The eighth annual Economic Roundtable held Jan. 20 at The Republican-Herald’s main office at 111 Mahantongo St., Pottsville, brought together Schuylkill County business leaders to discuss Pennsylvania’s new transportation law and its impact on their companies and the county as a whole.
Robert S. Carl Jr., executive director of the Schuylkill Chamber of Commerce; Richard A. Worst, general manager of Sapa Industrial Extrusions Inc., Cressona; Jay L. Newswanger, president of R&J Transportation Inc., Cressona; James A. “Jamie” Barton, vice president of Jack Rich Inc., Pottsville; and Kim Lorimer, vice president and director of safety and compliance at Evans Delivery Co., Schuylkill Haven, participated in the discussion.
Gov. Tom Corbett signed a bill in November 2013 providing $2.3 billion a year for improvements to Pennsylvania’s highways, bridges and mass-transit systems. The 40 percent increase from the $5.3 billion the Pennsylvania Department of Transportation spent on infrastructure last year comes from higher gasoline taxes and numerous motorist fees.
The tax is imposed on the sale of fuel to gas station owners and went into effect Jan. 1.
Pennsylvania ranks third in the nation in the number of bridges with 25,000 state-owned structures and first in those that need repair. Nearly 4,500 are deemed structurally deficient, according to PennDOT.
Schuylkill County has 500 bridges and nearly a third of them are structurally deficient. Of the 343 state-owned bridges, 83 are in need of repair. The remaining 157 are owned by either the county or municipality, and 81 of them are structurally deficient.
In August 2013, PennDOT announced new or increased weight restrictions on about 1,000 state and local bridges in an attempt to extend their life spans. New or increased limits were placed on 11 state-owned and 26 locally owned bridges in Schuylkill County.
Peter F. Banko, editor of The Republican-Herald, acted as moderator and asked the questions compiled for the roundtable. Henry H. Nyce, publisher of The Republican-Herald, also attended the roundtable and participated in the discussion.
The following is the text of the roundtable. It was edited for clarity and content.
BANKO: I would like to welcome all of you to The Republican-Herald’s annual Business Review Roundtable where we gather some local business and industry leaders to discuss about the economic climate and tap into your expertise.
I would like to thank you all for coming here today as we discuss the Pennsylvania transportation bill and its effects. The Pennsylvania state legislature approval of major new funding for roads, bridges and mass transit was one of the major stories of 2013. We have three questions I’d like to discuss, and please take as much time as you’d like to answer. We will be recording our conversation and the transcript will appear in the Feb. 28 edition of The Republican-Herald.
The first question is: How will the new funding law, which will raise at least an extra $2.3 billion annually to build and repair roads and bridges and underwrite mass transit systems through increased fuel tax fees and fines, affect your organization? Is it a good thing?
LORIMER: For our business, we have independent contractors and it is going to impact us as far as the fuel taxation, of course, but it’s more passed on to the contractor. We do pay the fuel taxation, so that will be a major impact. As far as it being a good thing, it’s a necessary thing. The roads need to be repaired, the bridges are deteriorating, so it’s definitely going to have a financial impact on the company and a lot of that is going to be passed along to the customer. We have a fuel surcharge now, it’s going to increase that exponentially.
BANKO: Do you have any idea of what it will be yet?
LORIMER: We have not projected that out yet. As I said before, the way we operate our business, it’s all independent contractors and every location is independently owned and operated. So, how that’s going to be decided is on an individual basis depending on the location.
BANKO: Jay, how about your business? Is it a good thing and how will it affect you?
NEWSWANGER: Actually, it’s good thing and a bad thing as far as the increase in costs to repair roads and bridges. As far as our business dealing with the transportation end of it, I guess we get hit both ways. We have schools, naturally those costs of tax increases are going to have to be passed on to the districts. And being that the districts are already strapped for money, we have to look at other ways that maybe we can conserve there.
As far as our motor coaches, that’s a big impact, traveling from the state of Pennsylvania and throughout the country, so we have to pass it along to the customers. You’re talking, maybe for us, which our tour booklets for retail tours are actually out, and with the budget being passed, as far as our company, we’re not going to go back to the customer and say,
‘We need 3 or 4 percent more on our tours.’ We’re going to have to absorb that cost of fuel taxes.
