Let’s Make Deal on a Transportation Bill

Democrats and liberal op-ed writers are busy beating up Republicans for refusing to do what Republicans are supposed to always do, shut and vote for higher taxes to fund roads, bridges and public transit.

Republicans should agree on some revenue enhancements when Democrats are ready to make two key concessions. First, Democrats will agree to unlink highway funding from transit funding. The issues need separate priority and have many differences when it comes to the best way to fund them and at what level they should be funded. Second, Democrats will stop opposing the elimination of prevailing wage requirements.

Simply having Republicans hold their noses and vote for revenue enhancements for transportation will not serve the Commonwealth’s long term best interests. Savings opportunities will have been foregone and needed structural changes will not be enacted.

There is a reason Pennsylvania is now facing a multiplicity of serious financial problems. The state government-for too long-has kicked cans down the road as it kowtows to the power and influence of unions. Teachers, transit workers and other government workers have had their way with legislation regarding strikes, prevailing wages, pensions, layoff rules, and so on for decades. Every problem is met with demands for more money to feed the monster that has been created. Especially noteworthy are the Port Authority of Allegheny County as well the largest school districts in the state.

Previous governors have redirected highway funds to keep the Port Authority from going on strike robbing Southwest Pennsylvania of dollars needed to keep roads and bridges maintained. Why do the complainers about Republican inaction not want to hear about that abuse of power? Then too, tens of millions of Federal highway funds were redirected to the North Shore Connector in Pittsburgh. Where was the outrage over that? Likewise, almost a hundred million in state and local tax dollars were required to build the Connector. That’s a lot of road and bridge work. But as always the supporters of public transit were 100 percent behind building the tunnel regardless of costs: one that provides free rides to users.

The mindlessness encapsulated by this venture is the single greatest argument for Republicans to demand some concessions from Democrat and transit supporters before folding and voting for the higher revenue status quo fans want.

Road Work

Allegheny County’s Department of Public Works fielded fewer calls to repair the bane of nature’s fury, also known as the pothole, this year, according to a news article. As to how reliable the science of tracking complaints are (for instance, when a driver hits a pothole, do they know whether to call PennDot, the county, or the municipality and does the recipient of a wrongly-placed call tell the caller to redirect their ire to the proper place, and, if so, does that indeed happen?) but the article says that the County itself took 59 calls this winter, 54 in 2012, and over 100 the two previous years, including 2010 when the blizzard hit.

The County’s CAFR provides operating indicators and capital assets for Public Works’ functions (they are way in the back of the document) and that data shows that from 2002 to 2011 the County did not add a lot of infrastructure: it had the same amount of lane mileage (818), the same mileage of paved streets (395), the same number of bridges less than 8 feet in length (181), the same number of bridges between 8 and 20 feet in length (149), and added 1 bridge greater than 20 feet in length in 2006, bringing its inventory to 192. It has 9 fewer vehicles than it did in 2005 (130 now), and added 59 pieces of heavy equipment since 2005, bringing the total to 430.

The operating indicators show that in 2011 the Department spent 298k man hours on winter road maintenance (all activities) and purchased 19k tons of salt to melt snow. The high water mark (maybe the high snow mark is more apropos) was in 2010 when the man hours for winter road work topped 374k and nearly 27 tons of snow melting salt was purchased (based on the tonnage bought and the price paid by the County a ton averages about $50).

How Much Do Users Pay for PA’s Roads?

The Governor has let the cat out of the bag, or maybe, more apropos, some of the air out of the tire, on a holistic transportation fix for the Commonwealth. Part will be a proposal to take away a cap on the Oil Company Franchise Tax, a tax that is levied upon gas at the wholesale level but presently applies to the first $1.25 of the wholesale price. Removing the cap to apply the tax to the entire wholesale price, and by one estimate reported in a newspaper article would generate $1.8 billion on top of the $1.3 billion currently collected with the cap.

That was but one recommendation made by the Governor’s Transportation Commission in 2011; others include paying more in fees and registrations but lessening the frequency at which driver’s licenses and auto registrations must be renewed.

Its not clear what lifting the Franchise Tax cap, license proposals, etc. will mean for the end user, the person filling their gas tank and traversing one of Pennsylvania’s roads. A recent study by the Tax Foundation shows that nationally gas taxes, tolls, and other user fees generated just a third of the spending on roads-the rest comes out of general revenues. According to their analysis Pennsylvania is right at the national average: 33%, ranking it 18th out of the 50 states. Outliers include Alaska, Wyoming, and the Dakotas generating 20% or less of road spending from "user fees" and Delaware, Florida, and New Jersey at 49% or more of road expenditure coming from gas taxes, tolls, and driver related charges. Another Foundation document shows that as of 2013 Pennsylvania has the 7th highest gasoline tax at 39.2 cents per gallon (Connecticut has the highest at 56.2 cents, Alaska the lowest at 8 cents).

