Last Tuesday, the Pennsylvania Senate Transportation Committee held the first in a series of hearings focused on optimizing the Commonwealth’s multimodal transportation system. The discussion highlighted both the financial challenges and potential solutions for modernizing infrastructure — particularly considering growing concerns over declining gas tax revenue and the need for a sustainable, long-term transportation funding model.

Through the 2024-25 state budget, the state allocated $80.5 million toward public transit and $80.5 to PennDOT for multimodal improvement projects, though Gov. Josh Shapiro has pushed for an annual $282 million increase in mass transit funding. This discrepancy speaks to a broader challenge in Harrisburg: balancing necessary investments with responsible fiscal management.

The PA Chamber submitted testimony to the Committee outlining our views on transportation infrastructure, mass transit, and funding.

 Challenges and Innovations in Transportation Funding

One of the central issues addressed in the hearing was declining gas tax revenue, particularly as more electric vehicles (EVs) enter the market. Doug Shinkle, transportation program director at the National Conference of State Legislatures, discussed how other states are experimenting with alternative revenue streams such as mileage-based fees, EV fees, and user fees for ride-sharing services.

Shinkle pointed out that states like Pennsylvania must explore diverse funding sources to fill gaps in their budgets. He noted that while mileage-based user fees are one option, they are still in their infancy and have yet to generate significant revenue in other states.

Public Transit’s Role in Economic Development

Paul Skoutelas, president and CEO of the American Public Transportation Association, emphasized in his testimony the critical role public transit plays in Pennsylvania’s economy, particularly in urban areas like Philadelphia and Pittsburgh. He highlighted the sector’s resilience through the pandemic, with ridership recovering to about 80 percent of pre-pandemic levels. However, he acknowledged ongoing challenges such as inflation and workforce shortages.

Skoutelas and several committee members discussed how transit systems also play an integral role with economic development efforts, particularly in rural areas where inadequate transportation can limit access to jobs.

PennDOT’s Funding Shortfall and Solutions

PennDOT Secretary Mike Carroll testified about the significant funding shortfall facing Pennsylvania’s transportation infrastructure. He estimated the shortfall is $9.3 billion.

While acknowledging that no single solution can address this gap, Carroll supported the governor’s proposal to allocate 1.75 percent of sales tax revenue to fund public transit. He emphasized that sustainable transit and road maintenance funding is essential for the state’s long-term economic health.

Looking Ahead

The hearing underscored a bipartisan consensus that Pennsylvania needs to modernize its transportation funding system to meet the state’s long-term infrastructure and economic needs. The next hearing, scheduled for Oct. 1, will focus specifically on public transit.

The PA Chamber will continue to advocate for forward-thinking transportation policies that ensure sustainable funding and promote economic competitiveness across the Commonwealth. To learn more about our transportation advocacy, click here.