Corbett Plan For Transportation Funding: Uncap Wholesale-Gasoline Tax

Philadelphia Inquirer

Gov. Corbett is about to roll out a long-awaited plan for solving Pennsylvania’s transportation-funding crisis — by raising more revenue from a tax on wholesale gasoline.

The governor is scheduled to announce next week that he intends to uncap the so-called oil company franchise tax, according to two senior legislative staffers who are familiar with the proposal and spoke on condition of anonymity. That tax is levied on the wholesale price of gas and is now capped at $1.25 per gallon.

The administration estimates that uncapping it would eventually yield nearly $2 billion annually.

Administration officials could not be reached for comment Wednesday night. But the governor has publicly said several times in recent months that he was considering uncapping the tax, an idea also recommended by the task force he created to study transportation-funding options.

In its August 2011 report, that panel recommended a dozen ways to raise $2.5 billion needed to fix aging roads and bridges, as well as supporting mass transit.

Chief among the proposals — and by far the one that would raise the most money — was lifting the cap on the franchise tax. Panelists said it could raise $272 million in the first year and up to $1.3 billion by the fifth year.

The commission also recommended letting drivers renew their registrations every two years instead of annually, which would save PennDot an estimated $5 million, and raising driver’s license and registration fees to generate $574 million by the fifth year, as well as dedicating a slice of the existing sales tax to raise $200 million for transit.

It was unclear Wednesday whether Corbett’s proposal would contain any of the panel’s additional recommendations.

What is certain is that the governor’s plan will be a topic of fierce debate in the Capitol over the next few months, as it touches on an issue affecting every legislator’s constituents.

State Rep. Bill Adolph (R., Delaware), chairman of the powerful Appropriations Committee, reached by telephone Wednesday night, said he had not been briefed on Corbett’s plan, but had been told an announcement was coming next week – in all likelihood, in the Southeastern part of the state.

Corbett may find himself fielding questions about whether the proposal departs from the no-tax pledge he made in his 2010 campaign. And some have suggested uncapping the franchise tax on fuel distributors would inevitably trickle down to motorists in the form of higher prices at the pump.

In interviews, Corbett has said that multiple factors affect gas prices and that he had not ruled out having the state’s prohibiting distributors from passing an increase to customers.

The transportation-funding gap is not new. A 2010 advisory panel estimated the shortfall at $3.5 billion, which, if not addressed, would double by 2020. A principal reason: improved auto fuel efficiency has led to a decline in the state’s fuel-tax revenue.

Read more: