The Road to Funding

Given the circumstances just a week prior, the fact that on Monday, November 25th, Pennsylvania Governor Tom Corbett signed into law a $2.4 billion funding package for transportation across the Commonwealth was nothing short of remarkable. The roller-coaster week that preceded the Governor's appearance at signing ceremonies for the funding bill was the culmination of a years-long effort to increase state funding for transportation that was only set into motion in earnest on the preceding Monday, November 18th. That evening, following months of deliberation, the State House of Representatives voted 103-98 to reject House Bill 1060, a statewide transportation funding package that closely resembled legislation that had easily passed in the State Senate months earlier. Many regarded the House’s decision as the fatal blow to the long-standing push to increase state revenues for the Commonwealth's crumbling transportation infrastructure. The rejection of the bill also appeared to be a major defeat for Governor Corbett, who had declared transportation funding a legislative priority and, along with Pennsylvania Secretary of Transportation Barry Schoch, had lobbied long and hard for action in the House.


Media outlets and observers across the state immediately began questioning whether anything would come of the transportation funding push, as it appeared that the Nov 18th vote might be the closest the bill would come to passing.  With key House conservatives decrying the legislation as an expansion of government and a burden on taxpayers and key Democrats withholding support on account of the inclusion of reforms to the state's Prevailing Wage Act, the prospects for closing the margin of defeat in another vote appeared bleak.


The Governor and Schoch reportedly spent much of day following the bill’s defeat picking up the pieces, holding conversations with key legislators and continuing to lobby in favor of passage. And against all odds, that evening the House took up the matter again and reversed course, approving the legislation by a margin of 106-95. The details of what spurred this stunning about-face remain unclear to the public eye, but from there the legislation's fate was all but assured. Over the course of the ensuing days the Senate and House pushed the bill through a series of procedural votes and sent it to the Governor for his signature on the 25th, when it officially became Pennsylvania Act 89 of 2013.


With that pen stroke, Corbett brought resolution to an issue that had loomed large in Harrisburg for some time. Given the deteriorating condition of the Commonwealth’s transit systems, roads, and bridges and mounting investment needs in communities all over the state, the matter of how to provide more resources for transportation had been the subject of debate for years. The origins of this most recent funding push could be traced back to the efforts surrounding the 2007 passage of Pennsylvania’s Act 44. Built largely on recommendations put forth in 2006 by the Transportation Funding and Reform Commission convened by then-Governor Ed Rendell, Act 44 promised to establish dedicated transportation funding but ultimately failed to do so as a result of the federal government’s rejection of the state’s proposal to generate revenue through tolls on Interstate 80.  The federal decision put a damper on state funding efforts as supporters regrouped and waited for the dust to clear.  When Corbett assumed the Governor’s office in 2011, he gave new life to the issue by convening a 40-member Transportation Funding Advisory Commission (TFAC) to solicit new recommendations for solutions to the state’s transportation funding gap.


In August 2011, the TFAC issued its final report, outlining a recommended funding package that would raise $2.7 billion from a variety of sources including increases in fines and licensing and registration fees. The cornerstone of the recommended funding package was the gradual elimination of the cap placed on the state’s wholesale tax on gas, known as the Oil Company Franchise Tax (OCFT). The cap, set in 1983, allows the tax to be applied to a maximum per-gallon wholesale price of $1.25. Today, the real average wholesale price of a gallon of gas is $3.11, meaning that removal of the cap would more than double OCFT revenues.


Seventeen months passed following the publication of TFAC’s final report before Corbett unveiled a pared-down plan to provide $1.8 billion in new state funding for transportation. The Governor’s plan spurred the state Senate into action, with Senator John Rafferty (R-Montgomery) quickly submitting a $2.5 billion counterproposal that aligned more closely with the full TFAC recommendations. The Senate spent the better part of the spring debating the merits of the Governor's plan and Senate Bill 1, ultimately approving the latter in a decisive 45-5 vote on June 5th.


While the Senate debated, the House was focused on an effort to push through reforms of the state-controlled liquor system. Led by Majority Leader Mike Turzai (R-Allegheny), House Republicans reportedly wanted Senate support for the liquor privatization effort in exchange for House support of transportation funding. This political coupling led to a stalemate, and the House took no action on transportation funding before recessing for the summer, leading many to fear that the political realities associated with the looming 2014 election year would put the kibosh on the prospects for passage in the fall.  But intense support during the summer from business leaders, trade associations, and civic groups around the state kept the pressure on state representatives. After several promised calls for a vote earlier in the fall were delayed for lack of support, on the week before Thanksgiving the House embarked on the remarkable path of action that resulted in passage of House Bill 1060 and will ultimately lead to a massive infusion of cash for the Commonwealth's transit systems, roads, bridges, and bicycle and pedestrian infrastructure.


Now, with the turn of events that led to Act 89, the question on everyone's mind is exactly how the increased funding will be deployed. Over the weeks and months ahead, investment plans are coming into focus. For now, in southeastern Pennsylvania one thing is clear: there is no shortage of candidates for investment.