The other big thing is the school buses. We get a special license rate and that’s going to jump up and our association fought that to keep it lower, which it did. I think they were looking at something like a 200 percent increase on the registration fee for school buses. So we kept that down.
The biggest thing is going to be the schools. Right now we work with a couple school districts, which we are compensated for increases but they can’t absorb it all, so naturally we have to absorb that as well.
The second thing, our drivers have CDL licenses, and we have to reimburse all our drivers who drive school buses and motor coaches for their CDL licenses, we actually have to compensate and that’s going to be a big jump as well.
As far as our aspect, it’s hurting the company, but then our bridges and roads need repairs.
BANKO: Jamie, how about for Jack Rich? How will it affect you?
BARTON: I’m going to answer the first part of that question first, and yes, it’s a good thing, and how it will affect us. I’m a wholesaler and retailer of fuels, so very candidly under this new bill immediately in 2014 we’re seeing the cost of diesel fuel increase by 12.9 cents a gallon and the price of gasoline increase by 9.5 percent a gallon. So immediately that has increased, however, that has increased across the whole industry in the state of Pennsylvania.
Where it is affected more are companies closer to the borders, Ohio, New York, New Jersey, Delaware and West Virginia, where those folks are faced with people who will go and find their fuel across the borders, not necessarily retailers.
The question could be raised well aren’t they doing that already, maybe, but now we’re looking at Pennsylvania being either No. 1 or No. 2, I’m not sure, the highest in the country for fuel tax.
I go back to my first thing, it’s a good thing, infrastructure was horrible, it needed to be fixed and it needed to be fixed for some time. There are people that will say for years this has been going on, and there are legislators and lawmakers have been talking about this for at least 20 years. And candidly, I think they took the easy way out. I think it’s very easy just to raise taxes, as opposed to doing the hard work and asking where can we become more efficient. I don’t want to digress.
How is it going to affect my business additionally, we don’t have tax parity, so for compressed natural gas, liquefied natural gas, electric charge and petroleum. The roads and bridges don’t care what’s powering the vehicle that’s wearing them out. There should be tax parity for compressed natural gas, liquefied natural gas and electric as well.
BANKO: Do you know exactly what your taxes will go up in the coming years with this bill?
BARTON: I think it’s going to be dependent upon what’s done with this money.
There has been talk, I don’t want to put you on the spot, Bob, but Bob Carl may know better than me on that. Talk is almost as much as 29 cents a gallon and as little as 20 cents a gallon.
We strive to be No. 1 in life and one of the things we have to do is open Pennsylvania back up to business. A huge part of that is our infrastructure. I think we all agree that as businesses we want to prosper, we want to grow, that’s a big part of it. Being No. 1 in taxation, we want to be No. 1 in job growth, we want to be No. 1 in public education and SAT scores, those are the things you want to be No. 1 in, not necessarily the highest tax. I don’t think that’s the goal we’re looking for.
BANKO: Bob, how about the chamber? How do you see it affecting the members?
CARL: Well, obviously as Jay aptly said it’s a two-part story, the fear is that everyone is going to get a cost increase that’s moving goods and services via transportation and that is at a very difficult time in our economic life in the United States, so no one wants an increase. But, I think we need to look at the problem and what’s happened quietly if we continue to do nothing.
Governor (Tom) Corbett and Governor (Ed) Rendell both had transportation funding advisory commissions, and their reports came back very similar. So, it wasn’t a political issue, it was a factual issue. It showed that we had a 3.5 billion-dollar deficit growing at a million dollars a day to put into transportation maintenance and reform, meaning roads, bridges and mass transit. So it was growing exponentially, the prediction was that 3.5 was going to turn into 10 billion by 2020 and with the way the legislative cycle works there was real concern if it did not pass now with elections coming up, it probably was three or four more years until it could be discussed again.
So, I think that the reports that the governors had the commissions do if you read them, and they’re available online, again it’s transportation funding advisory commissions of both those governors are compelling. If you read the report it’s more than a concern, it’s absolutely frightening.
We can go back to Jamie’s point. We are No. 1 in the nation in deteriorating bridges. How does that impact us, well PennDOT had just closed 1,000 bridges and some people thought that was politics, but it was legit. Like they should have been closed a long time ago but they had to start closing them thinking they weren’t going to have the funding for it.
