Good
morning. My name is Jim Swoyer, and I’m a Public Interest Advocate with
the Pennsylvania Public Interest Research Group Education Fund
(PennPIRG). The PennPIRG Education Fund is a non-profit, non-partisan
public interest advocacy organization, representing thousands of
citizens across the state. I would like to thank the Commission for
giving me the opportunity to testify today. The PennPIRG Education Fund
would also like to thank you for your ongoing hard work and commitment
to an issue that is vital to Pennsylvania and its future. We also
commend Governor Rendell for his leadership in convening this important
commission.
I
am going to spend my time today speaking about the public transit
component of Pennsylvania’s transportation system. In brief, the
PennPIRG Education Fund is advocating that the Commission recommend the
expansion of existing revenue streams for public transit, such as the
real estate transfer tax, the tire tax, and the rental car tax, as well
as developing new funding mechanisms, such as a transportation impact
fee, a vehicle sales tax based on weight and/or fuel efficiency, as
well as several others.
Our
public transit systems are in serious jeopardy, which is well
documented by the Commission’s initial findings. I probably do not need
to tell anyone in this room why public transit is so vital to the
Commonwealth, but in light of our broader audience, let me say a few
words about the importance of public transit to everyday Pennsylvanians.
Quality,
affordable public transportation is vital to Pennsylvania. Students
rely on public transportation to get them to school. Pennsylvania
businesses rely on transit to get their employees to work, and shoppers
to their doors. Tourists and business travelers rely on public
transportation to take them to area attractions and events. Public
transit combats air pollution and helps reduce the kind of road
construction that destroys open spaces and creates sprawl. Transit
provides consumers with an alternative to high gas prices and expensive
automobile costs, and gives seniors and the disabled a way to get to
doctors appointments, run errands, and otherwise get around.
Pennsylvania communities reap billions of dollars in benefits from the
public transit system, and millions of riders depend on its services,
both direct and indirect.
The
public transit system directly employees thousands of people and
creates thousands of additional jobs through third-parties. When
combined, the individual systems spend more than a billion operational
dollars in local communities, and over half a billion dollars is spent
annually on capital improvements. These capital investments generate
tens of thousands of additional jobs, and up to $4 in federal grant
money for every $1 invested.
There
are other ways the public transit system confers economic benefits to
non-riders. The most obvious example is relieving congestion and
reducing driving time. By reducing sprawl, transit saves government
funds that would otherwise be spent on an over-extended public
infrastructure. Transit increases property values near transit stops,
saves energy usage, expands the available labor pool for businesses,
results in cleaner air, reduces auto fatalities, and helps
welfare-to-work programs to succeed. Transit also allows seniors and
other citizens with reduced mobility to lead independent lives.
Commuters
derive value from merely having transit as a viable option. They can
rely on it when their car is in the shop, or when they need to go out
of town. Public transit is available when roads are closed, or when
parking is a problem. By reducing car traffic in cities, it also lowers
parking costs and increases its availability. Public transit options
are also terribly important in cases of natural disaster or public
emergencies.
The
benefits of transit will become increasingly important in the future.
As a population ages, the number of citizens needing transit (because
of impaired mobility) increases. Highway and road congestion is
exacerbated by population growth and urban sprawl. As the destructive
environmental effects caused by global warming intensify, communities
need ways to reduce vehicle transmissions.
An
adequate public transit system is also an essential component of
increasing Pennsylvania’s economic competitiveness now and in the
future. Good public transit helps build sustainable communities and
increases value for homeowners. Pennsylvania already possesses an
extensive and high quality higher education system. Public transit
fosters the kinds of communities favored by the skilled workforce
required for high growth industries. As such, public transit will play
a key part in helping continue Pennsylvania’s transition to a
post-industrial economy.
The
put it most plainly, transit is a public good and it is essential that
we adequately fund it. The PennPIRG Education Fund is proposing that
the General Assembly institute or expand a series of revenue streams
that will put our public transit systems on sound economic footing.
There are a number of factors to consider when judging the
appropriateness of potential revenue sources.Each option should be
considered in terms of its ability to grow along with needs, and the
degree to which it either distorts markets or better aligns markets
with public and social costs. Above all, these revenue streams should
be permanent, sufficient, and reliable.
Permanency: the
majority of funding sources should not automatically expire after a
particular time period, and the bulk of funding should not have to be
reauthorized through yearly budget negotiations.
Sufficiency: At
minimum, the agencies need enough revenue to close their existing
budget shortfalls. However, the best public policy would be to dedicate
revenue streams that can be expected to grow along with anticipated
future needs, including the rising costs of fuel and health care as
well as reasonable capital investments.
Reliability:
Agencies need to know how much in-state subsidies they can rely on over
time in order to plan for the future, and need to be assured that
funding sources are stable enough to depend upon. This will also allow
agencies to maximize their investments by allowing them to secure as
many federal matching dollars as possible.
