HARRISBURG -- When Democratic Gov. Ed Rendell first proposed a tax on oil company profits in early February, its political prospects seemed rosy, since many motorists are angry about huge oil company profits and the projected $760 million a year in revenue would go to bail out struggling mass transit agencies.
But the tax on Big Oil has turned into a tough sell with state legislators, who fear the oil giants will just pass the added costs on to drivers in the form of higher gasoline prices.
"I think this tax is one that will be difficult to get passed," state Rep. Joseph Markosek, D-Monroeville, chairman of the House Transportation Committee, said yesterday.
The proposed 6.17 percent tax on oil company profits would be the first such tax in the nation, he said, meaning the companies would almost certainly file lawsuits seeking to overturn it and prevent other states from enacting one.
Even if the state would win, such litigation would keep the tax from taking effect for months, meaning deficit-ridden bus and trolley agencies, such as the Port Authority of Allegheny County and the Southeastern Pennsylvania Transit Agency, wouldn't get needed financial help. The agencies have said they need to know by July 1 how much state aid they will get, because that's when their 2007-08 fiscal year starts.
The Port Authority is facing an $80 million deficit for 2007-08 and SEPTA is facing a $150 million deficit, transit agency officials told the House Appropriations Committee. Without adequate state aid, the agencies will need to consider slashing service, raising fares even more than already projected or shutting down for two months of the year.
Mr. Rendell has said he'll try to stop oil companies from passing the tax along to motorists, but Rep. Mario Civera, R-Delaware, was skeptical that it can be stopped.
"If this oil profits tax is seen as leading to higher gas prices, the General Assembly will slide away from it," he said.
Rep. Douglas Reichley, R-Lehigh, asked state Transportation Secretary Allen Biehler if the tax would apply only to the seven major oil companies or also to smaller companies that distribute home heating oil. Mr. Biehler said heating oil distributors would have to pay it also, which led to fears about increasing heating oil prices.
And legislators from rural areas, such as Reps. Dave Reed, R-Indiana, and Fred McIlhattan, R-Clarion, said their constituents, most of whom don't use mass transit, likely would be hit hard by higher gas prices. That, in turn, makes it hard for them to vote for such a tax.
Rep. Dan Frankel, D-Squirrel Hill, said he can support the oil company tax, because mass transit is vital to Pittsburgh and its surrounding towns, where many residents take buses and trolleys to get Downtown to work.
"But are there 102 votes in the House for it now? No," he said. That's the minimum number of votes in the 203-member House needed to pass a bill.
Support for the tax also came yesterday from a Port Authority labor leader, Patrick J. McMahon, president of Local 85 of the Amalgamated Transit Union,
"We endorse the governor's plan to raise money for mass transit by taxing oil company profits. This is a sensible solution," he told the Appropriations Committee.
Mr. Markosek said the problem of funding mass transit is serious, especially for the economies of southwestern and southeastern Pennsylvania.
"I don't think the seriousness of the problem has sunk in with much of the public and even with some legislators," said Mr. Markosek, adding that something must be done by the start of the new fiscal year July 1.
Other options for funding public transit have been talked about but none is close to passing. Some are:
Raising the statewide 1 percent realty transfer tax, or allowing regions, such as the five-county Philadelphia region or several counties around Allegheny County, to raise the realty transfer tax in just those areas. Real estate agents oppose such a change, saying it will increase home prices and make home buying more difficult.
Doubling the current $2 daily fee paid by people who rent cars. Mr. McMahon favored that idea, saying it's a way to collect more money from out-of-state people visiting Pennsylvania.
Increasing fees for driver's license renewals, motor vehicle registrations and/or vehicle tire sales.
In addition to an oil profits tax for mass transit, Mr. Rendell also has proposed leasing the 500-mile Pennsylvania Turnpike to a private firm as a way to raise $965 million a year to repair thousands of ailing roads and bridges. The turnpike commission has hired powerful lobbyists to fight that idea.
Mr. Rendell has said that if legislators don't like his ideas for helping transit agencies and repairing roads, they should come up with alternatives of their own.