So that would have just kept happening as well, obviously whether it’s Jay or we’re moving goods and services, we’re moving beams, we moving anything across these roads, all you need is one or two detours, and your 5 cents a year on your tax that’s going to be eaten up very quickly if you’re detouring 40, 50, 60 miles. We had situations in Schuylkill County where detours were already set up and were causing people to go 20 miles out of their way.
At the end of the day, from the Chamber of Commerce’s perspective, we let the members answer this question because we got actually challenged by our legislators on it. So we said we’ll answer that situation, we’ll create a survey, and we did. We put a 10-question survey out there and the results came back overwhelmingly, the lowest response was in the 70 percentile, and most of the responses were in the 80 and 90 percentile. They were answering the question we need our roads and bridges fixed, we need to address this issue. When I don’t know one person, including myself, if asked the question do you want gas at the pump to go up is going to answer that question yes, no one would individually answer that question yes, but collectively, if you’re asking what the mission of the Chamber of Commerce is, it’s to promote business and the majority of our businesses said to promote commerce and to have commerce succeed, both in Schuylkill County and in the state of Pennsylvania.
We need better roads and bridges, and unfortunately we got to a point where the price had to be paid immediately and I think that was the
correct decision and we just have to live with it.
But at the end of the day the way our roads and bridges were going it was going to create a lot more problems and there were a lot of statistics that showed that the cost to do nothing was going to actually cost each company more per vehicle than whatever this tax winds up being over the course of five years. The prediction is 28 or 29 cents.
But the truth of the matter is when you look statistically across the nation and when you look at what happens when this oil franchise tax is lifted. There is not a precise mathematical coalition, it’s the same thing if you go to the pump today and you say wow the price is up 10 cents. Jamie, probably being in the business, knows better how to answer that question today why the price went up, but it’s economic forces. We know if an oil field blows up it’s going to go up.
But at the end of the day there’s so much movement every week that I believe at the end of the day this is going to get lost. At the end of the day does anybody want to increase this cost, no, but for the betterment of commerce and by the response to the survey of our members we think this answer is absolutely yes. It has to be done.
BANKO: Henry, any thoughts on this?
NYCE: Yes. One question. Jamie, have you seen an uptick for conversion to either liquid gas or compressed gas?
BARTON: No, I haven’t.
NYCE: Have you seen it in fleets for businesses?
BARTON: There’s a lot of studies going on, and Kim might have seen this. We’re seeing a lot of studies, Henry, so maybe one truck in a fleet, the large fleets it boils down to infrastructure. Where do we get that compressed natural gas, where do we get that liquefied natural gas?
LORIMER: It’s so expensive, though.
NYCE: They’re talking about building a gas station up at Highridge, so one of my biggest concerns is we have a fleet as well, is it worthwhile to convert to gas.
BARTON: There’s a couple of things when you talk specifically about the state of Pennsylvania a lot of times the studies I’ve seen it’s not conducive because of the hills and the climbing you have to do here, you can’t get the power.
One successful company, I’ve just read about it in western Pennsylvania is Giant Eagle has been working on is SANGI, compressed natural gas that they’re working with.
NYCE: You’re right about the taxation.
BARTON: And electric (is) the same way and we all want to see renewable fuels, alternatives to gas and petroleum products. And I’m in the petroleum industry and we’re constantly researching that as well. But, the fact is they’re using the roads too.
NYCE: More so, in some cases.
NEWSWANGER: In our industry as far as the school bus industry actually I’m on the Board of the PA School Bus Association, and all over the state a lot of these boards are hitting big contractors up, why don’t you go to natural gas or SANGI? The cost to install it into your facility is unbelievable, and say for our industry we have close to 80 vehicles, that’s fine, you probably can save money, but the up front cost is just unbearable. And to pass that along to the districts it just wouldn’t justify the cost savings, unless you’re going to be there for years.
Like I said in transportation, schools are looking to cut transportation and consolidate where you can, so it would just be an unbearable cost to convert (to natural gas).
NYCE: We switched internally from oil to natural gas, and yes the conversion is expensive, but the payoff, it’s been paid off within 12 months. That’s the magic formula. I haven’t been able to nail that down, it’s just a question of you guys looking at it as well.
LORIMER: We’re actually not looking at it as much, of course a lot of our businesses are in and out of ports and each port has different clean port initiatives and that’s part of the clean port initiative and there’s also replacement filters, replacement trucks and upgrading trucks. So, few of our independent contractors are not programmed, but I don’t know of any of them yet that have actually replaced their trucks with alternative fuel because of the logistics of refueling and just the expense of it.
