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Legislature explores spectrum of funding mass transit
Income, sales, 'sin' taxes on the table
Saturday, May 12, 2007

HARRISBURG -- The state Legislature may give counties a "menu of tax options" to generate more local revenue to bail out deficit-ridden public transit agencies.

As they work to craft an alternative to Gov. Ed Rendell's controversial plan to tax oil company profits, House Transportation Committee leaders are focusing on giving county officials more fund-raising alternatives to the property tax.

"We need to find other ways for Allegheny County and other counties to fund mass transit for the people that need it," said state Rep. Joseph Markosek, D-Monroeville, chairman of the House Transportation Committee. "We have to provide them with more options for their local matching funds. There could be a mosaic of funding proposals."

Mr. Markosek and state Rep. Rick Geist, R-Altoona, his Republican counterpart on the transportation panel, are discussing some items on their "tax menu." Nothing is likely to be adopted before June 30, but options include:

Allowing counties to impose a modest earned income tax or a personal income tax, with all the money going to transit.

Giving counties authority to impose an additional sales tax of 0.5 percent or 1 percent on top of the 6 percent state sales tax, again with all revenue for transit. Mr. Markosek admitted this idea might not go over well in Allegheny and Philadelphia counties, where the sales tax is already 7 percent (6 percent state tax and 1 percent for county needs). But a higher sales tax for transit could work in other counties, he said.

Allowing counties to raise the realty transfer tax, which in most places now is 2 percent (half for the state and half for the locality) But such an option would be difficult in Pittsburgh and Philadelphia, where the transfer tax is already 4 percent. In the past, real estate agents have strongly opposed efforts to raise the state's 1 percent share of the deed transfer tax, claiming it would hurt sales of houses.

Using "sin taxes," additional local levies on tobacco or alcohol.

Mr. Rendell wants to impose a 6.17 percent tax on oil company profits as a way to provide $760 million in additional funds for transit. Legislators from both parties don't like that idea. So he has challenged them to come up with ideas of their own.

Currently, Allegheny County provides $25 million a year out of its general fund for Port Authority of Allegheny County. county Chief Executive Dan Onorato's only current revenue-raising tool is the property tax, and he doesn't want to use more of the county's existing revenue to help fund the Port Authority, which currently faces a $45 million deficit for the fiscal year starting July 1.

County officials want the state to provide more transit money. But Onorato spokesman Kevin Evanto said yesterday that the county likely would support a new funding mechanism, even if it is implemented on a county-by-county basis.

He said that Mr. Onorato "would probably be supportive" of options such as a local increase in the sales tax, realty transfer tax or establishing a county income tax.

"He's really welcome to the idea of other options," Mr. Evanto said. "Obviously if we had the means of shifting the $25 million to another funding stream -- especially one that had the opportunity to grow -- that would be a good thing."

Also yesterday, House Republican leader Sam Smith said House GOP members won't support more state aid for mass transit unless two things happen. He said each local transit system must secure a larger share of local funding, and the transit agencies themselves need to be managed better -- meaning reduce their costs. He said that bus, trolley and train riders also must pay "their fair share," meaning that fares could rise.

Currently, Mr. Smith said, the Legislature already provides more than $800 million statewide for transit, including nearly two-thirds of the Port Authority budget and three-fourths of the SEPTA budget in Philadelphia and four neighboring counties. A very small percentage of funds currently comes from local sources, he said. Mr. Smith, Mr. Geist and many other legislators of both parties think the state is already doing its share for transit riders.

Mr. Markosek noted that while Philadelphia County now has an extra 1 percent sales tax, the other four counties in SEPTA -- Bucks, Montgomery, Delaware and Chester -- don't. So perhaps they could each enact a 1 percent county sales tax to aid mass transit, which is used by many suburbanites to get to jobs in Philadelphia.

As if finding new ways to raise $760 million more for mass transit wasn't tough enough, it's only half the puzzle facing legislators. They also must find a way to generate at least $965 million in new funding to fix roads and bridges. Gov. Rendell has proposed leasing the Pennsylvania Turnpike to raise that money, but the Turnpike Commission is putting up a strong fight against his idea.

Everyone agrees it has to be a package deal -- approving legislation to bail out transit and help roads and bridges at the same time. Mr. Markosek has set a goal of solving the transportation crisis by June 30, which is also the deadline for adopting a new state budget.

"I am committed to solving our state's transportation funding problems," he said. "We cannot allow the deterioration in transportation to continue."

First published on May 11, 2007 at 11:19 pm
Tom Barnes can be reached at tbarnes@post-gazette.com or 717-787-4254. Ed Blazina can be reached at eblazina@post-gazette.com or 412-263-1470.
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