform that is so desperately needed and the full court efforts to prevent liquor store privatization. Talk about ideological. It is all about government kowtowing to the demands of its public sector employees. This unfortunate situation is demonstrably at the heart of severe government financial problems from sea to sea shining sea.
Jake Haulk, Ph.D., President
If you wish to support our efforts please consider becoming a donor to the Allegheny Institute.The Allegheny Institute is a 501(c)(3) non-profit organization and all contributions are tax deductible.Please mail your contribution to:
The Allegheny Institute
305 Mt. Lebanon Boulevard
For more on