The PennPIRG Education Fund is advocating the following eleven avenues
through which to generate a permanent, sufficient, and reliable revenue
base for our public transit systems. All of these mechanisms have a
logical nexus with the public goods conferred by transit, and help
recoup the costs vehicular travel displaces onto the general public. We
are not advocating for specific rates or fee amounts, but rather we are
asking that the Commission consider these recommendations as viable and
appropriate funding sources. Of course, we would welcome the
opportunity to work with the Department of Revenue if these proposals
are ultimately put in place.
First, let me address the expansion of existing revenue streams:
Real estate transfer tax
– There is currently a 1% realty tax of which 7.6 mills ($7.60 per
$1,000) is allocated to public transit. Accessibility to public transit
increases property values so it makes sense to invest some of this
benefit back into the system. Conversely, developments that are not
located near transit stops require vehicular traffic that displaces
costs onto the general public. It therefore makes sense to recover some
of these costs by funding our transit systems which helps reduce the
damage caused by excessive traffic. In response to fears that this may
impact a slowing housing market, let me say that several states with
high reality transfer fees have grown very fast, particularly Florida
and Nevada. It should also be noted that the industry’s brokerage fees
impose their own six percent levy on home sales which gets passed on to
consumers. There should be a balance between their profit margins and
the costs they disperse onto the general public.
Rental car tax
– Increase the current $2/day auto rental tax. This makes economic
sense because visitors in rental cars do not pay all the fees in-state
drivers pay to defray the costs of driving.
Tire tax
– Increase the existing $1 excise tax on the sale of tires. This tax
makes sense because tires clog our landfills and pollute our waterways.
Proper disposal of tires in government waste sites is expensive. The
tax is also tied to the amount of driving one does: the more miles you
put on your tires represents additional costs displaced onto the
general public. It is logical to recoup some of these costs at the
point-of-purchase.
Parking tax
– Some municipalities such as Philadelphia, and some counties, like
Allegheny for example, already assess a version of this tax. This fee
would generally fall on those who could use public transit but choose
not to. As such, the revenue is generated directly from individuals who
are directly benefiting from the congestion reductions of transit, as
well as recouping some of the societal costs imposed by their decision
to forgo public transportation. If the tax is deemed too high, the
payee will usually be able to use public transit as an alternative. The
parking tax could be a percent surcharge on parking transactions or a
flat fee for hourly/daily/monthly rates. A more efficient version would
be a levy on non-residential parking spaces themselves. It could be
imposed on each parking space or per volume of parking area. Such
systems already exist in three Australian cities and Vancouver, British
Columbia.
Next let me address some new funding mechanisms:
Transportation impact fees
– These are charges paid by developers for placing a new burden on the
road system to accommodate increased traffic flow. They can be assessed
locally or on a state-wide basis. Planners already must calculate the
estimated number of vehicle trips that new developments will generate.
Impact fees would internalize the costs that the public currently pays
to subsidize development, especially in areas with long commutes. The
fees would also indirectly encourage smarter growth near public transit.
Stormwater Fees
– These are special charges applied to impervious surfaces (pavement
and buildings). Unlike gardens, yards, and undeveloped land, impervious
surfaces prevent rain water from returning to the water table and
therefore impose costs on the public by creating the need for
infrastructure to provide drainage systems, treatment facilities, etc.
This is a major environmental cost of sprawl that is normally pushed
onto the general taxpaying public. Such fees exist in many cities and
range from about $5 to $20 per 1,000 square feet, or about $1-7
annually per off-street parking space.
Vehicle Battery tax
– This constitutes a disposal fee assessed because batteries are toxic
and expensive to dispose of. It internalizes some of the costs that
drivers currently impose on society and again it is tied to the
frequency of vehicle use.
The PennPIRG Education Fund also asks the Commission to assess the viability of the following taxes and fees:
Added vehicle sales tax based on weight and/or fuel efficiency
– This makes pure economic sense because heavy vehicles put more stress
on roads and bridges and gas guzzlers have greater negative social
impacts. These vehicles cause disproportionate damage to our
transportation infrastructure and environment, so it is logical to
recoup some of these costs by funding public transit, which reduces the
stress placed on our infrastructure.
Adjusted vehicle registration fees based on weight and/or fuel efficiency – These would follow the same logic as the sales tax.
Before I close, I want to say two additional things. The PennPIRG
Education Fund urges the Commission to reject any proposals to raise
fairs. Higher fares deter ridership, which leads to less revenue for
the agencies, and reinforces the underlying fiscal crisis. The state’s
largest transit agency, SEPTA, already has the 2 nd highest cash fares
in the nation at $2 per trip. With gas prices as high as they are,
transit needs to be an affordable alternative to driving. The PennPIRG
Education Fund also urges the Commission to reject any proposals that
would reduce the overall quality and quantity of service.Transit
agencies have reduced service over the last two decades to compensate
for inadequate funding, and they have dipped into capital budgets for
basic operating expenses. This impacts the overall quality of the
individual transit systems, further deterring ridership. Pennsylvania
needs to improve the quality of its public transportation systems, not
allow them to backslide.
I want to thank the Commission again for giving me the opportunity to
testify, and Governor Rendell for making this forum possible. Thank
you.
