Public Transportation Funding Problems in Pennsylvania

As an initial project of the newly formed coalition, the Campaign to Build Pennsylvania Public Transportation undertook an investigation of the current state funding of public transportation.  In Pennsylvania, Public transit is facing potential funding problems due to a tighter state budget and an unpredictable funding source.  Additionally there is a threat of cutbacks in federal funding with the Reauthorization of TEA-3 in 2003.  What we have discovered follows.

Problem
Pennsylvania has more roads per capita than any other state in the country.  Yet Pennsylvania Department of Transportation (PennDOT) continues to build new roads and increase highway capacity at an alarming rate.  Despite a popular statewide movement to curb sprawl, PennDOT has allocated 22% of its budget to new highway construction.  When questioned, Brad Mallory, Secretary of PennDOT, indicated he wished he could devote 28% to new growth. 

States like California, New York and New Jersey with increasing population and far less per capita highway miles than Pennsylvania, are choosing to curb sprawl by decreasing investment in new highway capacity.  Instead they are investing in existing infrastructure and public transportation.  

Pennsylvania has doubled the amount it spends on public transportation over the past 10 years, but the taxes and fees that make up these funds have not lived up to their projections.  Besides the shortfall of tax revenue, we will also discuss other factors that continue to impede growth in public transportation such as the required revenue recovery raised from fares. The following will show the overall PennDot budget, the amount spent on public transportation and sources of funding 

PennDOT Budget
The table below shows the small percentage of the total PennDOT budget allocated to public transportation:

Sources of Funding Public Transportation
Pennsylvania draws among several sources to fund public transportation:

• Unrestricted General Funds (appropriated annually to Mass Transit Assistance from general revenues
  � no guarantees)
• Public Transportation Assistance Fund (PTAF) Act 26 of 1991 (has restrictions

$1 fee per tire on tire sales

$2 per day fee on motor vehicle rentals

6% tax on the sale of periodicals*

3% tax on the lease of motor vehicles

7.5 mill tax on the Public Utility Realty Tax Act (PURTA

• Act 3 of 1997 uses 1.22% of monthly sales tax revenues (has restrictions)

• Lottery Funds for Shared Rides, Free Transit and other state sponsored programs

• Bond Funding (has restrictions)

• TANFBG (Temporary Assistance for Needy Families Block Grant) � Rural Transportation/Access to Jobs

• TEA-21 Access to Jobs (Transportation Equity Act for 21^st Century)

• Other Federal Programs

 *Note: A percentage of the general sales tax equal to the percentage of sales tax revenue generated by the sale of periodicals is administratively transferred to the PTAF account; however, some budget analysts admit this amount is a guess.

State Funding of Public Transport
(Capital and Operating)
(Table in Millions)

PTAF Revenues: Projected vs. Actual
Actual revenue generated under Act 26 (1991) known as the Public Transportation Assistance Fund (PTAF) which also includes PURTA, has not lived up to projections: 

Other Funding Issues:
In Pennsylvania Act 26 also requires 50% revenue recovery from the Southeastern Pennsylvania Transportation Authority (SEPTA) and 46% from the Port Authority Transit in Pittsburgh.  Revenue recovery is money the transit authorities raise from fares, subsidies for seniors, rent paid by vendors at stations, advertising on buses, etc.  However, the biggest portion of this revenue comes from transit fares.  If a transit authority does get an increase in state or federal funding for operating expenses, it is required to match that funding, dollar for dollar, with operating revenue.  Therefore, an authority could get more money from the state, but then it would have to raise transit fares to make the match. 

Federal Funding, known as TEA-3, is in danger of being cut back for public transportation from the current 80/20 split (Federal Government 80% of funding while states and local government make up the additional 20%), to a 60/40 split.  Additionally, the Bush administration is recommending leaving highway dollars at the current 80/20 split.

With reauthorization of TEA-3 coming up in 2003, public transportation advocates will push for more money to be flexed to transit operations.  Currently the only federal money going to transit is for capital funding.  This includes competitive money for new projects (called New Starts) and money for capital maintenance projects such as system upgrades, station restoration and bus and rolling stock overhauls.  Projects qualify for capital maintenance if maintaining them would prevent the authority from replacing them. 

Conclusions:

• Press for legislation amending ACT 26 to repeal PURTA and find a more stable source of revenue to support public transportation;
• Press for legislation further amending ACT 26 to remove the revenue recovery requirement (i.e., fare box revenue) which would allow transit authorities to receive additional state and/or federal dollars without having to match it dollar for dollar;
• Educate consumers on importance of TEA-3, push coalition to lobby congress to maintain the 80/20 split and to allow more flex funding of federal dollars to operations;
• Recommend studying a decrease in the new highway capacity such as New Jersey�s where new highway capacity spending was dropped from 18% to 5% of their DOT budget;
• Amending the Pennsylvania State Constitution to allow for a portion of gasoline tax revenues to be used for public transportation; and
• Index state transit funding yearly with inflation.