GOVERNOR RENDELL RELEASES $412 MILLION IN TRANSIT FUNDING

PHILADELPHIA & PITTSBURGH: Governor Edward G. Rendell today announced a plan to provide as much as $412 million to Pennsylvania’s struggling transit agencies over the next two years if legislation providing other funding is not enacted during that time period. His announcement came shortly before major fare increases and service cuts were set to take effect. The amount proposed by the Governor is sufficient to hold off planned fare hikes, service cuts and employee lay-offs for up to two years.

“For some time I’ve been asking the legislature to dedicate new funding to mass transit,” Governor Rendell said. “That’s the right way to solve this problem and we will all keep working to try to make that happen. But this isn’t going to happen soon enough to avoid major disruptions in service. Our transit riders have been moving from one crisis to another for too long and I am not going to let that continue.”

The plan would make available up to $412 million in new funding for Pennsylvania’s transit agencies in stages over the next two years, and provide an additional $530 million in new money to repair roads and bridges. Funds for transit will come from within federal transportation monies provided to Pennsylvania, a major portion of which can be used for either roads or transit. New road money will come partially from federal sources and partly from state sources.

The Governor also announced he was signing an executive order to create a nine-member “Transportation Funding and Reform Commission” to assess transit and highway funding needs and recommend ways to raise the amounts needed. The Commission will also recommend ways to cut costs, enhance efficiency and improve service at SEPTA, the Port Authority of Allegheny County and other transit agencies. The Commission’s recommendations will be based in part on results of an external audit and outside management consultant review.

To hold off the service cuts and fare hikes planned for March, the Governor proposed the immediate “flexing” of $68 million in new funds for SEPTA and the Port Authority.

“I am asking for the immediate transfer of $68 million to SEPTA and the Port Authority to stave off the fare hikes and service cuts scheduled to take place shortly,” Governor Rendell said. “Once this is accomplished I will ask PennDOT Secretary Biehler to work with the state’s Metropolitan Planning Organizations (MPOs) on a schedule for additional flexing to those agencies and others around the state.” If a legislative solution is agreed to any time over the next two years, flex funds not yet spent could be returned to the Commonwealth’s highway program.

This plan takes advantage of higher than expected revenues coming to the Commonwealth from both Federal and state gasoline taxes. PennDOT is revising its previous projections of revenue expected to flow to the Commonwealth over the next two years. These projections are normally updated every two years in tandem with the State Transportation Plan, but this adjustment is being made out of the normal cycle due to the sizable difference between previous projections and new revenue levels.

An automatic adjustment made to the state’s Oil Company Franchise Tax and other minor adjustments to state funding are projected to bring in $276 million in additional funding. Higher than expected federal appropriations will add another $666 million. Total new funding is projected to be $942 million. The new rate of the state OCFT took effect on Jan. 1 and new “obligation authority” that will allow the state to draw down the new federal funds was received on Feb. 3. If gasoline prices stay at current levels, additional OCFT revenue could be available in 2006.

These new funds make it possible to provide consistent, predictable funding to the state’s transit agencies without cutting highway projects from current transportation spending plans. Rather, new funding can be provided for transit and for roads and bridges at the same time. When funds were flexed to mass transit in 2004, they required reprogramming for specific highway projects. Because new federal funds are available such a reprogramming is not necessary. Under this plan, no funds targeted to specific highway projects will be cut.

“Although the new money is good news for all of us, it is not a long term fix for the transit crisis. Legislative action in Harrisburg is the only way to achieve that. The new money gives us some breathing room, and hopefully a consensus will emerge on a longer term plan soon,“ Governor Rendell said. “Make no mistake, the best way to fund transit is with new transit money. Highway money should be for highways. But we’ve run out of options and I have no other choice.”

For transit agencies in the Philadelphia, Pittsburgh and other regions of the state to receive the new funds, the Metropolitan Planning Organizations for these areas will need to vote to allocate the new funds provided by PennDOT to transit. New highway funds will also be allocated through these agencies.

EDITOR’S NOTE: A copy of the Governor’s Executive Order is attached as well as a Fact Sheet on today’s announcement.