NYCE: Yes it’s not abundant. I know that, it’s not abundant now.
BANKO: Richard, how is the new funding tax affecting Sapa?
WORST: Obviously, we’re seeing the same impact in terms of fuel price
and cost, and unfortunately now this cost will get passed to the customer. For us, we have 25 facilities in the nation and this facility is one of two that are in Pennsylvania. So if you can imagine, I compete with sister facilities that are in Indiana, Florida, Carolinas and if they can produce the same material and don’t have to deal with the surcharge and can ship to New Jersey, New York or Virginia, obviously they’ve got a cost benefit on us. And again, we look at moving business around the United States based on where it best fits.
From a Pennsylvania standpoint, there’s no question that the infrastructure is in very bad disrepair, has been for a lot of years. I grew up in this state, been in and out of it numerous times and we have to do something about it obviously if you intend to have business here in Pennsylvania.
The concern that we have as a company, is that this bill when it was written, was to repair roads and bridge infrastructure as well as mass transit. And our fear is that a large portion of the dollars will go into mass transit in the larger cities in Pennsylvania, which frankly have no impact over us as a business, and will probably absorb the largest portion of the dollars and we’ll be looking at 10 or 15 years down the road another surcharge to actually fix the bridges and the roads which is our concern.
From the perspective of compressed natural gas, that is a big industrial segment for us, we actually supply CNG and seamless pipe to that industry.
The two biggest players in that industry being Worthington and Luxfer, both on the western side of the United States. And we are seeing a huge growth in that business, mostly tied to larger cities where their infrastructure for CNG exists, where they can do airports and shuttle runs and we’ve got some major programs underway right now with FedEx and UPS.
And I think long term based on the natural gas availability that industry is the infrastructure builds will grow far beyond the large cities. We don’t see it here, we don’t have any large cities.
If you go anywhere near any of the larger cities, and you look at the fleets that move people back and forth just at the airports, both taxis and buses, almost all of them are being converted to liquefied natural gas or compressed natural gas, and we’re a big supplier to that industry so we’re thrilled.
And we’ve got to tax them so it’s even better.
BANKO: The second question is: Overall, is the law a good move for Pennsylvania and its citizens? How will it make a difference if at all?
LORIMER: I think it’s necessary, so it is a good move because overall the safety is the most important thing, you don’t want to see bridges falling out from underneath, and the general safety of all the citizens is more important. So it is necessary and it’s going to make a difference.
I think it will have a lot less wear and tear for the average citizen as far as the potholes and just the logistics, too.
They repaired the bridge in Landingville, and my parents live in Landingville, and we talked about this at the chamber and we talk about it a lot at our transportation meetings. That was a little scary that my children go over that bridge every day.
Overall it’s good, because it’s necessary. It’s already gotten passed where it needed to be and now it’s time to make it happen.
BANKO: Jay, how about for you, is it a good move overall?
NEWSWANGER: I think it’s a good move overall, but I’ve just got some questions I guess, my concerns about mass transit, where is a lot of this money going to be going? And being in transportation a lot of it I know where it’s going.
As far as the tax issue for us, let’s say we have a motor coach going out of the state so we can buy fuel maybe 50 to 60 cents out of the state cheaper on a multiple day run so we tell our people to fuel up out of state.
Getting into taxes we pay every state that we run we pay taxes on.
Going into Pennsylvania, you’re looking at $4.09 right now for diesel, we can go out of state and maybe buy it in New Jersey to go to Atlantic City we can buy it for $3.70 or $3.60.
Not that we want to take that tax revenue away from the state, but we also have to look where we can gain some of that cost savings. Yes it is a good thing, but when you’re driving in Pennsylvania the wear and tear on the motor coaches sometimes it’s terrible.
Yes, it is a good move but like I said where this money is being disbursed is another question.
BANKO: Jamie, a good move overall for Pennsylvania?
BARTON: It is. I think Kim touched on something that we didn’t talk about safety, when you talk about Pennsylvania it needed to be done.
Known as the milkshake state, it’s embarrassing the only thing in your cup holder that’s not going to spill is a milkshake. It actually needed to be done.
As released some of the disbursement, the way I understand it the lion’s share will be used for state roads and bridges, $186 million this year as opposed to mass transit which is about $59 million this year.
