Don’t stall funds for transportation
The timing isn’t great, but state lawmakers shouldn’t allow the recent rise in gasoline prices to stall efforts to address Pennsylvania’s transportation funding shortfall.
After years of sitting in park, it finally appears the governor and state legislators might get moving on a plan that almost certainly will result in higher fuel prices for consumers but that could provide the money needed to repair and update deteriorating roads and bridges.
Coming after a string of recent increases that have pump prices nearing record levels isn’t an ideal time to ask drivers for more.
But if state officials clearly explain how the money will be used, how much prices could increase each year based on reasonable estimates and what it means – in rough roads and bridge limits – if the state fails to act, it could be enough to get grudging acceptance from motorists.
The biggest part of Gov. Tom Corbett’s plan calls for uncapping the oil company franchise tax over five years.
The tax is paid by distributors on the wholesale price of gasoline.
Currently that tax only is levied on the first $1.25 of wholesale price of gasoline. When the tax was created, legislators didn’t expect the wholesale cost to rise above $1.25.
On Friday, the wholesale price for gasoline for April closed at $3.27 per gallon on the New York Mercantile Exchange.
The Corbett administration estimates when the oil company franchise tax is applied to the entire wholesale price of fuel at the end of five years, it will bring in an additional $1.8 billion annually.
The administration has said that it’s possible that distributors won’t pass on the entire cost of the higher oil company franchise tax.
Technically that’s true, but realistically it’s not.
The Pennsylvania Highway Information Association reports that for 2013, the oil company franchise tax amounts to 19.2 cents per gallon for gasoline and 26.1 cents per gallon for diesel.
The administration could gain credibility by being honest and saying that if the entire tax is passed onto consumers, prices would rise by X cents per gallon per year.
The governor’s Transportation Funding Advisory Commission, which proposed uncapping the wholesale tax in a report, estimated that in the first year, the change would increase pump prices about 4.4 cents per gallon or about $22 a year for a motorist driving 12,000 miles a year in a vehicle averaging 24 miles per gallon.
While motorists might not relish the idea, the actual increase might be less than they feared.
And if motorists know that paying a little more will mean better roads and bridges, they probably will see it as an acceptable tradeoff.
The best time to tackle the wholesale tax on fuel would be when prices are falling. But it’s tough for state government to time that.
There is an opportunity for lawmakers finally to get into gear in addressing the state’s transportation needs.
They shouldn’t squander it.