Leaders Highlight Continued Need for Transportation Funding
With the passage of transportation funding legislation in Harrisburg last fall, southeastern Pennsylvania is slated to receive much-needed investment that will help address long-deferred maintenance needs and upgrade deteriorating systems. Achieving a World Class vision for our region’s bridges, roads, and public transit, however, is going to require making the most of these and other resources.
Last week, nearly 80 business and civic leaders from across the region joined the Economy League and the Delaware Valley Regional Planning Commission (DVRPC) for the “Going the Extra Mile” World Class Council Forum to learn more about how new state transportation funding will be deployed, how to leverage innovative financing and funding approaches, and how to raise additional revenue.
To set the stage for the evening’s discussion, DVRPC’s Executive Director Barry Seymour provided a high-level overview of what the nearly $11 billion in additional funding coming to southeastern PA over the next 26 years will mean for our region. The impact of the new funds can already be seen in the numerous projects added to the FY2015 Transportation Improvement Program (TIP) for southeastern Pennsylvania, which are slated for implementation within the next four years. (Notable projects include: the Pennsylvania Turnpike / I-95 Interchange Project in Bucks County, the Paoli Transportation Center in Chester County, the widening of Route 322 in Delaware County, and the replacement of the US 422 bridge over the Schuylkill River in Montgomery County.) Looking beyond 2018,Connections 2040, the long-range plan that DVRPC keeps for the region, was also updated this summer to reflect the implementation of many major investments that had previously been unfunded.
With so much in the way of transportation investment on tap for the region, ensuring the efficient use of these resources and the rapid delivery of projects is a top priority. One of the most promising ways to do this came with the passage of Act 88, which enabled certain public entities to enter into public-private partnerships (P3s) for transportation purposes. Expert panelists -- David Seltzer, principal and co-founder of Mercator Advisors; Richard Voith, president and principal of Econsult Solutions; and Brian Walsh, Practice Leader of Ballard Spahr's P3/Infrastructure Group -- offered their thoughts on the potential of P3s to achieve savings and accelerate project implementation.
Across the US, much has been made of the P3 approach’s potential to drive infrastructure investment. When deployed in the right context and powered by supporting revenues, the P3 approach can help expand access to capital, accelerate project completion, and drive cost savings.
While the Pennsylvania law does not allow counties or municipalities to enter directly into P3s, current activity at the state level will have an impact on our region. PennDOT is turning to the P3 approach for a rapid bridge replacement program that will target 558 structurally deficient spans across the Commonwealth. Next year, PennDOT will enter into an agreement with one of four private bidders for design, construction, and 25 years of maintenance of these bridges, which are all of similar length and width. While the actual cost of the program won’t be known until the agreement is finalized in spring 2015, state officials anticipate that the bundling of design, construction, and maintenance will result in public savings. Officials also say that the P3 approach will accelerate the replacement of these bridges to a period of just three-and-a-half years.
While the P3 approach may be a promising project delivery tool, because it is not a generator of new revenues, it won't fundamentally solve the significant funding gap that remains between what Act 89 provides and what will be necessary to achieve truly world class transportation infrastructure in our region.
The Need for Additional Funding
For southeastern Pennsylvania alone, DVRPC estimates this gap at $47.8 billion through 2040. Renewing existing roads, bridges, and transit assets remains Greater Philadelphia’s topregional mobility priority. While Act 89 funds will be used mainly for these purposes, it does not provide sufficient resources to address all needs. Without additional funds, potentially transformational projects -- such as the proposed cap over I-95 to Penn’s Landing, the extension of transit service to the Navy Yard in Philadelphia, new roads to serve PIDC’s ambitious redevelopment of the Lower Schuylkill, and the US 30 bypass in Chester County – remain out of reach.
Where can our region turn for these additional revenues? Looking to the state, the Commonwealth’s share of transportation funding in southeastern Pennsylvania has already grown from 23% to 38% with the passage of Act 89. And while the federal government provides more than half of transportation funding in the region, the future of this funding is uncertain due to the precipitous decline of the gas tax’s purchasing power and Congress’s ongoing inability to come to consensus around how to address this issue.
It stands to reason, then, that the greatest opportunity to increase transportation funding may be at the local level. In Greater Philadelphia, transportation dollars from local sources today account for just 3% of total funds. When compared with metros around the country, this share is strikingly low. On a per-rider basis, transit systems in our region receive only $21 in local capital and operating funding. In Chicago, this figure is $94; in New York, it’s $147; and in Denver, it’s $259.
Historically, Greater Philadelphia’s authority to raise local revenues for transportation has been limited. Act 89 provides for a modest expansion of this authority by giving counties the option to impose a $5 vehicle registration surcharge beginning in 2015. With approximately 2.8 million vehicles registered in the five counties of southeastern Pennsylvania, the surcharge could yield approximately $14 million in combined revenues. While details on how often it can be levied are not yet clear, PennDOT officials have indicated that guidance will be made available soon.
If implemented in southeastern Pennsylvania counties, the surcharge could provide a modest bump in revenues for roads and bridges, but will not fundamentally change the funding landscape in our region. The hard truth remains that even with the infusion of new dollars and the potential for a new project delivery mechanism, local leaders still need to grapple with the challenge of identifying additional funding sources that will substantially increase transportation revenues over the long term.