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GUV'S WAY IS THE HIGH WAY

TAKING THE ROAD LESS TRAVELED TO FIND SEPTA AND TRANSIT SOLUTIONS

February 12, 2007

GOV. RENDELL has offered up two real, fresh solutions to fix the state's deteriorating roads and bridges, and pump money into cash-strapped public transit systems: Lease the turnpike, and change the system the state uses to tax oil companies.

We stress "real" because any solution that would have required Pennsylvanians to dig into their own pockets, especially in light of Rendell's proposed sales-tax increase, would have been wishful thinking, and dead on arrival in the state House and Senate.

And we say "fresh" because the governor's recommendations, especially the tax change on oil companies, reflect much-needed outside-the-box thinking, and echoes the message of change Harrisburg needs to hear - and heed.

With our new, reform-minded Legislature - OK, forget for a minute the $3.7 million in bonus pay some legislative aides received in the past two years, and the 139-count indictment of Sen. Vince Fumo - perhaps Rendell's $1.7 billion package will become a reality. But timing is everything.

This is a big week for transportation. Allen D. Biehler, state Transportation secretary, is scheduled to meet with SEPTA officials this week.

This is a big week for SEPTA, too. The transit agency, which faces a $140 million shortfall, will present two scenarios to its budget committee: (1) if it gets the state funding, and (2) if it doesn't.

We guarantee you, scenario No. 2 will not be pretty.

But the governor's package of dedicated funding could go far to end SEPTA's annual tortured budget drama.

Leasing the Pennsylvania Turnpike to a private company, in return for a huge cash infusion, is not unprecedented. Last year, Statewide Mobility Partners, a joint venture between Cintra Concesiones de Infraestructuras de Transporte SA of Spain and Macquarie Infrastructure Group of Australia, paid Indiana $3.8 billion for a 75-year lease of the Indiana Toll Road. In 2005, the same two groups signed a 99-year lease for Chicago Skyway toll road, giving the city a $1.83 billion boost.

There's no lack of interest for 420 miles of Pennsylvania's toll road, even though Rendell hopes to get $965 million a year for it. But the devil will be in the details, like the setting of present limits on toll increases and the fate of PennDOT workers.

In Indiana's case, workers were offered a chance to stay with the new owners or be placed in other state jobs. Most chose to stay.

But it is the new way of taxing oil companies that do business in Pennsylvania, called "combined reporting," that shows Rendell's really ringing the bell. In effect, he has merged his environmental sentiments with transportation needs.

For years, retail chain stores and other businesses used an accounting practice that helped them duck out from paying their full share on state tax revenue. According to Newrules.org, a site that encourages community building, between 1979 and 2000 total state tax revenue contributed by corporate income tax fell from 10.2 percent to 6.3 percent.

With combined reporting, the oil companies must combine the profits from all their subsidiaries before determining what part would be subjected to a 6.17 percent tax in Pennsylvania. Those companies would not be subject to the old 9.99 percent Corporate Net Income Tax. And so far, combined reporting has withstood court challenges.

Both of these ideas need enabling legislation. If this truly is a reform-minded Legislature, its members will see to it that they are quickly introduced and acted upon.

Philadelphia Daily News

 
 
 
 
 
 
 
 
 

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This Page Last Updated: Monday February 12, 2007

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