Dave Argall is the kind of guy you’d expect to be a state lawmaker.

The guy who would speak at the annual Chamber of Commerce dinner, or who flips pancakes at a charity breakfast. The kind of guy who maybe, just maybe, doesn’t even own a pair of jeans, who wears a suit just to read the newspaper in his easy chair.

He’s an Eagle Scout. A family man. He holds town hall meetings.

But David Argall is not simply a friendly guy, or another suit in the Statehouse – not by far.

Argall is a man with a mission … a mission centered on the amount of money the state of Pennsylvania spends on mass transit – and where that money comes from.

And David Argall’s fight to fix that situation goes to the very heart of the transportation funding debate in Pennsylvania.

The city of brotherly cash

Argall’s mission actually starts with another public official –Ed Rendell, governor of Pennsylvania and a former mayor of Philadelphia.

In November of 2004, the mass transit agency in Philadelphia was facing massive budget shortfalls. It wasn’t the first time in the financial hole for SEPTA – the South Eastern Pennsylvania Transportation Authority.

The Philadelphia Inquirer reported a $25 million transfer from highway funds to SEPTA and Pittsburgh’s mass transit agency in 2003 – even though some questioned the legality of the move at that time.

But the $63 million deficit widely reported in the media in November 2005 represented a huge problem for the agency, and for the state.

That month, several state lawmakers, quoted by The Inquirer, urged a then-reluctant Rendell to use highway funds to plug the hole in SEPTA’s budget. And shortly thereafter, Rendell caved in, calling for transfers.

By February 2005 – even though media outlets reported that the immediate funding crisis at the Philadelphia mass transit agency was over – the transfer of highway funds was well under way, and growing.

Rendell announced on Feb. 28, 2005, that he would transfer $412 million in federal highway funds to SEPTA and other mass transit agencies in the state. And even though the amount was massive, the governor’s office estimated it would only last two years.

The reaction of many lawmakers to the governor’s transfer of more than $400 million was summed up by one or Argall’s fellow state lawmakers, Rick Geist.

“Yeah,” Geist said. “He flushed it.”

Plenty of people shared those sentiments.

Rep. Argall said the action prompted considerable outcry outside of the state’s mass-transit-heavy metropolitan areas.

“Rural legislators and our constituents hit the roof; this had never been done before in Pennsylvania,” he said. “Essentially what the governor did was move federal dollars which in the past had been used only for roads and bridges in Pennsylvania, and diverted hundreds of millions of dollars to mass transit.”

Some were upset because the money was set to repair highways and bridges to serve rural areas.

Others were angry because once SEPTA had the funding in hand, it canceled staff cuts and fare increases – from $2 to $3 – that were scheduled to balance its budget.

It would have been the first fare increase since 2001.

Out of the first transfer from highway funds to mass transit – a $68 million payment – media outlets reported that more than $42 million, or 62 percent, went to just one mass transit agency – the South Eastern Pennsylvania Transportation Authority, SEPTA.

And where did the rest of it go? According to those same media reports, most of it – more than 98 percent – went to the Port Authority of Pittsburgh, that metro area’s mass transit agency.

A year of partisan and regional battles followed the governor’s announcement. By December 2005, David Argall had had enough.

Asking for answers

On Dec. 12, 2005, Argall introduced a resolution calling for an evaluation of operations at the South Eastern Pennsylvania Transportation Authority.

Taking the form of a formal study by a group of outside consultants, the evaluation was set up to examine how to better manage SEPTA’s $1 billion annual budget – a third of which Argall says is typically supplied by the state government.

In a press conference that month, Argall outlined his case for the investigation.

“The problem is that SEPTA – the South Eastern Pennsylvania Transportation Authority – is very expensive and is looking at a pretty significant deficit, despite the fact that the governor has given them millions of dollars from counties that were hoping to use those dollars for highway and bridge projects,” Argall said.

“Instead, it’s going to the southeastern portion of Pennsylvania. And so the House Transportation Committee, as a result of my resolution, which was overwhelmingly passed by the House, is going to do a detailed study of their operations to look for some common sense solutions to help them save money.”

The resolution passed in the full House only two days later.

During a recent phone conversation, Argall told “Land Line Now” that the study was not only attractive for rural lawmakers like himself – people who were tired of seeing their constituents’ money funneled to urban mass transit. It even gathered support from many lawmakers based in the state’s urban centers.