Revised PennDOT Funding Estimates
Federal Funds


Late release of final portion of FFY04 funds $136 million

held back under TEA21 extension bill



FFY05 funds in excess of previous estimate $265 million



Revised projection for FFY06 funds in light

of higher FFY05 baseline $265 million



State Funds


Oil Company Franchise Tax & other misc. revisions (a) $276 million



TOTAL $942 million



Projected Uses
Additional Highway Funds $530 million


Flex Funds for Transit $412 million



FY 04/05 – Full Funding $68.0 million

FY 05/06 – Full Funding $210.1 million

FY 06/07 – Half Year’s Funding (b) $133.9 million



TOTAL, Highways and Transit $942 million




Detail on Transit Funds

FY04/05 FY05/06 FY06/07

Operating Shortfall

SEPTA $42.7 m $92.1 m $130.9 m

Port Authority $25.3 M $45.0 m $64.0 m

Others -- (c) $5.0 m $5.0 m



Additional Capital Funds -- $58 m $58 m



Job Access/Reverse Commute -- $10 m $10 m

(TANF replacement funds)



TOTALS $68.0 m $210.1 m $267.9 m





Notes:

a) Additional OCFT funds could be received in 2006 if gasoline prices stay at current levels for the remainder of 2005.

b) Plan envisions enactment of long term funding plan by end of calendar year 2006, so full funding for state fiscal year 2006 is not provided.

c) Operating deficits for these transit agencies were fully funded by December 2004 supplemental transit funding package.







COMMONWEALTH OF PENNSYLVANIA

GOVERNOR'S OFFICE

EXECUTIVE ORDER

Edward G. Rendell, Governor Subject: Transportation Funding and Reform Commission







WHEREAS, there exists a structural imbalance between operating funds available to Pennsylvania's

transit agencies and the operating costs of these agencies; and

WHEREAS, unless rectified, this shortfall will lead to major reductions to transit service,

increases in transit fares and employee layoffs, and these dislocations would harm

the Commonwealth's business climate, damage its competitiveness and disrupt the

lives of many of its citizens; and

WHEREAS, the pressing shortfall of operating funding for transit is the result of many

factors, including: growth rates for tax sources dedicated to transit well below the

rate of inflation; heavy dependence on state general fund appropriations with little

growth in these appropriations from year to year; low levels of support from local

government; and dramatic reductions in federal operating support for transit; and

WHEREAS, steps to be taken early in 2005, either through legislative or executive action, are

likely to provide at least temporary relief for this operating shortfall, but structuring

a permanent, long-term solution to this problem will be difficult without a fuller

understanding of its causes, its magnitude and the full range of options addressing

it; and

WHEREAS, other issues of transportation funding and management issues merit similar investigation,

including the structure and magnitude of state funding for road and bridges

and the management of the state's transit agencies.

NOW, THEREFORE, I, Edward G. Rendell, Governor of the Commonwealth of Pennsylvania,

by the authority invested in me by the Constitution of the Commonwealth of Pennsylvania

and other laws, do hereby order and direct that a Transportation Funding and Reform

Commission (hereinafter referred to as "the Commission") be established to investigate and

make recommendations as provided in this order.

2005-1

February 28, 2005



1. Composition.

a. The Commission shall consist of nine members appointed as follows:

(1) One by the Speaker of the House of Representatives.

(2) One by the Minority Leader of the House of Representatives.

(3) One by the President Pro Tempore of the Senate.

(4) One by the Minority Leader of the Senate.

(5) Five by the Governor.

b. Members of the Commission shall be appointed within 30 days of the effective date

of this order.

c. Of those members appointed by the Governor, at least one shall be a resident of the

County of Philadelphia and at least one shall be a resident of the County of Allegheny. One of the

appointees of the Governor shall be the Secretary of Transportation of the Commonwealth, who

shall serve as the Chair of the Commission.

d. To the greatest degree possible, appointees should have a background in transportation

policy and management, public finance, or institutional management and reform.

e. Members of the Commission shall receive no compensation for their service as

members. Non-government members will be reimbursed for travel and related expenses in accordance

with Commonwealth policy.