Additionally, the way the tax is distributed offers most municipalities some benefits as well. They now have the ability that liquid fuel tax funds are available to them, actually 60 percent more available to them now.
Overall a good move, (but) I go back to the way it happened, that was the easy way out. It should have been done a long time ago, should have been done with a little bit more hard work becoming more efficient and less bureaucracy.
BANKO: Bob, is this law a good move?
CARL: Yes, I believe it’s a good move. I know that if you want to be one of the major economic powers in the United States and obviously Pennsylvania is labeled as the Keystone State for a reason, a lot of commerce goes through Pennsylvania.
And obviously economic development is why SEDCO (Schuylkill Economic Development Corp.) and a lot of other organizations, the Chamber and our greater business communities, our business leaders sitting right here at this table (are) always working to entice new business and industry into our county.
But if we are going to be a major economic engine, PA roads, bridges and mass transit need to be good. They need to be as superior as they can. If they lag behind unquestionably when we go to recruit businesses to come to PA, they’re not going to look favorably.
Now the counterside of it is, what we already discussed, and that is so does the cost profile getting looked at. Pennsylvania, interestingly, like when we compare gas prices, and we say why is that happening, what Jay’s talking about, why is it 30 cents different across the board? The short answer to it is Pennsylvania garners all of their road, bridges and transportation money out of gas tax. So you get rid of one, you create another, and you get cost shifting.
But that’s how Pennsylvania addresses roads and bridges. Not every state does it that way. Other states have other mechanisms to put their roads and bridges into repair, and I think that’s something that needs to be looked at and I know that is something we are going to talk about where we’re going in the future.
But at the end of the day, there’s not strictly one answer, there’s multiple answers why this pricing is out of skew.
But it’s real. If I’m running a business, small or large, the price point that I have to operate at is very real. We have to be very concerned about that because there is a tipping point in the economy ring, there’s a tipping point for every business. And sometimes a matter of X number of cents in any given line item times that has to be used in an annual budget, can be the tipping point for either in business or out of business.
But as we looked at this, as we surveyed our members, as we did the research on this, we believe at the end of the day that the 28 cents or roughly the estimate was $2.50 per motorist, per week, we believe that it was a user fee and we believe that it needed to be done to mitigate the ongoing crisis in structurally deficient roads and bridges.
I do want to make a comment on the mass transit that was a concern, and we had to look at that very carefully, and I sit on the Schuylkill Transportation Authority which obviously in this county runs a lot of buses and they were no different. They were struggling with their budget.
But what I wanted to share with you was they have statistics that show that urban Pennsylvania, Philadelphia and Pittsburgh, their money collected through this funding is going to pay more money back to rural PA then rural PA is going to pay back into urban.
So those statistics are out there. It’s a legitimate concern and we did have a lot of noise. We had one person in particular really making a big issues about funding mass transit in Philadelphia and Pittsburgh. On the surface that could be an alarming issue, but I want to encourage you to look at those statistics and to see that although that’s a concern there are statistics out there that show that the dollar distribution out of this is going to move more from urban to rural than rural to urban.
The other thing I wanted to point out to you is if you’re in urban Pennsylvania, pick any big city, and you take people off the mass transit system and you see how your roads and bridges handle that volume, you got a mega-problem on your hands. So you can’t just say, ‘Well I don’t think we ought to be funding mass transit because then you need to give me a solution,’ what you’re going to do when you put all those motorists on the road if they didn’t have mass transit, if it wasn’t working properly.
And I think a very important part for rural PA, Jamie was on it a minute ago, was local roads and bridges. If you know any municipality, we’ve got 67, and you go out to them and you talk to them and they’re all going to tell you they have no money in their budget to fix their local roads. In fact, just look at where we have a little bit of industry where I know we have a problem. Take the Mill Creek, for example. Take the industries in that industrial park, take obviously Yuengling, but that one municipality saying no trucks can go down Mill Creek, caused Atlantic Track over there to have to ship materials from another location, cause they can’t get it in there and almost when Atlantic Track was ready to expand almost cost them moving out of Schuylkill County. That’s not a well-known fact and they aren’t going to go scream about that, but the point is sometimes we don’t realize the pressure point that gets created over a local road or bridge that could be out of service.
