In a press conference on July 19th, Governor Rendell discussed the request he is making for the General Assembly to return to Harrisburg to work on transportation funding. He also discussed the status of the FMAP extension. The budget passed earlier this month relies on $850 million in federal dollars through the FMAP extension. To date, Congress has not passed this extension
Summary of the press conference is by Jeff Cox of Pennsylvania Legislative Services
At a Capitol Hill news conference today, Governor Edward Rendell said he is sending a letter to the leadership and to the members of the General Assembly asking them to return to Harrisburg on Monday, August 23, to reconvene the special session to address the transportation funding issue. He also announced he has requested to be the lead-off witness at the Senator Transportation Committee hearing scheduled for Wednesday, July 21 in Harrisburg. Governor Rendell told reporters, “I am going to tell the Senators on the committee what projects would not be done in their district if we don’t get a replacement for the $472 million and what additional projects could be done if we did transportation funding at the level that the Transportation Reform Commission recommends.” The $472 million gap in transportation funding was a result of the federal government rejecting the request to toll I-80.
Governor Rendell said when the special session on transportation funding convened in May, he told the legislators he wanted them to meet over the summer after passing the budget and he originally set a date of July 20. He said he recently met with the chairs of the House and Senate Transportation Committees. Governor Rendell explained the House committee just completed seven hearings across the state and the Senate committee has scheduled five hearings between July 21 and August 18. He said he wanted to give the Senate committee time to finish the hearings.
Governor Rendell commented, “I am cognizant of the fact that in the current political climate it is always difficult to raise revenues but as I suggested when I spoke at the start of the special session in May, you could fix the $472 million gap by just raising all of the fees we charge consistent with inflation.” According to Governor Rendell, taking the inflation factor between 1998 and 2010 would produce $340 million and a 3.25¢ increase in the gas tax, which he described as “negligible at the pump,” would provide the additional moneys necessary to bridge the $472 million gap. He said, “I believe we can do this in a bipartisan way and we can ensure the efficacy of the Pennsylvania transportation system if we do something significant here.” Governor Rendell expressed hope that “we can right away on August 23 take action on public-private partnership legislation that is so important.” He indicated the staffs of the four caucuses are getting together this Wednesday to finalize a report on public-private partnership legislation. He told reporters, “The first thing I would ask the legislature to do when they return on August 23 is to enact public-private partnership legislation which would make it easier to get private dollars that are right now ready and willing to invest in infrastructure, particularly transportation improvements, to get those dollars flowing as well.
Governor Rendell then responded to questions from the news media.
Senator Pileggi has indicated in press reports that there seems to be a desire among lawmakers to push the transportation funding issue off until after a new governor is elected. Is that an acceptable scenario?
No, it is not acceptable for two reasons. One, because we would lose $472 million in funding this year and I think 100 bridge projects and over 300 road projects would have to be discontinued. By the time the next governor and the next legislature gets together and do this, even if they are willing to do it, you would miss the summer construction schedule and these projects would be put off for another 18 to 24 months…Number two, one of the two candidates, in fact the one leading in the polls, has pledged not to raise taxes. There is no way you can do the things we need to do to fill that gap and to have a long-term, job creating transportation plan without raising some form of taxes or fees. We run the risk of having four years with absolutely no progress with $472 million missing. That is unacceptable. There are some people that say let the Turnpike go out and borrow some more money. I don’t think Senator Pileggi would want to do that because you know the Senator Republicans are the paragon of fiscal stability and fiscal conservatism. It would cost us just to raise tolls enough to do a bond to allow us to pay off the $472 million this year and $1 billion in debt service. There is no way Senator Pileggi and his caucus would advocate spending $1 billion to get one year of funding which, if we do it right, we can get without spend one dime of that billion dollars. For all those reasons, there is now way we can put this off. We got to act. This is the time for a little bit of political courage. I don’t think it is a lot.
You have said many several times over the past year that it is unlikely there will be an increase in the gas tax at the federal level. Why do you think it would pass at the state level?
First and foremost, it is our responsibility. Transportation has always been a state responsibility. The chief executive in Washington is opposed to increasing the gas tax. I am not advocating an increase in the gas tax. I’ll sign it. I am advocating taxing, raising the fees consistent with inflation, and taxing the oil companies. Right there you have over one billion dollars in additional funding. If you had another $150 million for the electronic surveillance program that will get us reckless drivers and drivers that are uninsured. There are ways to go about this to put together a very significant transportation funding with very little political pain.
