Testimony before the Pennsylvania state Senate Transportation Committee regarding SB 382, March 17, 2021.
Chair Langerholc, Minority Chair Sabatina and all members of the Committee,
My name is Baruch Feigenbaum and I am the Senior Managing Director for Transportation Policy at Reason Foundation, a non-profit think-tank with offices in Los Angeles and Washington DC. For almost four decades Reason’s transportation experts have been advising federal, state and local policymakers on market-based approaches to transportation policy issues.
During my time at Reason have worked with the states of Georgia, Maryland, Massachusetts, Michigan North Carolina, Ohio, Pennsylvania, Texas and Virginia as well as numerous counties to implement transportation policy and funding reforms.
Pennsylvania’s Interstates and freeways are generally in very poor condition. The 2021 American Society of Civil Engineers report gives Pennsylvania roads a D+. Reason’s 25th Annual Highway Report, which looks at the overall quality of state highway systems, ranks Pennsylvania 39th overall. Our study ranks Pennsylvania’s rural Interstate pavement condition 38th while the state’s urban Interstate pavement condition ranks 40th. A large number of structurally deficient bridges in Pennsylvania put the state at 46th, or 5th worst in the country according to our research. This ranking is worse than most neighboring states like New York and Ohio.
Traffic congestion is also a problem in several metro areas, particularly Philadelphia and Pittsburgh. In addition to adding unpredictability and stress to commuters to and from work and school, congestion also harms Pennsylvania’s economy and limits growth in business activity. High-quality roadways are one of the top factors businesses examine when making location and expansion decisions. With the delivery market expanding by double digits each year, truck traffic is forecast to grow by more than 100 percent over the next 30 years. To meet this anticipated growth, Pennsylvania needs to improve its Interstate and freeway network.
Over the last five years, Pennsylvania has used a Rapid Bridge Replacement public-private partnership (P3) program to enter into contracts to rebuild more than 550 bridges. The length of the contract is 28 years. While this program rebuilt many smaller bridges, which helped to reduce the state’s backlog of substandard bridges in need of repair, many of the Interstate bridges remained in poor physical condition.
As a result, the Pennsylvania Department of Transportation (PennDOT) is proposing a major P3 bridge initiative that rebuilds or replaces nine Interstate bridges, each of which is more than 50 years old. Given the dire condition of the bridges and the reality that the state’s fuel tax revenue is dedicated to other priority projects, the department is looking at toll revenue to finance these nine major bridges. P3s are financing tools that help deliver needed infrastructure more quickly and raise new sources of capital from the private sector while shifting risk from taxpayers to investors. P3s can also enable major transportation innovations and can help stretch resources further by unlocking new sources of financing. Given Pennsylvania’s current transportation funding challenges, bridge-specific tolling would supply the needed revenue for the project. Without tolling PennDOT does not have the ability to rebuild these bridges.
When some think of tolling they imagine tollbooths requiring an exact change in quarters with a tollbooth operator who would rather be somewhere else. Today’s 21st-century approach to tolling is very different. Tollbooths have been replaced with electronic gantries. Quarters have been replaced with in-vehicle transponders such as EZ Pass that instantaneously note when a vehicle passes under a gantry and charges the toll. The cost of toll collection, as high as 25 percent of revenue in the 20th century, has decreased to less than 10% on tolled facilities. Pennsylvania is currently converting the entire Turnpike System to electronic tolling. Most experts believe as tolling and technology improve, the overall cost of toll collection will decline to less than 5 percent, close to the gas tax’s 2 percent cost of collection.
Tolling is popular with taxpayers as well. In many studies, when asked whether they preferred tolling or an increase in gas taxes to fund a major project, the public chose tolling. Why? Unlike the fuel tax that is collected from all motorists and then dispersed to all roadways in the state, tolls can be dedicated to a specific facility, such as a new bridge. Users of a toll facility know that the tolls they pay are being used on the road or bridge they use. And motorists who do not use the toll facility don’t have to pay one dime for the roadway.
SB 382 has identified several legitimate concerns regarding PennDOT’s current bridge tolling plan. One concern is ensuring that there is no double taxation for Pennsylvania motorists. Several states already allow highway users tax refunds on toll roads for trucks. For example, New York uses Best Pass to refund truck highway user taxes.
To protect taxpayers we recommend adding five guidelines we call “value-added tolling” to PennDOT’s proposal:
- Limit the use of toll revenue to the newly tolled facility.
- Charge only the amount required to cover the capital and operating costs of the facility or an appropriate congestion charge that varies with the level of congestion starting at $0.
- Begin tolling only after construction or reconstruction is complete.
- Use tolls to replace, not supplement, fuel taxes.
- Provide a higher level of service for tolled facilities.
However, we are also concerned that SB 382 would make unnecessary changes to the Public-Private Transportation Partnership (P3) Statue. The bill requires the General Assembly to approve any P3 with a user fee. We understand the importance of the General Assembly having a voice and oversight, but this requirement could micromanage the department of transportation while increasing costs and decreasing the speed of project completion.
The bill also outright voids the PennDOT Pathways Major Bridge P3Initiative. While not every bridge may be a great fit for the program, voiding the entire nine-bridge initiative would send a signal to the transportation and finance communities that major P3s are not welcome in Pennsylvania.
Instead, we recommend the General Assembly provide guidelines and insist that PennDOT follow the five value-added tolling protections detailed earlier in this testimony. The General Assembly can create a system to review P3 performance and outcome data, ensuring that the project meets the goals outlined by the department including reduced traffic congestion and enhanced safety. The General Assembly should also hold PennDOT accountable for completing projects on time.