By Timothy J. Carson
The continuing debate over Pennsylvania's new transportation funding law, Act 44, reminds me of the adage that you do not sacrifice the good in pursuit of the perfect.
Act 44 is a very good law that was approved in July after a lengthy public discussion and debate. The law calls for new tolls on Interstate 80, increased tolls on the Pennsylvania Turnpike, and the sale of revenue bonds. It will allow us to generate up to $116 billion for roads, bridges and mass-transit systems over the next 50 years.
For the first time, Pennsylvania has a long-term, dedicated funding plan for commonwealth roads and bridges, and 73 mass-transit systems.
For many Pennsylvanians, the concept of tolling an existing "free" highway is a dramatic change, and understandably so: Nobody likes to pay new fees for any service. But for those of us who have spent years grappling with transportation funding challenges, Act 44 is a logical next step.
The cost of traveling these two major interstates will increase, absolutely. But what are the options? Consider:
In Virginia, a new law empowers the Northern Virginia Transportation Authority to collect seven new regional taxes and fees. Motorists will pay a tax on auto repairs, a regional vehicle-registration fee, and a safety-inspection fee, among other charges. The same law allows local governments to impose three additional taxes and fees.
In Oregon, the state has launched a GPS-based road tax system on a pilot basis that levels taxes based upon miles driven. If widely adopted, the state would not lose revenue with every resident who purchases a more fuel-efficient vehicle.
South Carolina recently received approval to toll I-95 so it can build new express lanes for those willing to pay. Four other states are seeking permission to toll I-95.
In Indiana, the state has given away its turnpike to a foreign consortium in a 75-year lease for a one-time payday made possible by astronomical toll increases. Officials in Florida are eyeing potential leases of key interstates.
In Ohio, where the state is looking at a $3.5 billion gap in funding for transportation, officials will soon organize a statewide task force to look at long-term solutions, including "new and innovative ways of financing Ohio's transportation needs."
The guess here is that Ohio officials will look at examples one, two or any of the above. And they certainly will look at Pennsylvania's solution.
Act 44 was approved after months of study and debate. Lawmakers looked at many alternatives. Raising gas taxes (as much as 25 cents per gallon) and registration fees, given gas prices and other financial strains already hitting drivers, was out of the question.
Lawmakers also decided that the turnpike was too important a public asset to cede to private investors for 75 years or more. The Pennsylvania Turnpike Commission believes in public-private partnerships and has entered into several of them. But the private investors we work with share the risks of a new project. Handing over the turnpike, with its historically predictable revenues, to a private concern is a big risk for Pennsylvania travelers - not for investors.
No private conglomerate (foreign or domestic) can raise the amounts generated by Act 44 under comparable financial assumptions. Some of the most optimistic estimates of up-front privatization proceeds have been in the $20 billion range, but the proposed financial terms remain murky, at best. Over what period of time would control of the turnpike be turned over to the private investor? What guarantees would drivers have that the tolls wouldn't skyrocket? What would prevent the money in reserve from being squandered by future governors or legislatures?
When you throw in the private investors' double-digit profit margin on top, turnpike travelers would end up paying much higher tolls under a privatization plan than they would under Act 44.
The bottom line is that Pennsylvania has crafted a viable, financially sound, user-fee-based solution to our thorny transportation funding needs. Act 44 is not perfect, but it is a very good law.