Could you spell out some of the fees people would see?
For example, increasing the fees on licensing and on registrations. I could promise the citizens of Pennsylvania that those fees would be increased not one penny more than inflation.
Could you clarify your position regarding increasing the gas tax?
I am advocating placing an excise profit tax on all the oil companies. That would produce three quarters of a billion dollars…I would sign an increase in fees. I would sign an increase in the gas tax and lifting the cap on the oil company franchise tax. I would certainly sign legislation that would increase electronic surveillance so we can capture more uninsured drivers or reckless drivers. I laid out a menu at the beginning of the special session on May 4.
Your position has not changed since your May 4 address?
No. If I had my druthers, I would do the oil company excess profit tax. My plan is the excess profit tax. I think the oil companies are making ungodly profits. I believe the Exxon-Mobils and the BPs and all the rest can afford to pay a whole lot more than what they are paying now. Because of the Delaware loophole, most of the oil companies that sell 12 billion gallons of gasoline a year in Pennsylvania pay very little in state taxes. That would remedy this dramatically. That is what I am for.
Have you been contacting legislators about the FMAP money?
I have been working very hard. I have talked everyday to Washington leaders. I try to impress upon them what the stakes are here.
Have you been in touch with legislative leaders here in Harrisburg?
Not yet. On Tuesday or Wednesday, there is a vote on the unemployment compensation extension. If that passes, I think there will be an accord on the FMAP extension. Until we get a verdict on the UC extension, I am not going to contact the legislative leaders on that.
If the FMAP extension fails, will you have to reopen the budget?
No. What I would do is put things into the budgetary reserve but I would do it after consultation with the legislative leaders. Putting things into budgetary reserve would obviously mean additional layoffs.
Could you spell out more precisely what would be the percentage on the excess profits tax and what are you talking about regarding electronic surveillance of reckless drivers? Are you talking about cameras, monitoring devices, etc.?
It means a whole slew of things. It would allow us to check every vehicle that goes through certain areas and roads and make sure those vehicles are insured and check reckless drivers. We will get you full information on both of those.
There seems to be a growing amount of pessimism that FMAP is going to pass.
We’ll see. If the unemployment comp extension does not pass then I think that spells real trouble for FMAP extension. If it does pass, it doesn’t mean FMAP extension will pass but it least it is a glimmer of hope.
You spoke about raising the fees to go along with inflation. Would that be pegged for inflation in the future or would it be a one-time increase?
I would. Again, that would be up to the legislature. I would sign it in any fashion that it got to me.
Can you tell us which departments will be hardest hit by this latest round of layoffs?
Everyone. No discrimination. The departments that have the most personnel that are not mandated. Public safety would obviously be exempted.
Regarding FMAP, have you asked Washington or the Administration for any waivers?
The Governor’s Association has asked for that and it does not look likely that is forthcoming.
What are you doing right now regarding the layoffs?
We are still are identifying the layoffs that come from the budget that passed. As I said, the target there is about 700. We are trying to work with the cabinet secretaries. We will be announcing that shortly. If the extension of Medicaid dollars doesn’t occur, then there will have to be more significant layoffs.
Are you delaying round one to see what happens with round two?
If the unemployment extension does not pass, we will probably only do it once.
How many would be required?
We do not know yet. We have to talk to the union leaders. There are options for the union leaders.
The law requires the Turnpike Commission to come up with $920 million. If Senator Pileggi and the Senate Republicans continue to say they are not going to do something until the next governor, do you favor legislation to reduce the Commission’s obligation?
There is a dispute there between the Turnpike lawyers and the PennDOT lawyers. The only way they could do that is spend $1 billion and do a bond.
Regarding public-private partnerships, is there anything specific you would like to see leased to increase funds?
I would go back and look at the Turnpike again. There is a growing interest both on Wall Street and with hedge funds and foreign investors in investing in infrastructure. Right now, there are very few projects underway. The private sector is looking for stable investments and if you invest in transportation projects and there is a return on the investment, it is a fairly stable investment. I think we can get a lot of money into the state and into the entire country doing it that way.
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