At the end of the day, Jamie’s exactly right, this bill puts 60 percent increase in liquid fuels back into local municipalities and that’s probably the most forgotten about piece of this legislation because none of these municipalities have any serious money to deal with their local issues and this is going to be a huge boost to them.
So, sometimes we only think about how we’re getting it into major arteries and sometimes we have to think about once we get off the major arteries, and go into local industrial parks and things like that, what this means to the municipality and if a municipality has no tax money, which most of them do not, especially in Schuylkill County, except for the Highridge area obviously is the exception to that, but other than that these municipalities have no way to get out from underneath where they at. So I think we really need to look at what this means as the economic growth what we’re trying to do and I think a lot of advantages for commerce here in Pennsylvania.
BANKO: Henry, any thoughts on this subject? Is it good?
NYCE: Absolutely, It’s a good thing. In fact, it was getting a little hairy whether it was going to be done or not, and quite frankly, it should have been done 20 years ago. If you look at the Mady’s bridge, and it’s one I can walk to, it is scary just to walk across it, it’s rusted and just dilapidated. I’ve got to think there is a whole host of our local municipalities that are suffering from the same thing with the state roads.
It's something that had to be done.
BANKO: Richard, your thoughts?
WORST: Again, I think having grown up in this state, 50 years later we always were the joke of northeast United States. Drive anywhere in Pennsylvania and you’ll find potholes.
In Pennsylvania and nowhere else, you can drive to New York, you can drive to New Jersey, both states I have lived in at one time or another... very, very different. And again the fact that we are here we need to get our products in and out of here, we need to have an infrastructure system that handles that.
If the dollars get applied appropriately and actually go into the infrastructure and into the bridges and into the roads and allows the opportunity and affords the opportunity to move material in and out more effectively then we’re all for it.
Again we will, as you will, pass that along to our customers, we have no choice, as that fuel surcharge hits our trucking firms we will obviously pass that along to our customers.
If that puts us in a negative cost-competitive situation, we have to deal with that situation as it occurs. We don’t frankly believe it will be a huge impact to our overall business.
We’re better off having a reasonably good infrastructure system than we are not being able to move 40,000-pound trucks in and out of Cressona.
BANKO: The third question: Kim, everyone seems to think it was necessary to fund the infrastructure improvements, but is this type of tax increase and fee increase the long-term solution?
LORIMER: I think it was somewhat kind of the easy way out. Other states have other programs where they fund the type of revenue you need. Our lawmakers need to look at the other states to see how they fund and look into other revenue streams that we currently have and revenue streams that we could have with potential luxury tax on something else.
You can’t continue to hit the fuel tax, that can’t become a continual thing.
There comes a point where this is going to put some businesses out of business because of that increase of that particular expense.
Bob already touched on it. There is a tipping point where it’s going to put businesses out of business. They really need to look into alternative revenue streams and look at income already coming into the state as well something else that they might be able to have a revenue steam from.
BANKO: Jay, on long-term solutions, is this it?
NEWSWANGER: Personally, I don’t think so, in our industry being in the touring industry as far as Schuylkill County setting up tours, there is going to be a big impact with increasing cost to our clients, senior citizens or any group.
The state has to look at something else other than continuously taxing fuel.
Like I said, it doesn’t only impact our tourism it’s going to impact our school transportation. I looked at some figures and we’re using about 1,000 gallons a day as far as fuel and gas, when you take 20 cents a gallon, somewhere along the way we have to pass it along to get the roads and bridges up to where they should be. I think it’s a good thing, but the state has to look at something else to help subsidize the funding of roads and bridges.
In Schuylkill County, we start increasing our costs, I can just use a New York trip going from maybe $37 up to $43 to $45 to cover that fueling costs, people won’t travel. We try to keep our rates low, but it is getting hard to keep it down, and now we start competing with tour companies out of the county, Berks and Lehigh County, and we do a lot of pickups in both of those counties on our way for different tours.
I would hope years to come that the state does look at any other alternatives as far as increasing revenue to fix the infrastructure.
BANKO: Jamie, you mentioned you thought this was the easy way out, what other options are there for long term?
BARTON: This isn’t the long-term solution in my opinion, to answer the question first of all, this catches us up for the last 30 to 40 years. So now we need to go to work, specifically we need to reduce regulatory constraints, we need to become more efficient, we need to reduce bureaucracy.
Instead of increasing taxes why don’t we cut spending? If we run Pennsylvania more like a business and look at how we’re purchasing. We can’t always just raise our prices in business we have to figure out how to buy better.
