Corbett plan secures long-term transportation funding
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In rolling out a five-year plan to raise $5.4 billion for roads, bridges, public transit and other transportation modes, Gov. Tom Corbett threw in a little sweetener for drivers -- a 2-cent-per-gallon reduction in the flat tax they pay at gasoline pumps.
But the backbone of the governor's plan, elimination of a cap on wholesale gasoline taxes, would eclipse any savings from the tax cut. Based on current price and tax benchmarks, full removal of the cap would add 28.5 cents per gallon to the tax paid by wholesalers. Some or all of that could be passed on to consumers.
The governor's plan seeks to cushion the impact by removing the cap in three stages, pushing its full effect back to Jan. 1, 2017. The gasoline tax paid by drivers would be cut by a penny per gallon July 1 and another cent on July 1, 2014.
John Kulik, executive vice president of the Pennsylvania Petroleum Association, said it would be difficult to predict the precise impact of a cap removal on prices. Multiple factors go into the pricing of gasoline, and an increase in the wholesale tax would not necessarily cause a corresponding increase in the retail price, he said.
Pennsylvanians currently pay 32.3 cents per gallon in state taxes (including the wholesale tax). It is the 15th-highest state tax in the U.S., according to the Pennsylvania Highway Information Association.
The state taxes have not been raised since 1997 and, as currently levied, do not increase revenue as the price of gasoline rises.
The lack of inflationary growth, coupled with better fuel economy, has gradually withered the principal funding mechanism for transportation over the last 16 years. According to the budget proposal, Pennsylvania now collects less in fuel taxes per mile traveled than at any time since the taxes were first imposed in the 1930s.
The underinvestment has economic and safety implications, Mr. Corbett said in his budget presentation.
"Every year, nearly half-a-trillion dollars worth of goods and services move through our state transportation system. Transportation is the bloodstream of our economy. If it fails, our economy fails," he said. He also pointed out that school buses carry 1.5 million children on state roads and bridges each day.
He sought to counter critics who say the cap removal violates his campaign pledge not to raise taxes. Briefing materials referred to the action as "deregulation," and in his budget speech, the governor said, "This is not a new tax, nor am I proposing to increase the rate of the existing tax."
Other significant changes are part of Mr. Corbett's transportation plan: Vehicle registrations would be required every two years instead of annually, and license renewals would take place every six years instead of every four. The fee levels would not change -- for example, a two-year registration would cost $72, double the one-year fee of $36. Transition to the new system would begin July 1, 2014.
Mr. Corbett's plan would generate $510 million in the first year and $1.8 billion in the fifth and final year, well under the $3.5 billion per year in additional funding that a state advisory commission said was necessary to keep up the state's transportation infrastructure. It is also well below the $2.5 billion in new annual funding recommended by the governor's Transportation Funding Advisory Commission in 2011.
Sen. John Rafferty, a Montgomery County Republican who leads that chamber's transportation committee, said lawmakers have "some ideas of our own" that they'll be considering in addition to what's in the governor's proposal.
"There's two branches involved in this, the Legislature and the executive," Mr. Rafferty said. "The Legislature's looking at everything on the table, everything. We're going to do transportation. We're not going to do transportation light."
Democrats quickly denounced Mr. Corbett's proposal as insufficient.
"The plan doesn't go far enough to reduce the number of structurally deficient bridges, repair our roadways and provide sustainable funding for mass transit," said state Sen. Matt Smith, D-Mt. Lebanon.
"For two years, the governor has paid lip service to the need to fund transportation," House Democratic Leader Frank Dermody said. "What we got today is not anywhere close to adequate."
Others welcomed the plan as the start of a badly needed dialogue on transportation infrastructure.
"This is a big step forward," said Eric G. Madden, executive vice president of the American Council of Engineering Companies of Pennsylvania. He said the plan addresses all modes of transit and provides long-term and predictable funding.
Dennis Yablonsky, CEO of the Allegheny Conference on Community Development, commended Mr. Corbett, saying in a statement that he "has expressed his clear commitment to comprehensive transportation funding."
"We will be looking at the details carefully to ensure that this comprehensive package has sufficient funding for the Port Authority, SEPTA and the other transit systems in the counties across our state. Transit is vitally important to the competitiveness of our region in today's global economy," Mr. Yablonsky said.
In the first year, $300 million of the new revenue would go to state highways and bridges; $80 million to local roads and bridges; $60 million to a multimodal fund that includes airports, railroads and trails; $40 million to public transit; and $30 million for Pennsylvania Turnpike expansion projects.
The extra funding for public transit would rise to $250 million per year by the fifth year of the plan, but local governments would be expected to pay a greater share of the costs.
The required local match for capital funding would rise gradually from the current 3.3 percent to 20 percent, and the local match for operating funding would go from the current 15 percent to 20 percent. For Port Authority, matching funding is provided by Allegheny County.
The proposal also requires studies of consolidating regional transit systems. If agencies don't comply with the recommendations of such studies, the local funding match would rise to 25 percent; if they do consolidate, the local share would return to 15 percent.
Although the $40 million increase for transit statewide would barely cover the need for Allegheny County's Port Authority, county Executive Rich Fitzgerald said he is encouraged by the budget proposal and doesn't foresee the need for additional cuts at the transit agency.
"[The amount of money] is a concern," Mr. Fitzgerald said. "I need to see if there is any other money in there somewhere else.
"The commitment with the governor and the secretary of transportation ... was really to put a 10-year funding source in place, and this is the first step in that direction."
Mr. Fitzgerald said that rather than cuts he wants to grow the public transit system, so he was happy to see Mr. Corbett include incentives for regional expansion.
The next step there is to give other counties additional resources for local funding since Allegheny County has property taxes and the alcoholic drink tax and others only have property taxes, he said.
Municipalities would get additional help from PennDOT in repairing bridges and maintaining signals. Allegheny County owns many bridges, but Mr. Fitzgerald said it is too early to say whether the county would benefit from the governor's proposed changes there.
First Published February 6, 2013 12:00 am