“We were trying to get a handle of what the real dollar amount is that is needed by mass transit – not just SEPTA in the Philadelphia area, but also the smaller mass transit agencies across the state,” he said. “What was interesting to me was when we brought the resolution to the floor of the House, I had thought that perhaps we were going to be in for a major urban vs. rural battle.

“Imagine my surprise when many of the urban legislators from Philadelphia stood up, starting complaining about SEPTA, and said, you’re right, we need to do a better job, we need to look at how they conduct themselves. And that was why ultimately, it was unanimously approved.”

When the study’s results became known, that thinking turned out to be right.

In fact, what emerged was startling – in addition to an extensive review of the transit agency’s operations, an interim report showed that in the year 2004, the South Eastern Pennsylvania Transportation Authority received an even larger-than-expected share of its funding from the state – 75 percent that year, compared with 41 percent for Chicago’s mass transit agency, and 61 percent for New York’s system.

Local funding accounted for only 13 percent of the cost of running SEPTA – despite years without any kind of rate hike from the actual users of the system.

For his part, Argall said the study – and its results – outlined the need for change.

“It tells us, for one, that they have not increased their fares in several years,” he said. “I think it’s very unfair for SEPTA to expect my constituents in rural Pennsylvania, to give them more money, when they’re not even asking the riders, the people who use the program every day for any kind of increased cost.

“The other thing that we were interested to learn was that many agencies across the country get much more local support from their version of the city of Philadelphia, than SEPTA does,” he added. “And once again, I think it’s very unfair for SEPTA to expect my constituents to bail them out.”

The report’s recommendations for change sounded amazingly reasonable, practical and basic – among other ideas, they included:

Argall’s study wasn’t alone in calling for changes – or for showing problems within the South Eastern Pennsylvania Transportation Authority that created a drain on highway funds.

A separate study by the Pennsylvania Economy League showed that local funding sources were paying as little as 77 cents out of every $10 that are needed to run the Philadelphia-area mass transit system.

By comparison, the league’s study showed similar mass transit systems pulling in up to three times the amount of local funding.

The lack of local funding has also been a target of U.S. Rep. John Peterson of Pennsylvania. During a press conference earlier this year, he pointed specifically to Philadelphia’s SEPTA and to PAT, or the Port Authority Transit agency of Pittsburgh.

“PATT and SEPTA get 95 percent of the money; the rest trickles out in very small increments,” Peterson said. “My rural transit agencies struggle, but they’re providing good services.

“My State College ones provide 53 percent of their own funding,” he said. “If PATT and SEPTA even came anywhere near that, they’d be in good shape.

“There’s some disparities there. The two big systems in our cities do not provide their percentage of their own funding, whether it’s from the fair box or from the local communities that are being served that’s normal around the country. So we need to look at all that before we just wholesale them money, we need to make sure that they’re somewhere in the mix and that they manage the money well.”

Part of the problem was spelled out by The Philadelphia Inquirer in a June 2007 investigation. Some mass transit systems in other cities get local support from taxes not allowed in Pennsylvania.

The curtain rises on Act 44

Argall wasn’t sure when the state – and its highway dollars – became such an important financial supporter of SEPTA. However, the lawmaker indicated that since former Philadelphia Mayor Ed Rendell became governor, the pace of diversion had picked up.

That trend has continued with the passing of Act 44 – a measure that calls for taking money raised from tolls on Interstate 80 and pumping hundreds of millions of those dollars into mass transit.

Here’s how Act 44 is designed to work:

Under the new law, the state’s Department of Transportation would lease Interstate 80 to the state’s Turnpike Commission.

Over the following three years, the commission could, at any time, turn the highway into a toll road. The turnpike agency would be responsible for operation of the road from that point forward – although it could contract with PennDOT to maintain the highway, and with the state police for what the lease summary calls “enhanced levels of State Police service for traffic patrol and traffic law enforcement.”

The turnpike would then pay the state increasing payments of $750 million the first year, $805 million the second and $900 million the third year of the lease.

However, much of that money, like so much highway money in Pennsylvania, would be diverted to non-highway uses – including mass transit.

In fact, according to the lease summary, in the first year of the lease, $300 million generated from I-80 would go exclusively for mass transit. That would increase to $350 million in the second year, $400 million in the third year, and then increase by 2.5 percent every single year thereafter.

And even if the Federal Highway Administration rejects tolling on I-80, the Turnpike Commission will still divert millions upon millions of highway users dollars into mass transit – to be precise, $250 million every year to be used exclusively for mass transit.