If you let a business person in, you know, buy two bridges get one free.
Those negotiations that hard work takes place I think there’s a genuine opportunity.
The trophy of being number one in taxation is not a good trophy to have. This will catch us up though, it’s just not a long-term solution.
Now we need to go to work and figure out how we become more sufficient.
BANKO: That work really has to start now for when this law expires.
BARTON: It absolutely should have, but unfortunately this isn’t what gets people elected, that hard work, so we really need leadership.
BANKO: Bob, is this a long-term solution?
CARL: No, it’s not the long-term solution. I look at it from a quality management standpoint which I think most of us have had in our careers, one of those classes. I would say this is the fix but you got to get to the root cause of the problem. As Jamie said it catches us up. It actually doesn’t totally catches us up but it goes a long way to help us catch up.
The problem as I see it is this, there are certain things in life that are not a core function of government. I believe that transportation infrastructure absolutely is because until someone can tell me who’s going to take on this problem other than government. When you look at all the massive roads, bridges and mass transit I don’t have that answer and I don’t think anybody does.
Now we’re moving into new models. The state of Pennsylvania created incentives recently in the last five years for what they call public private partnerships and it’s really to encourage people to invest in transportation repair, construction and to get more private companies funneling money into transportation infrastructure. So that’s one move that is probably a good move if the theory can be put into practicality, if you can actually get investors to invest in what they call P3, or public private partnerships.
But I mean you guys (The Republican-Herald) wrote on Nov. 22 that unfortunately too many lawmakers have decided to pass the risk … rather to accept political risks.
That’s essentially the problem here. Transportation is but one major political football, but we all know that the legislature or Congress at a national level are dealing with a lot of issues. In the state of Pennsylvania two major ones are Medicaid and education. When you say we need to shift this, we need to find other ways to do it, I confer 100 percent.
But it’s going to take major roll the sleeves up and get going to decide what’s going to give. Because if you’re saying we’re not going to increase our taxes and transportation needs to be better funded out of the general fund, which it’s not being funded out of the general fund, then by de facto something else has to give.
When you get over in education everybody says they don’t want education touched and school districts are hollering about that, and you get into the poor and Medicaid and you get a whole other discussion there. It really is a zero-sum game unless you want to raise taxes.
It takes legislatures of courage. It takes really tough decisions. We know we had what I call split decision legislatively on this where our House members did not act and our Senator did. And I’m not here in any way shape or form to talk politics but I said this was a vote of statesmanship because at the end of the day something had to be done to fix Pennsylvania’s roads, bridges and mass transit. It was not an easy vote. It was a very difficult vote. It took leadership and it took courage to say I don’t really want to raise anybody’s profile and costs but we’ve got to do something because we’re in a crisis.
The question will now be can that same courage, can that same statesmanship get into rolling of the sleeves and to really address a lot of Pennsylvania’s problems?
This is not a time for the people that don’t want to work and this is not a time for the faint of heart, because obviously our economic situation is not improving, in my opinion, and the choices become more difficult and the money is shrinking.
Just look at Pennsylvania budget right now. They’re off budget and it’s because the tax revenue is down and why is that, because the economy is down and therefore tax dollars are being garnered off the economy.
So, at the end of the day, if we are going to go with what I believe everybody thinks should happen, other ways other than just heaping on new taxes, then it means tough choices. And it means that people are going to need to really sit there and be able to say no to something else to be able to say yes to this.
I encourage that. I think that is the ideal, but it really takes a lot of leaders, not one leader, it takes a lot of leaders collectively to do that and to call it out the way it is.
I hope we can get there because clearly the answer is not long term to continue to tax constituents because I would suggest that they can’t bear it today and they’ll be able to less bear it tomorrow.
BANKO: Henry, is this a long-term solution?
NYCE: No, it’s obviously not a long-term solution and we’ve got to go to
other sources. Quite frankly, the one that really seems that we really missed the boat was the taxation of natural gas, it’s taken out of our ground.
It’s driven revenue into some of our businesses. But overall for the population it is a huge resource, and it’s going out for free and it should have been taxed a long time ago.
BANKO: Richard your thoughts on a long-term solution?
WORST: Again, I don’t believe the surcharge is the long-term solution, you really ask yourself the question there has to be other revenue streams, natural gas, Marcellus Shale, obviously is one of them.
