Testimony: Mayor Rendell pressed for a reform to have a capital budget. He strongly opposed the current unified budget, because he believes the nation's need for infrastructure investments will never be addressed as long as we have the unified budget.

He cited studies by the U.S. Department of Transportation (DOT), the U.S. Environmental Protection Agency, and the General Accounting Office that show significant lack of investment in infrastructure. These studies found significant deficits in repair and maintenance of transportation, water and wastewater treatment systems, and the education infrastructure.

Although he supported the transportation bill, he said the only way to adequately repair the nation's infrastructure is to have a capital budget. He said even if the bill is enacted, the nation still falls behind the adequate transportation spending level in the DOT study.

He said Philadelphia desperately needs more infrastructure investments for economic growth. He described a situation where transportation infrastructure stymies the city's economic growth. The city's route 202 leading to King of Prussia, a successful shopping center near Philadelphia, is a two-lane road, limiting the activity of this suburban growth center.

He believes the nation is united to see infrastructure repair, because a recent poll showed that more than 70 percent of Americans are willing to pay more taxes for infrastructure repairs.

Lastly, he said underinvestment in infrastructure involves many issues including quality of life, economic, and environmental issues. He said this investment reduces traffic congestion; helps ensure competitiveness in the global market; creates thousands of good-paying jobs, especially for the population moving from welfare to work; and ensures the safety of drinking water.

Mr. Lebenthal supported the Mayor's testimony regarding the importance of these investments.

Questions from the Commissioners: Questions focused on the King of Prussia situation, the current budget process, informational and scoring aspects of investment spending, and debt financing at the expense of private investments or the GDP.

Q.    Shouldn't development in the King of Prussia area be paid by this area's real estate taxes?
A.    First, Federal dollars are used to leverage local dollars. Second, this development will provide jobs for welfare-to-work participants.

Q.    You recommend borrowing to fund infrastructure investment, but the borrowing squeezes out private investments. Comments?
A.    If you don't repair the infrastructure, there will not be private investment.

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