2. Powers and Duties.

a. The Commission shall conduct or cause to be conducted an operational audit of the

Southeastern Pennsylvania Transit Authority (SEPTA), the Port Authority of Allegheny County

(PAAC), and such other transit agencies receiving funding from the Commonwealth as it deems

appropriate. Such audits shall determine if opportunities exist to implement cost efficiencies,

revenue enhancements, and service improvements that would be in the best interest of the users

of these systems and of the Commonwealth and its citizens. Such audits shall include an assessment

of employee roles, responsibilities, and compensation.

b. The Commission shall study and make recommendations regarding appropriate levels

of funding and sources of funding for transportation in the Commonwealth for the coming

years, for transit and for roads and bridges, and for operating costs and capital investments.

Regardless of what levels of funding are recommended, the Commission shall assess the need for

adjustment to the methods by which funding is provided, the appropriate mix of state and local

funding, and the structure of state funding programs.

c. The Commission shall assess the structure of the Commonwealth's transit agencies

and assess whether changes to their underlying structure can improve service, reduce costs, and

increase efficiency. This review shall include board structure and responsibilities and options for

changes to asset ownership and operations, including competitive contracting.

d. The Commission shall assess the relationship of growth and development patterns

and policies to the Commonwealth's transportation systems, particularly fixed rail systems. In

metropolitan areas around the U. S. policies are being put in place to encourage development

patterns that are easily served by transit and lead to fewer car trips and less congestion, and the

Commission shall assess the opportunity to implement similar policies in the Commonwealth.

e. In addition to the items enumerated above, the Commission may investigate other

related matters as it deems appropriate.

f. Public agencies receiving transportation funding from the Commonwealth shall, to

the greatest extent possible, assist the Commission in carrying out its responsibilities and make

available to the Commission such records and information as are needed by the Commission to

fulfill its responsibilities.

3. Responsibilities of Other State Agencies. All agencies of the Commonwealth shall

cooperate as necessary with the Commission to assure it is able to carry out its responsibilities. The

Secretary of Transportation of the Commonwealth shall assure that the Department of

Transportation provides technical and logistical support to the Commission. This may include

provision of meeting space and other logistical support, staff resources, and payment of expenditures

for consultants.

4. Reporting. At the close of its deliberations but no later than November 15, 2006, the

Commission shall issue a final report to the Governor and the General Assembly containing its

analysis and recommendations. The final report shall, at a minimum, recommend specific funding

sources and amounts for transit and for highways.

5. Duration. The Commission shall commence its work as soon as possible after its

members are appointed, and shall disband upon the issuance of a final report.

ARGH! This is the worst way to treat SEPTA, IMHO. It's like telling a child that since they were careless with their money, they can have no more. But, then turning right around and bailing them out when they come into financial trouble.

Although I agree that SEPTA needs not to be left to rot (more than they have by their own people) at the price of thousands of workers who rely on SEPTA's inefficient, poorly run system.

Rendell should have said that you will get this money if, and ONLY if, you dissolve the whole board and have a MAJOR restructure of the WHOLE mamagement team.

Hooray? Well, not exactly. This doesn't mean SEPTA's budget crisis is over.

queenlnr8 wrote:ARGH! This is the worst way to treat SEPTA, IMHO. It's like telling a child that since they were careless with their money, they can have no more. But, then turning right around and bailing them out when they come into financial trouble.

Although I agree that SEPTA needs not to be left to rot (more than they have by their own people) at the price of thousands of workers who rely on SEPTA's inefficient, poorly run system.

Rendell should have said that you will get this money if, and ONLY if, you dissolve the whole board and have a MAJOR restructure of the WHOLE mamagement team.

Agreed. The problem is that SEPTA is a bigger money-waster than the MTA is. Now if the waste can be cut, then service increases can be done for the suburban bus division.

Are those guys from DVARP going to show their reform proposal to the board? The board should be embarrassed, and we should be treating SEPTA the way the Feds are treating Amtrak. Force the reform.

Now that they got their money....are we going to see better service? More service? And are those rediculous "Your World is Getting Smaller" posters going to go away?

jfrey40535 wrote:Are those guys from DVARP going to show their reform proposal to the board?