We look at the surrounding states and look at their budgets and the fact that their road systems and infrastructure are far better than Pennsylvania, you would think that our legislature, since we have one of the biggest, highest-paid legislatures in the country, second behind California, that we would study some of the other states and look at their revenue streams that they use to attack their roads. New York, New Jersey, doesn’t have significantly less traffic on their roads and they don’t have easier weather than what we have, so how is it that they’re able to maintain their road systems?
I’ve lived in both of those states, and it used to be a joke when we tell them we came from Pennsylvania. You’re good right up until you hit the border, and then our vehicles will be destroyed as we drive across your state.
Again, surcharge is an easy way out, that’s what I think.
Unfortunately, we have a lot of high paid representatives and senators in Harrisburg and they seem to take the easiest choice they can take so they can maintain the lifestyle they enjoy.
It’s unfortunate, but I don’t think that there is the leadership among the group and enough people in Harrisburg to take a hard stance to make decisions. They’re more interested in their long-term careers.
BANKO: Bob, what do you think about that? Is there leadership now that can do something in the future?
CARL: I think that it depends on the topic, as Henry already said this thing was teetering on the edge and actually a lot of people don’t know but the first time it went through the House it failed. And they thought they were close enough so they reintroduced it. That’s somewhat unusual that that happened. In fact it really kind of went through three different times in the House to get enough votes. And there was a lot of horse trading so to speak on issues to try to get this thing through. It could have just as easily failed.
We’re really good obviously at a national and state level on the easy things, we’re not very good on the difficult things. This was one of three or four top issues facing Pennsylvania. What’s next on the docket? Pension reform. It will be interesting to see what happens there. Pension reform could bankrupt Pennsylvania. Some people believe we’re almost in bankruptcy right now over pension.
Some of the problems, that’s a good one, was actually helped facilitated by the legislature and now they’ve got to figure a way out of it. So at the end of the day do I believe we can have leaders? Yes, but they have to be committed.
What’s our structure based on? Representation, working in the best interest of the people. I can’t cause somebody to want to do that. You have to have that inside you. You have to be going there everyday for the right reasons.
You have to put yourself in the position.
I tried to answer the transportation question of what I would do if I was in the legislatures spot or if I was in each of my 850 business spots and it wasn’t a slam-dunk answer. It was very gut-wrenching, it was a very difficult decision. But if you’re going to be a representative or senator either at the state or national level I suggest you’re signing up for combat pay.
Therefore, let’s go and let’s fight and let’s do the right thing for our constituents. If that’s not why you’re there and at the end of the day, which everybody in the room here seems to be concerned about that your mission becomes more, how do I get re-elected than how do I do the right thing? Well, I would suggest you can’t serve two masters. Sometimes doing the right thing gets you un-elected but you still did the right thing.
We need statesmen. We don’t just need representatives by name. I think everybody needs to make that personal choice of why you’re there.
We need to do a better job possibly of holding people accountable for the work they do. And not dramatic swings where we have these movements across the United States where today it’s popular to say nobody should ever create a tax.
I think we need to do what God gave us, the intelligence to make informed decisions on behalf of the people we serve and if we do that the answer is it’s possible. If you go there and that’s not your mission in life and you’re on another mission such as getting re-elected, then that’s not going to serve your constituents very well.
I think everybody has to answer the personal question and I’m not here to judge anybody, but I know how I would handle it if I was there and I believe that’s why we send them there. And if they don’t do that job, unfortunately we have to hold them accountable.
What I worry about in this country, it has become very popular for splinter groups to try to move the agenda through somewhat radical moves when at the end of the day it really comes down to a very simple question: Do you represent the best interest of the people?
How do you make those judgements and how do we hold those people accountable?
WORST: Peter just to speak to Rich and Bob’s comments and specifically about leadership. If you take a look at four governors ago here in Pennsylvania. Tom Ridge spoke when he was campaigning for his governorship of Pennsylvania and he talked about PA being the worst infrastructure in the United States of America. And it was one of his top platforms to be elected and it still didn’t happen. This is 20 years ago, and it still didn’t happen because we need leadership, we really need leadership, we need people, and Bob put it well, if you’re going to make the right decisions and maybe that’s not going to get you re-elected, but hard decisions need to be made in business we do that everyday. We need to run Pennsylvania more like a business.