Pennsylvania approves transportation funds; diesel tax to top 65 cents

By Keith Goble, Land Line state legislative editor | Friday, November 22, 2013

The Pennsylvania House voted 113-85 on Thursday, Nov. 21, to send a $2.4 billion transportation spending plan to the governor’s desk. The plan includes a nearly 40-cent-per-gallon diesel tax increase.

A week of negotiations and voting at the statehouse wrapped up with a final House vote to advance a funding plan to Gov. Tom Corbett that would raise various taxes and fees. Senate lawmakers passed the bill, HB1060, on Wednesday by a vote of 43-7.

Transportation funding is one of the top priorities of Corbett’s administration. State lawmakers have spent much of the year discussing how to address a $3.5 billion shortfall.

Speaking on Thursday night at a press conference with House and Senate members from both parties, Corbett said the bill’s passage marks “a new era.”

“This week the General Assembly made a dramatic choice to invest in the future of Pennsylvania. In doing so Republicans and Democrats, business and labor have set the stage for safety and economic prosperity here in the commonwealth,” Corbett said.

The road, bridge and transit spending plan is expected to raise about $2.4 billion annually in five years. It amounts to about 40 percent more than the state DOT now spends.

The main part of the plan would remove the state’s 12-cent-per-gallon flat tax on fuel and replace it by lifting the cap on the oil company franchise tax. Since 1997, the franchise tax is applied only to the first $1.25 per gallon of the wholesale price.

Currently, the state’s 39.2-cent-per-gallon diesel tax and 32.3-cent-per-gallon gas tax include a franchise tax rate of 26.1 cents and 19.2 cents, respectively.

Uncapping the franchise tax could increase the per-gallon tax on diesel by 39.8 cents over five years because the oil companies are expected to pass along much of the increase to consumers. The gas tax is likely to increase by about 28.5 cents.

By 2017, the diesel tax rate is expected to be 65.9 cents per gallon and the gas tax rate is expected to be 47.7 cents.

Many critics of the bill acknowledged the need to invest in roads and bridges but they say they don’t like putting more of a burden on taxpayers.

“The new taxes would cost motorists $5 more on an average tank of gas for a mid-sized car and $80 more on an average tank of diesel for a tractor trailer, but could be more as the price of gas increases over time,” Rep. Matt Baker, R-Bradford/Tioga, said in a news release.

Eliminating the cap on fuel prices now exceeding $3 per gallon would go a long way toward helping the state raise about $1.8 billion annually for roads and bridges once the cap is completely lifted. About $600 million would be applied to other modes of transportation.

Vehicle fees and fines would also be increased over the next five years. Specifically for trucks with a registered gross weight of 80,000 pounds, the fee will climb from $1,687.50 to $1,827 in the first year. Increases of $139 would be implemented during each of the next three years to top out at $2,244 by fiscal year 2017-2018.

Once fully implemented, fees will rise with inflation.

Pennsylvania would be one of at least nine states with IRP fees more than $2,000.

Rep. Kate Harper, R-Montgomery, stated that lawmakers had to approve the tax and fee increases because “doing nothing was not an option.”

“Nobody likes to vote for an increase in any tax (and fee), but I really felt like it was the responsible thing to do.”

Another provision in the bill would authorize higher speed limits on the state’s interstate highways and the Pennsylvania Turnpike. Speeds on the affected highways would be increased from 65 mph to 70 mph for all vehicles.

PennDOT and the Turnpike Commission would have the final say on any speed changes.

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