You might think that’s a new wrinkle – toll money being used for mass transit costs. Or you might think that the governor’s previous diversions of highway money were unique.

In fact, it’s not unique at all. A portion of federal highway money goes to mass transit every year.

And according to documents from the FHWA, more than $36 million in road and crossing tolls were spent on mass transit in Pennsylvania alone in 2005.

Those documents also show that in the same year, more than 100 million dollars of highway money went to Pennsylvania mass transit in the form of state “Grants in Aid.”

A house of wild cards

In the end, the Pennsylvania Turnpike Commission may very well make its required I-80 lease payments out of its own pockets.

The Federal Highway Administration must approve the I-80 tolling plan before the first dime is collected – something that seems far less likely in the wake of the FHWA’s latest communication with the state.

In early December of 2007, officials at the FHWA sent a letter to the Turnpike Commission, indicating they held a dim view of the tolling plan. The federal agency asked for more information on the plan, and noted some concerns they had with the commission’s request to toll the highway.

A press release from U.S. Rep. John Peterson’s office said that FHWA would not move ahead with the application to toll the road, “until the state addresses – which they have not so far – many salient requirements.”

State Rep. David Argall says that if the Federal Highway Administration doesn’t approve the state’s request, and the highway isn’t tolled, it’s bad news indeed for the plan to prop up mass transit with highway money – and bad news for the rest of this transportation plan as outlined in Act 44.

“If that approval does not come through, that whole funding package that this governor has signed into law collapses like a house of cards,” he said.

If that house of cards does indeed fall, as far as Todd Spencer is concerned, that’s just fine.

Spencer is the executive vice president of the Owner-Operator Independent Drivers Association – one of the early opponents of leasing the turnpike in the state, and of plans to toll and lease Interstate 80.

He says plans like the I-80 proposal, which are intended to prop up agencies like the South Eastern Pennsylvania Transportation Authority, in fact simply encourage the behavior that put them in trouble in the first place.

“There really is no incentive for transit systems to work efficiently,” he said. “And because it’s all just found money, money that taps into highways, they’ll never be any incentive.

“What the governor is proposing here isn’t creating any kind of management incentive, it’s just throwing more money, and just allowing what doesn’t work to dip deeper into the slush fund.

“It makes no sense for anyone.”

While Gov. Rendell and others continue to pursue tolling and leasing I-80 – as well as other provisions of Act 44 – as the solution to the state’s road funding ills, others are already working on a fix that doesn’t include tolling … or privatization.

Rep. Argall says he and other lawmakers are working together – including across party lines – to develop some alternatives to fund transportation in the state.

The lawmaker says a bipartisan approach is absolutely vital; the two parties hold nearly the same number of seats if the state House of Representatives, with only a slim margin for the majority.

“Really, nothing can move through the House without some kind of bipartisan effort,” he said.

Meanwhile, Argall says it’s becoming less likely that the governor could repeat his financing maneuver of 2005, shifting hundreds of millions in highway funds to mass transit.

That’s not, however, because the governor has had a change of heart. It’s because of the way highway financing works in the state.

“In order to move any more federal dollars to mass transit, local planning agencies would need to give their OK,” Argall said. “And I am told that they have pretty much explained to the governor that there’s no way that they will allow him to continue to do what he has done in the past.

“He has used up some money to the tune of – as I said – in excess of $400 million for which there was no specific use, but if he were to try to move additional dollars, they would mean canceling road projects and bridge projects left and right all across the state. And this is just something that they’re not willing to do.”

Even if the financial well that so much highway money has gone down is now capped, Argall is not certain that will solve the state’s road funding needs.

The lawmaker says a movement is afoot to look at other highway funds – those diverted to transportation enhancements, those diverted to state police, the money diverted to any of a number of purposes having nothing to do with paving roads.

“I know that there’s been a series of meetings with our two United States senators, as well as our congressmen representing Pennsylvania, to see if there is indeed a way to draw down some additional federal dollars,” Argall said.

“I think everyone understands that certainly in the urban areas, mass transit is very important, just as you know in the rest of the state, the roads and bridges are very important. And we knew we had a problem here even before we saw the bridge over the Mississippi River falling in there in Minnesota.

“Where it’s a representative sitting in the middle of Philadelphia, or someone like me from a much more rural constituency, I think we’ve acknowledged each others’ needs; it’s just a questions of sitting down and working out the details to move this ahead.”

--By Mark H. Reddig, host, Land Line Now
mark_reddig@landlinemag.com

Originally aired on: December 20, 2007