Our backgrounder has already been circulated to a number of relevant people, and I suspect some of them are going to be on this new commission (I'm speculating here--I don't know who will be on it other than the Secretary of Transportation [ex-officio]).

We've obviously not issued an official statement yet, but my own opinion is this is great news in a number of ways. First and most importantly, it resolves the immediate budget crisis. Second, there's going to be an independent audit of SEPTA and PAAC: the audit completed last year (by a consultant paid and selected by SEPTA, and whose scope of work was largely determined by SEPTA) failed to look at many areas that need outside investigation. Third, it will probably forestall any hasty backroom deals in the Legislature: stuff like tying a SEPTA takeover to an airport takeover. A deal like that could create as many problems as it solves.

Finally, it sets up a process for a really broad-based examination of public transit in the Commonwealth: not just looking at board structures and cost-efficiency, but also the structure and funding of transit programs and the relationship between transportation and development, which is one area where Pennsylvania is at a real disadvantage to nearby states. Done right, the elected leaders of the Commonwealth will get an understanding of the benefits as well as the costs of transit, and we can make the case for improving and expanding our rail network (paragraph 2d is especially encouraging in this respect).

If this process goes forward and is done in an open fashion, you can bet that DVARP will be quite involved: not just to call attention to SEPTA's lapses the last several years, but also to study and comment on alternative management and organizational structures.

Matt Mitchell
Delaware Valley Association of Rail Passengers
www.dvarp.org

From the Inquirer:

"By executive order, Rendell created a nine-person "Transportation Funding and Reform Commission" to audit how SEPTA runs and suggest new means for long-term funding."

The paper claims that SEPTA is now OK for funds through 2007. If so, this is a fantastic opportunity to sit down and seriously think about the long term and propose major changes for the long term operation of SEPTA.

Chriss wrote:The paper claims that SEPTA is now OK for funds through 2007. If so, this is a fantastic opportunity to sit down and seriously think about the long term and propose major changes for the long term operation of SEPTA.

HAHAHAHAHAHA! NO, this is a perfect time for SEPTA to say to itself, "Now that we have funding for another two years, we can sit back and relax! Our jobs are safe (whether we have the finding or not, we'll always be in power) and if we do run out of money, we'll pull another crock-pot stunt like this to scare the beejezus out of the city and we'll get the money AGAIN! *snigger snigger snigger*"

SEPTA won't do a thing. And if they do, I think that Philly, as a whole, will die of shock.

queenlnr8 wrote:

Chriss wrote:The paper claims that SEPTA is now OK for funds through 2007. If so, this is a fantastic opportunity to sit down and seriously think about the long term and propose major changes for the long term operation of SEPTA.

HAHAHAHAHAHA! NO, this is a perfect time for SEPTA to say to itself, "Now that we have funding for another two years, we can sit back and relax! Our jobs are safe (whether we have the finding or not, we'll always be in power) and if we do run out of money, we'll pull another crock-pot stunt like this to scare the beejezus out of the city and we'll get the money AGAIN! *snigger snigger snigger*"

SEPTA won't do a thing. And if they do, I think that Philly, as a whole, will die of shock.

Well, we have to apply pressure, obviously.

Chriss wrote:The paper claims that SEPTA is now OK for funds through 2007. If so, this is a fantastic opportunity to sit down and seriously think about the long term and propose major changes for the long term operation of SEPTA.

I wish it would be so, but queenlnr8 is right: SEPTA will do nothing. The reason: the same hacks are in charge. I don't think SEPTA actually needs more money in their operating budget. My plan would've been to give it to them for this year (and maybe next year), but also fire the entire board and start fresh with a new group of qualified people. Giving more money to the same bums that have been running SEPTA into the ground for years is not the worst solution (at least my transpass won't get more expensive) but it is far from the best idea, either.

SilentCal wrote:I don't think SEPTA actually needs more money in their operating budget. My plan would've been to give it to them for this year (and maybe next year), but also fire the entire board and start fresh with a new group of qualified people.

That's on the table: see paragraph 2c of Rendell's order creating this commission.