Which Road Will the County Take?

Wages and health care: those are the two "biggies" for Allegheny County as it negotiates with collective bargaining units representing more than 5,100 of the County’s more than 7,000 employees. Both the County and at least one union leader are in agreement on the importance of wages and health care, and for good reason: personnel and fringe benefits are typically the largest share of expense for government. Based on the County’s 2013 financial plan and the statement of revenues and expenditures personnel and fringe benefits represent 53% of the general fund, 46% of all funds (general, debt service, liquid fuel, and transit support).

One of the bargaining units with whom the County is negotiating represents personnel who do a lot of the County’s road work (spreading rock salt and asphalt) which is housed in the Public Works Department (a good portion of that Department is being spun off into a new department called Facilities Management). Based on Public Works’ 2013 budget of $19 million, $13.1 million is tied to personnel cost and the remaining $5.9 million is identified by the County as non-personnel (services, supplies, materials, repairs and maintenance, and minor equipment). Note that Public Works has almost 70% of its departmental budget into personnel and fringes, higher than the County as a whole.

One of the "Strategic Goals" for the Department is for "Continuous Improvement" and within that goal is an emphasis for the Department to "practice greater fiscal constraint". It’s not clear exactly how the fiscal constraint is to be practiced, but one way would be to be judicious with labor agreements, including the one that would be executed with the aforementioned union representing the road workers.

Upon seeing the County’s initial offer of annual 2 and 2 ½ % raises over the four year contract the union head said it was "…hard to swallow that the county‘s best offer is less than what the city gave under Act 47 (state supervision)."

Pardon us, but we did not know that a local government had to be under state watch to be restrained with its spending on labor contracts. Perhaps the County has learned something from watching the events at the City-County building and does not want to jump into the same fiscal boat. Overly generous contracts and above the norm legacy costs are what got the City into Act 47 and state oversight-is the County supposed to follow suit? Will they?

Mayor Fails $52 Question

The Mayor of Pittsburgh was on a radio station today bemoaning the condition of the City’s roads and advocating for more money to pave nearly 900 miles of asphalt roads. The Mayor stated that commuters drive on the City’s roads and only pay $52 a year to work in the City through the Local Services Tax and that the tax should be increased and the resulting revenue would be dedicated to roads.

A few facts for the Mayor are in order. First, as we have pointed out time and again, non-residents pay more than the $52 LST; a good portion of the RAD sales tax goes to the City, and, if the drivers busting up the City’s roads are parking at a garage, lot, or meter they are paying the nation’s highest parking tax.

Second, a boost in the $52 tax would be a tax increase on City residents as well. The last time the state raised the tax from $10 to $52 they permitted every municipality in the state (except Philadelphia, which does not levy the tax) to raise it and would likely do the same if the idea were to get more than a moment’s notice in Harrisburg. And if for some strange reason the state permitted only Pittsburgh to raise the tax it would fall on City residents who work in the City (some of them might drive to work as well) since the tax is paid where the taxpayer works.

Lastly, on the idea that the proceeds would be put into a "lock box" for roads the state law already mandates that funds from the LST be used for police/fire/EMS, road construction/maintenance, and/or reduction of property taxes. The law does not allow it to be used for other purposes, so it is disingenuous for the Mayor to imply otherwise. Council attempted to dedicate LST money to pensions late last year before opting for the parking tax due to these statutory restrictions. Perhaps a detailed accounting of how the City has allocated the cumulative $100 million in LST money (from its increase in 2005 through 2011’s budget) would be helpful.

The City has decided to fund its capital needs on a pay-as-you-go basis without issuing new debt. That was seen as a necessary remedy for Pittsburgh, which has above-average debt on a per-capita basis. That means infrastructure improvement decisions are made with the same pot of money as pension benefits, money for workers’ compensation, the clerk’s office, etc.

Commission Mechanics

Yesterday’s blog discussed the rather limited scope under which the Governor’ Corbett’s Transportation Funding Advisory Commission (TFAC) will operate. Governor Rendell’s task force-the Transportation Funding and Reform Commission (TFRC)-likewise dealt with transportation issues, and the Executive Orders creating each respective group provides a good starting point for comparing and contrasting the two efforts.

