Dedicated Regional Transit Taxes Must Be on the Table in Transportation Funding Debate

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I’m glad to see Tom Corbett telegraphing his openness to uncapping the state gas tax to help fund transportation. That’s a key part of the solution, but another idea that needs to be in the mix is dedicated regional funding for mass transit.

In theory, state funding for mass transit in Philadelphia, Pittsburgh and the Lehigh Valley makes sense on equity and fiscal grounds.

PA subsidizes all forms of transportation. It loses money on all roads and highways, and it loses money on transit. Every part of the transportation network is a money loser. On equity grounds, as long as PennDOT is massively subsidizing rural roads, people are on solid political ground demanding state subsidies for mass transit in the big metro regions where most Pennsylvanians live.

On fiscal grounds, as Barry Schoch keeps pointing out urban areas are subsidizing rural transportation. The vast majority of the revenue in the state budget comes from the big metro regions, and then Harrisburg redistributes that money to rural roads and infrastructure.

But for the big metro economies to produce so much taxable wealth in the first place, they need to have functioning transportation systems to move all the people and goods around. That means mass transit. Could you imagine how much more congestion there would be if Philly shut down all the SEPTA trains and everybody who works in the city had to drive to work? It would grind the city’s economy to a halt.

On the other hand, if SEPTA service became cheaper and trains ran faster and more frequently, then Philly could fit a lot more residents and workers, build a lot more housing and office buildings, and send even more tax revenue to the state to subsidize rural roads. There is a strong fiscal case for using state money to boost mass transit quality in Philly and Pittsburgh and juice population growth in those metros, since it would mean even more revenue coming back to Harrisburg down the road.

In practice, this doesn’t happen because in Harrisburg *everybody knows* (or at least pretends to know) that Philly is a big moocher on white hard-working rural central Pennsylvanians. Under the representational and ideological constraints of state politics, the votes just aren’t there for big productivity-enhancing investments in urban transportation, even if this would enlarge the pot of money available for more rural subsidies.

If the state’s not going to come through with anything more than a starvation diet for mass transit, then the least they can do is get out of the way and provide metros with more options for raising more revenue at the regional level.

My favorite idea for financing mass transit is a land tax on land within a 1 mile radius of transit stations. The most wasteful practice in the SEPTA system is dedicating the land near train stations to Park-and-Rides instead of high-density housing and office construction. Land around transit stations is highly valuable. It makes no sense to waste it on parking idle vehicles. A fairly high tax on the land value of all land within a mile of SEPTA’s regional rail stations would provide an incentive for compact development instead of big parking lots. High density development around the train stations would increase land values and thus land tax receipts, and it would also boost ridership, increasing fare revenues.

Another regional tax option that metros need is congestion pricing – charging an extra fee to motorists driving into central business districts during rush hour. The congestion charge has two purposes – raising money, and providing a disincentive to solo-drive during peak traffic periods. People who are able to switch to mass transit or car-pool, or schedule their commute for off-peak times would do so, and the people who absolutely have to drive would have an easier commute. This would raise money for mass transit from tolls, and also from increased fare collections from the people who start taking transit.

Another option is establishing a regional payroll tax for the Counties served by metro transit networks, like the one used to help finance the MTA in the NYC metro area. This is my least favorite option since the politics tend to be ugly and there’s growing evidence that this kind of regional funding leads to an inefficient distribution of transit funds toward more suburban parts of the network. Still, this would be a big improvement over the current policy of relying on inadequate state funding. If Harrisburg’s not going to lead on transit, they need to give metro regions better tools to take matters into their own hands.

This entry was posted in Budget, Economy, Transportation.

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