Transportation plan includes removing gasoline tax cap

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Gov. Tom Corbett's transportation funding proposal will include removing a cap on the wholesale gasoline tax over five years and a 2-cent reduction in the gas tax paid by motorists at the pump over two years.

The plan calls for raising $5.4 billion in additional funding over five years to support roads, bridges, public transit and other transportation modes.

"Every year, nearly half-a-trillion dollars worth of goods and services move through our state transportation system," Mr. Corbett said in his budget address. "Transportation is the bloodstream of our economy. If it fails, our economy fails."

The cap on the Oil Company Franchise Tax, paid by wholesale gasoline dealers, limits taxation to the first $1.25 per gallon of the wholesale price. Based on the current rate and average wholesale price, removing it entirely would increase the tax by 28.5 cents per gallon, to 47.7 cents, some or all of which could be passed on to consumers. The governor proposed lifting one-third of the cap on July 1, another third on Jan. 1, 2015, and the remainder on Jan. 1, 2017.

Mr. Corbett also is proposing a 2-cent reduction in the 12-cent liquid fuels tax, paid by motorists at the pump. A 1-cent reduction would take effect July 1 and the second 1-cent cut would occur on July 1, 2014.

Pennsylvanians pay 32.3 cents per gallon in state taxes. According to the Pennsylvania Highway Information Association, that is the 15th highest state gasoline tax in the U.S. The state tax has not been raised since 1997 and because it is levied as a flat cents-per-gallon fee, it does 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.

Two other changes are part of Mr. Corbett's 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 annual fees would not change -- for example, a two-year registration will cost $72, or double the current one-year fee of $36. Transition to the new system would begin July 1, 2014.

The plan raises an estimated $510 million in additional revenue in its first year, $300 million of which 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 additional 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 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, the local funding match would rise to 25 percent; if they do consolidate, the local share would return to 15 percent.

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Jon Schmitz: or 412-263-1868.


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