ELEPHANT CORNER: Corbett’s Transportation Fix Passes

In frigid conditions GOV. TOM CORBETT signed into law Transportation Funding Bill (HB 1060) near a construction site at Pennsylvania Turnpike 363 Interchange in Montgomery Co. The law will provide roughly $2.3 billion a year for improvements to Pennsylvania’s highways, bridges and mass-transit systems. LT. GOV. JIM CAWLEY in a recent speech in Philadelphia stated approximately 4,000 state-owned bridges are structurally deficient and 9,200 miles of state roads are in poor condition.

Funding for the infrastructure improvements is coming from a combination of the removing of the cap on the Oil Company Franchise Tax and increased fees on vehicle and other fees. Also the law eliminates 12-cent-per-gallon state tax charged consumers at the pump.

The passage of the bill was not easy as many members of the State House of Representatives were not on board. Some rural members are opposed to funding mass transit, which they conveniently forget reduces the need for additional roads and repairs. Some of the more-conservative members thought the bill raised taxes. The Corbett Administration believes we are removing an arbitrarily set cap on the OCFT.

The OCFT is imposed on wholesale sellers of fuel. This law charges a variable rate fee on most carbon fuels. The capped rate currently is roughly $0.20 per gallon of gasoline and was set at a time the Commonwealth did not expect gasoline prices to rise above $1.25 per gallon. The bill uncaps the OCFT incrementally over five years.

PennDOT fees charged drivers and vehicle owners will increase. The $36 annual registration and $29.50 license fee (which is paid every four years) will not be adjusted until 2015, when the increase will be calibrated to a formula based a two-year average in the Consumer Price Index. Assuming recent inflation rates, the registration and license fees would increase by $2 and $1.50 respectively in 2015. Please note the last increase to these fees occurred in 1997. The fees will be adjusted for inflation every two years after that. Drivers will have the option to register their cars for two-year periods instead of annually, by paying twice the annual fee. The tiny license-plate stickers issued with registrations will be abolished.

A number of naysayers complain the tax increase will hurt families. Based on current prices, the oil-franchise tax could rise by 28.5 cents per gallon over five years. But don’t forget the law also eliminates a 12 cents-per-gallon state gasoline tax. How the changes will affect the individual driver is unclear as I cannot predict how much of the OCFT increase will be passed onto consumers. Some believe the consumer will shoulder the whole increase, but this assumes the gasoline buyers are “price-takers” and cannot shop for better prices (I do! Don’t you?).

PennDOT SEC. BARRY SCHOCH said, “Even with this revenue enhancement in place, the average driver would only pay about $2.50 more a week in the fifth year of the plan, less than the cost of one gallon of gas. In return, the commonwealth will receive $2.3 to $2.4 billion in transportation improvements.” I think the average family can afford this increase in exchange for safer roads. Also it is only fair the infrastructure improvements are paid for by the people who use the roads.

I believe many of the naysayers are concerned that this bill is positive for Corbett politically.

The law roughly $2.3 billion in revenue (by the fifth year) is expected allocate $1.3 billion to state roads and bridges and about $480 million to $495 million for public transit. The remainder of the money is to be dedicated primarily to local governments for road maintenance and the Pennsylvania Turnpike. Local Philadelphia projects that are expected to be funded by this law include the $80 million in needed repairs of the Chestnut Street Bridge at 30^th Street and the $110 million for replacements of Vine Street Expressway bridges.

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