Some Similarities:

  • Both Governors designated the Pennsylvania Secretary of Transportation as the titular chair of the Commission
  • Both Executive Orders stipulated that Commission members would not be compensated for their service, other than travel and related expenses
  • Both Commissions received staff support from the Department of Transportation

Some Differences

  • Governor Corbett’s Commission is much larger with 35 members, whereas Governor Rendell’s had 9 members
  • Governor Corbett will select all members of his Commission, whereas legislative leaders made 4 of the 9 appointments on Governor Rendell’s Commission
  • Governor Corbett’s Commission is working on a much shorter time frame: the Executive Order was signed on April 21st, and the final report is due on or before August 1st of this year. Governor Rendell’s Commission was created February 28, 2005 and its final report was due on or before November 15, 2006 (it was actually submitted on November 13, 2006)
  • Governor Rendell’s Executive Order ordered operational audits of SEPTA and PAT
  • Governor Corbett’s Executive Order includes public and private use airports as part of the transportation mix

Transportation Funding Commission Omission

Upon a moment’s reflection there is an obvious and glaring flaw in a newly appointed commission set up for the express and single purpose of looking for funding sources for the state’s transportation systems. Here’s a better idea. How about a commission to look for ways to solve the problems facing transportation?

For one thing, the eagerness to lump mass transit in with highways and bridges is a mistake. There are vastly different issues involved that should be examined separately. Transit operations are localized and have localized issues. Port Authority in Allegheny County, for example, is beset by vast financial problems of its own making and more funding will not solve them until the underlying problems are addressed.

Then too, road and bridge work faces unnecessarily high costs because of the requirement that employees on these projects be paid a prevailing wage. Before the Governor or the Legislature enact any new funding plan for transportation, they should take a long, hard and honest look at how much the prevailing wage requirement is adding to the annual cost of supporting transportation projects.

Further, do we know for sure that the engineering, design, and implementation procedures-including letting of contracts-used by the state are the best available and devoid of political favoritism? If not, why not?

This commission, with its unfortunate single focus on finding funding sources, is missing an important opportunity to find ways to save money or do things more efficiently. Looking for funding only sends a message that enables the spenders of the money to be less assiduous in their search for cost savings.

Labor Union Ad to Denounce Pennsylvania Roads

How deliciously ironic. The Laborers Union International announces it will run ads warning motorists about Pennsylvania’s structurally deficient bridges. And why are the bridges deficient?-according to the union not enough money is being spent on the bridges.

Perhaps if the bridges did not cost 30 percent more to repair than bridges in a right to work state with no prevailing wage requirement, they would be in much better shape. The union should be asked this question: In order to have safe bridges in an environment with very limited funds available to do the work, would you be willing to abandon the prevailing wage requirement and allow less expensive non-union labor do the work?

The answer would be no. So, here is what the union is really is saying. We prefer unsafe bridges to giving up any of our stranglehold over the policies of Pennsylvania. Indeed, they are really about soaking taxpayers regardless of the consequences. Looks like France from here.

Pennsylvania Roads and Bridges—Government’s Shame

While Governor Rendell has been working hard to keep increasing spending on education, the state’s roads and bridges and transit systems have been deteriorating to the point of being a threat to the state’s ability to grow and attract new businesses and residents. The latest report form the American Society of Civil Engineers paints a very sobering picture of just how bad the state’s transportation infrastructure has become.

The record of ineptness in dealing with the severity of the state’s roads and bridge problem is nothing short of remarkable. State budgets have grown much faster than inflation over the course of Mr. Rendell’s two terms, yet the state’s performance in addressing the roads and bridge issues remain shameful. Money has been shifted from highways fund s to support mass transit, the government dithered for years trying to get the Feds to approve tolling on I-80, the Governor supported unions in transit disputes and pushed for ever greater spending on education and economic development programs. And any discussion of lifting the prevailing wage laws that substantially boost road and bridge cost has been off the table.

What can be more important for the state’s economy than maintaining a good road system? And what has been the Governor’ priorities? Education and economic development spending. The payoff for these spending categories is very dubious. Failing to maintain roads will undoubtedly have a negative impact.

Water, Water, Everywhere…

Residents of the South Hills City neighborhood of Beechview have been dealing with a headache since mid-April when an 18 inch water main broke and sent the overflow onto the main thoroughfare, Banksville Road. Word came this week that the break will affect traffic through mid-June. This came not long after a water main break (of the 8 inch variety) on nearby Pioneer Avenue, which affected the high volume West Liberty Avenue.

Infrastructure-like water and sewer lines, roads, bridges, public buildings-crumbles; there is no denying the fact (the point person on the Beechview water line break noted "We put a lot of pipe in, just like we did with roads and bridges, about 100 years ago. Now it’s all reaching the end of its lifespan") and the impact that heavy use places upon it.

But we are reminded of the comments made by the past chairman of the region’s premiere organization aimed at "growing the region" who said in 2007 that "our roads, our infrastructure couldn’t handle a 15 percent growth rate. We couldn’t handle a 10 percent growth rate". So the region continues to experience slow to minimal growth and the impact of crumbling infrastructure.

The problem with minimal growth is that when the ever-important infrastructure begins to crumble there are fewer people around to shoulder the cost through their taxes, user fees, and/or rates than before. Not good news for a region that is expected to deal with stormwater/sewage issues, road upgrades, and a broke mass transit agency on top of the other desires of area governments and school districts.