In January of 2017, the National Conference of State Legislatures (NCSL) published a list of the top 10 issues that will be before state legislatures across the nation this year. While we’re just over a quarter of the way through the two-year 2017-2018 legislative session, it’s worth a look to see what our own elected officials are doing to address each of the issues. The next topic up for consideration: transportation infrastructure.
Pennsylvania’s most recent comprehensive transportation funding legislation was signed into law by former Governor Corbett in 2013. Act 89 created a Transportation Funding Advisory Committee, whose charge was to make recommendations on how to improve the Commonwealth’s deteriorating transportation infrastructure. It was anticipated that the state would invest an additional $2.3 billion into transportation infrastructure in the following five years. In order to provide the funds necessary to complete the projects laid out in the plan, the state modernized their transportation financing structure by eliminating the flat 12-cent gas tax and removing the artificial cap on the Oil Company Franchise Tax. Counties and municipalities received proportionally the same investments, even with the elimination of the gas tax.
Although it was estimated that the plan would generate 62,000 jobs and lead to thousands of miles of improved or rebuilt roads, we have yet to see such robust results these past four years. Secretary of Transportation Leslie Richards testified before the Senate Transportation Committee last year that the state’s 12-year transportation plan, which covers about 2,800 projects, will cost $6 billion more than projected.
One of the primary reasons that we have yet to realize the improvements to infrastructure contemplated in Act 89 is the recent (and seemingly regular) re-appropriation of moneys deposited into the Motor License Fund. Revenue realized from transportation related fees and taxes, such as driver’s license and registration fees and the state gas tax, are to be deposited in to the Fund. Over the past few years, as Pennsylvania’s budget has gone unbalanced and the structural deficit continues to grow, a growing portion of money in the Fund has been used for operations of the Pennsylvania State Police (PSP), rather than the Fund’s intended purpose, which is that the revenue be used for highway construction and maintenance in addition to funding the PSP. In 2000, two-thirds of PSP’s funding came from the Fund, while in 2015 the percentage grew to three-quarters.
Last year, the legislature adopted an amendment to the state Fiscal Code in an effort to limit the funds in the Motor License Fund available to the PSP. Now, transfers from the Motor License Fund to the Pennsylvania State Police are capped at $801 million, to be incrementally reduced by 4% annually until the cap is $500 million. The Wolf administration believes that this change will allow PennDOT to spend over $2 billion on road improvements in the next 10 years through the newly created Road Maintenance and Preservation (Road MaP) program. Road MaP will invest $1 billion to roadway maintenance and $1.1 billion for highway and bridge for capital projects listed in Act 89.
The legislature continues to try to find new ways to address the drain on the Motor License Fund. Rep. Mike Sturla (D-Lancaster) introduced legislation this session, H.B. 959, which would provide adequate funding for the PSP by requiring municipalities relying on PSP coverage to pay a fee for those services. This proposal was a key component of Gov. Wolf’s 2017 budget address as well.
Further, along with the “usual” funding for transportation projects provided through an annual appropriation, Pennsylvania has begun using public private partnerships (P3’s) to deliver, maintain and finance transportation-related projects. A P3 is a contractual agreement between a public entity and private entity whereby the public entity “sells” or “leases” the responsibility for what would normally be a government project to the private entity, allowing the private entity to perform by contract a service previously provided by the public entity, and ensuring the private firm receives payments either from existing revenue sources or through the collection of new tolls or user fees. Act 88 of 2012 authorized the use of P3’s in the state.
Sen. Tom Killion (R-Chester) circulated a co-sponsorship memo which would build on Act 88 by placing Pennsylvania in a position to be able to pursue federal funds to help with federally supported infrastructure projects by authorizing the expansion of the P3 program for other public infrastructure initiatives. Rep. Eli Evankovich (R-Westmoreland) also has a co-sponsorship memo that would create new guidelines and requirements for P3s and establish a P3 Pilot Program for entities such as counties and municipalities that would be implemented around the state. Currently, these entities can’t enter into a P3 agreement by themselves.
If the Commonwealth finds a way to make more funds available to PennDOT for transportation projects, the next few years could be a busy time for the state, possibly building on the transportation projects laid out in Act 89. Also, with a new president in office, a federal infrastructure plan might be on the horizon as well. Stay tuned to this blog and follow us on Twitter @BuchananLobbyists for updates.