Trucks at Work

Pennsylvania tries to chart new transportation funding course

Governor Tom Corbett is attempting to chart a new course for transportation funding in the Keystone state – one nominally considered quite unusual for a Republican.

To finance a bevy of transportation projects – everything from road and bridge repair to bicycle path construction – Gov. Corbett (at right) wants to marry a 17% reduction in the flat liquid fuels tax paid by consumers at the pump, while simultaneously phasing out over five years the cap on the taxes paid by oil and gas companies on the wholesale price of gasoline.

By gradually eliminating the $1.25 cap on Pennsylvania’s Oil Company Franchise Tax, which is levied by the state on wholesale oil distributors based on the wholesale price of gasoline, he said the Keystone state should realize approximately $1.8 billion by the fifth year of the plan.

Here’s the governor’s breakdown of where all that potential tax money would go:

  • Approximately $250 million for transit
  • Roughly $200 million for locally owned roads and bridges
  • Approximately $80 million for a multi-modal fund providing improvements to bicycle and pedestrian facilities, ports, airports and railways
  • Approximately $85 million for the Pennsylvania Turnpike Commission to pay for expansion projects
  • Approximately $1.2 billion for improvements to roads and bridges maintained by the Pennsylvania Department of Transportation (PennDOT)

“It is time for the oil and gas industry to pay their fair share of the cost of the infrastructure supporting their industry,” Corbett explained in a statement yesterday. 

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

One reason Corbett is seeking more funds for transportation – especially for highway maintenance and repair – is that PennDOT has basically been robbing Peter to pay Paul to some degree over the past few years; restoring or replacing old bridges at the expense of roadways.

Indeed, PennDOT said that the number of roads in poor condition within the Keystone state has risen from fewer than 7,500 miles in 2007 to more than 9,200 miles in 2011.

Yet the question remains: will Pennsylvania’s legislature sign off on what’s basically a tax trade off, exchanging a reduction in fuel taxes paid at the pump by consumers for higher taxes paid by oil distribution companies?

More importantly, will such taxes bring in the expected revenue?

We will see as the debate over this funding proposal heats up. 

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