Federal highway officials on Tuesday again rejected Pennsylvania's application to place tolls on I-80, ending the state's novel three-year effort to raise hundreds of millions of dollars a year for roads, bridges and mass transit projects around the state.

Gov. Rendell said he would call a special session of the legislature to fill the $470 million gap left in his proposed budget by the Federal Highway Administration decision. He said the legislature needed to act by July 1, the start of the next fiscal year.

In Philadelphia, the federal decision would mean about $110 million less for SEPTA projects such as a "smart-card" fare system, a remodeled City Hall subway concourse, and efforts to replace outdated power stations for the commuter rail system, SEPTA officials said.

Statewide, the funding loss would mean repairing 300 fewer miles of roads or fixing 100 fewer bridges a year, state Transportation Secretary Allen Biehler said.

State legislators said they had no alternative plan to the proposal to toll I-80. Rendell said he would again urge lawmakers to impose a gross profits tax on oil companies and might again propose leasing the Pennsylvania Turnpike to a private operator.

Other possible sources of money could include higher gas taxes, motor vehicle registration fees, and real estate transfer taxes.

"People understand that if they want safe bridges, good roads, and potholes eliminated, you cannot wait for the pothole fairy to do it - you've got to pay for it," said Rendell.

"The options are mostly painful," said State Rep. Joseph F. Markosek (D., Allegheny), chairman of the House Transportation Committee. He said that an increased gas tax would be "terribly unpopular" and that the legislature probably would have to come up with a variety of measures to raise money.

"We can't cut our way out of this. The number is too big. We have to have new sources of revenue," Markosek said.

The rejection of the toll plan was based, as it was in the past, on federal rules that require tolls on an interstate be dedicated to improvements on that highway. Instead, Pennsylvania's plan called for the income from the tolls to be spread around the state.

"We based today's decision on what is allowable under federal law," U.S. Transportation Secretary Ray LaHood said.

At a news conference in Harrisburg, Rendell said, "We're obviously disappointed. We think their legal analysis is incorrect."

Ever since Rendell signed the sweeping transportation-funding Act 44 in July 2007, the state has been trying to get federal permission to place tolls on I-80. Federal approval is necessary since the interstate was built largely with federal funds.

Tuesday's decision was the third time the FHWA had turned down Pennsylvania's application. Rendell said his administration would not try again.

In anticipation of getting the approval - and the toll revenue - the Pennsylvania Turnpike Commission already has borrowed more than $2 billion to pay for transportation projects around the state. To repay that money, the commission will need to increase tolls on the Pennsylvania Turnpike in coming years.

"We'll do what we have to do to repay that debt," said turnpike chief executive Joseph Brimmeier. "We're anticipating about 3 percent a year increases in tolls and we'll have to adhere to that."

The push to place tolls on I-80 divided the state along geographic lines.

In the Philadelphia and Pittsburgh regions, most civic leaders and politicians supported the tolls. Along the I-80 corridor in northern Pennsylvania, citizens and local leaders were strongly opposed, arguing that the tolls would cripple businesses and divert truck traffic to local streets.

Reaction to the federal decision Tuesday was similarly divided.

State House Democratic leaders called it "a very disappointing decision" that "cripples the Commonwealth's ability to repair and maintain Pennsylvania's roads and bridges."

Brimmeier, the turnpike chief, said, "We've got to take a look at the whole fairness issue - why should the southern tier have to pay the freight for the rest of the state?"

SEPTA general manager Joseph Casey said the loss of funding would "hobble the growth and rebuilding of the SEPTA system that our customers deserve and expect." He said it would leave SEPTA with "just enough money to pay for mandated expenses such as debt service, vehicle and infrastructure repairs and new equipment."

The federal action does not affect SEPTA's previously announced plans for fare increases averaging 6 percent, with no service cuts.

U.S. Rep. Glenn Thompson (R., Pa.), a leader in the fight against tolls, praised LaHood for the decision, saying he "followed the letter of the law."

"Act 44 never met the criteria set by the federal law," Thompson said in a statement. "This is the third time FHWA has turned down the application, and we can only hope the third time is the charm, and the Pennsylvania Turnpike Commission, governor and leaders in Harrisburg will get realistic about the Commonwealth's transportation future."

Truckers' groups, including the Pennsylvania Motor Truck Association and the American Trucking Associations, hailed the decision. "Pennsylvania's attempt to extract money from drivers on I-80 in order to subsidize road and transit systems in other parts of the state that provided little or no benefit to the users of I-80 is both poor public policy and illegal under federal law," said Clayton Boyce, of the American Trucking Associations.

The Pennsylvania Farm Bureau also praised the decision, saying tolls on I-80 "would have created an economic hardship for Pennsylvania agriculture, agribusiness and the food industry by increasing costs of everything that is transported" on I-80.
