Addressing the GROWING Issue of Transportation Funding

Pennsylvania has struggled over the years to adequately fund its highway transportation system. We have had some success. Act 89 (a major transportation bill) helped reduce the number of PennDOT’s bad bridges from 6,000 to 3,000. Hundreds of miles of roadway have been repaired. Roads are safer. But, there are mounting pressures on funding for our 40,000 mile state highway system. Road and bridge conditions are struggling to meet increased commercial and private vehicle demand. Today, we find ourselves $9 billion short in unmet transportation needs. According to PennDOT, this will grow to over $14 billion in 10 years.

It’s time to change course with forward-thinking policies that address the modern world we live in today and into the future.

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How did we get here? A modern timeline of challenges:

2013

Not quite enough.

In 2013, a transportation bill known as Act 89 raised an additional $2.3 billion per year which partially filled what was, at the time, a $3.5 billion funding gap. The hope was that the federal government would step up with additional funding, but that did not occur.

2013

2015

Highway dollars diverted.

The General Assembly gradually increased the diversion from the Motor License Fund – which pays for the construction and maintenance of our highway system – by $170 million to support General Fund operations (mostly State Police.) The entire diversion is now more than $700 million annually. That works out to the equivalent of nearly 12 cents per gallon in fuel taxes, or more than one-fifth of total state fuel taxes paid by motorists.

2015

2020

A global pandemic.

The emergence of COVID-19 resulted in a huge drop in vehicle travel, decreasing fuel consumption and therefore fuel tax revenue. Fuel tax revenue makes up a significant portion of the Motor License Fund, which PennDOT now estimates will see an $800 million shortfall from now through next year. Again, this is how we pay for our roads and bridges.

2020

Beyond

But wait, there’s more.

Along the way, there has been erosion in buying power, diversion of another $150 million to fund Real ID, a federal mandate to shift $430 million from local roads to the interstate system, an $820 million mandate to upgrade guiderails and more than $100 million for emergency repairs to landslides. All while gas tax projections fall short due to the increasing usage of more efficient and alternative fuels vehicles. Our current funding model can no longer sustain our transportation needs.

Beyond

Why should you care?

Every Pennsylvanian – regardless of where they live or if they drive – depends on a safe and efficient highway system.

Safety

Damaged and obsolete roadways are a contributing factor causing deadly crashes. The safety improvements to roads funded by Act 89 had a direct impact on reducing highway fatalities, so we know it works; but we need a continued investment to continue the trend.

Quality of Life

We depend on an efficient transportation system to get us to work, to school, to the doctor and to tourism destinations, without getting stuck in hours of traffic. And now more than ever, we depend on it for Amazon, take-out, grocery and medical deliveries that arrive quickly, conveniently and unscathed to our front door.

Economic prosperity

Highway funding drives our economy through the creation of jobs for builders, engineers, and trade professionals. Also, according to the Congressional Budget Office, for every dollar in infrastructure investment, there is an economic benefit that ranges from approximately $1 to as high as $2.50.

Food & Energy Security

Roads connect our rural communities, our creators of energy, food and fiber, with the rest of the state and country. These goods produced in our farms and fields cannot arrive in our homes and on our tables without use of our roads and bridges.

Changing Course

We’re currently going the wrong direction when it comes to properly funding our transportation system. We need to prepare for the future and start putting proactive policies in place that narrows the gap in funding rather than continuing to widen it.

Pennsylvania State Police Funding

Potential source of $706 million

Over the years, a gradual funneling of monies intended for highway projects was diverted to other needs, such as State Police operations. The General Assembly has to address a General Fund problem caused by the loss of the $400 million per year subsidy from the Turnpike to support public transportation. This is an opportunity to ALSO end all diversions from the Motor License Fund, which consists of mostly State Police funding, and let user-fee revenue be used for what it was intended to be used for in the first place – our transportation system.

Adjust OCFT for Inflation

Potential source of $775 million over time

According to PennDOT, a loss of $100 million a year in buying power occurs at a modest inflation rate of 2.25%. This means less money to fund highway improvements. The Oil Company Franchise Tax needs to be updated in order to recognize and offset inflation.

Alternative Fuel Vehicle Fee (HB 1392)

Potential source of $10 million at start but will increase over time

Whether a vehicle is fueled by gas or electricity, all vehicles cause wear and tear on our transportation system and need to share the cost of maintenance. The majority of the Motor License Fund, which is what pays to repair our roads and bridges, comes from fuels taxes that electric or alternative fuels vehicles do not pay. HB 1392 addresses the issue through alternative fuel vehicle fees, as many other states have already implemented. Although $10 million is not much to start, the trend of electric vehicles and alternative fuels usage is projected to significantly increase in the years ahead.

CARES Act Funding

Potential source of $50 million

As West Virginia did recently, Pennsylvania could use federal stimulus money to restart highway projects that were put on hold when the coronavirus shut them down. CARES Act Funding would help to address the damage done during the shut down and accelerate and boost the design community so that projects can be put into the pipeline.

Federal Funds Increase/Stimulus

Potential source of $500 million

According to the Congressional Budget Office, The Highway Trust Fund needs at least $6.4 billion in additional revenue to support surface transportation programs at current funding levels, plus inflation, through Sept. 2021. These estimates come as the current surface transportation law, the FAST Act, expires at the end of September with no movement in Congress on replacement legislation. Also, Congress is currently gridlocked on a second COVID-19 relief package, and funding for the full federal government set to expire Sept. 30. Congress must resolve these major issues to avoid a government shutdown. A boost in federal Highway Trust Fund revenues is needed to help close PennDOT’s needs gap.

Distribution Impact Fee

Potential source of $500 million

Proximity to major east coast cities, affordable land prices and easy access to Pennsylvania’s vital interstate surface transportation systems have caused a major growth in distribution warehouses accross the Commonwealth. This will continue to grow as consumers utilize more e-commerce, and come accustomed to the just-in-time supply chains that support quick deliveries. An impact fee on distribution centers based on a per-square-foot rate would offset the increasing wear and tear on our highway systems caused by the increase in truck traffic.

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