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Falling Gas Prices Will Have No Effect on New PA Funding Law

December 10, 2014 by · Comments Off on Falling Gas Prices Will Have No Effect on New PA Funding Law
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Price changing on gas signRetail gasoline prices have fallen to the lowest levels in more than five years, and many are wondering whether this drop will negatively affect the revenue available from the recent enactment of Act 89, PA’s most significant comprehensive transportation funding law since 1997.

The answer is no…but here’s why.

Act 89 did not change the fact that Pennsylvania’s highways are still funded by a user-pay system. Fuel taxes on gasoline and diesel remain the cornerstone of this user pay system. However, only about 11 percent of the actual price of a gallon of gasoline is determined by federal and state taxes. The vast majority is dependent upon the market price of crude oil.

The authors of Act 89 were wise in that they protected the state revenues derived by Act 89 and by effectively freezing the calculation rate used to determine that state tax level. Prior to Act 89, a large portion of the state tax rate was dependent upon a calculation of the average wholesale price of gasoline and then was run through a formula. An artificial cap was placed on this calculation formula in the mid 1980’s. This is the main reason Pennsylvania’s highway funds became stagnate because the cap was reached in the early 2000’s. Read more

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Impact of uncapping the OCFT explained

February 18, 2013 by · Comments Off on Impact of uncapping the OCFT explained
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Gasoline Pricing ComponentsIn the wake of Gov. Tom Corbett unveiling his transportation funding plan, there has been considerable discussion over the impact on gasoline prices of uncapping the Oil Company Franchise Tax.

The OCFT is a state tax levied at the wholesale level. To be sure, a wholesale tax will affect the retail price, but state taxes account for only about 11 percent of the price that motorists pay at the pump. A recent op-ed article by John Kulik, of the Pennsylvania Petroleum Association, sheds some light on the various components of retail fuel prices.

Nearly two-thirds of the retail fuel price is driven by the cost of crude oil, Kulik explains, and that cost is determined by world commodity markets. He also notes that federal environmental regulations requiring three grades of gasoline in the summer months in Pennsylvania add significantly to the cost. Some market experts suggest that settling on fewer summertime grades – there are currently about 20 nationwide – could reduce the cost per gallon considerably. Read more

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Gas tax running toward empty

September 19, 2012 by · Comments Off on Gas tax running toward empty
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Nearly everyone seems to agree that the federal and state consumption taxes on fuel are becoming obsolete, but solutions are not easy to come by.  The federal gas tax hasn’t been raised since 1993, and the state tax since 1997.  Meanwhile, improved fuel efficiency, hybrids, alternate fuel vehicles and inflation have sliced the tax revenue and its buying power considerably, and consumption taxes in general are at odds with federal energy policy.  Here’s a menu of options, courtesy of the Wall Street Journal.  Click here to read the article.

 

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Case study: the cost of doing nothing

July 4, 2012 by · Comments Off on Case study: the cost of doing nothing
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The Pittsburgh Post-Gazette reported recently that a three-mile stretch of Parkway West – from Green Tree to the Fort Pitt Tunnel – has received the dubious distinction of being ranked as the ninth-most congested stretch of highway in the country. 

According to INRIX, an international firm that uses global positioning technology to track the movement of traffic, the average trip through that three-mile stretch takes 13 minutes.  At the 55 mph posted speed limit, it SHOULD take about 3 minutes and 15 seconds.

Now bear with us while we lay a little math on you.  If it takes you an extra 9 minutes and 45 seconds to drive that three-mile stretch through stop-and-go traffic, then you have driven the equivalent of 9 extra miles.  If you’re a commuter who drives it every weekday, twice a day, by the end of the week you will have driven the equivalent of 90 additional miles.

If your car gets 20 miles to the gallon, you’ve wasted about 4.5 gallons of gasoline in a week.  At $3.50 a gallon, you’ve spent $15.75 more than you should have – all because of this one measly three-mile stretch. Read more

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A Primer on User Fees and Taxes

October 18, 2011 by · Comments Off on A Primer on User Fees and Taxes
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Triad Strategies recently posted an item on its blog, The Triadvocate, explaining the difference between general taxes and user fees. The following is a re-post of that blog:

Your teacher told you in grade school that it would be important to know how to use a dictionary. Now, the current Pennsylvania public policy debate on transportation funding has given you the perfect example of why she was right.

Most people say they don’t want new taxes. At the same time, people say they want better, safer roads and functional mass transit systems in urban areas. They are willing to pay a reasonable sum for using these facilities. So it’s important to know how you are paying for what you want and need and what the labels mean. Read more

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Survey Finds Support for Gas Tax Increases

May 9, 2011 by · Comments Off on Survey Finds Support for Gas Tax Increases
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Source:  ARTBA (reprinted with permission, Washington Newsline, May 9, 2011)

A Mineta Transportation Institute at San Jose State University study released May 5 found 62 percent of respondents supported a 10- cent per gallon federal gas tax increase specifically dedicated to improving road maintenance.  Backing for a 10-cent increase dropped to below 50 percent when revenues were dedicated to transportation projects to reduce local air pollution and global warming.  The study also evaluated other infrastructure revenue generating alternatives: 45 percent or respondents approved of a 0.5 cent sales tax increase; a mileage tax adjusted by vehicle pollution levels received 36 percent; and a flat mileage tax of 1 cent per mile was supported by 22 percent. Interestingly, a generic gas tax increase of 10 cents per gallon without specific goals received only 24 percent backing. This data suggests that respondents were willing to invest so long as there are clear and identifiable infrastructure benefits.

The Mineta findings contrast with a February 2011 survey from the Rockefeller Foundation where 71 percent of respondents said “it would be unacceptable to increase the federal gas tax.” The disparity amongst these survey results, and others, reinforces the varying degrees of public understanding on transportation finance and the importance of how opinion surveys are crafted.  To view the study, click here.

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Fully funding transportation is crucial to reducing national deficit

December 1, 2010 by · 1 Comment
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The Associated Pennsylvania Constructors (APC) released the following statement in reaction to today’s recommendation of the National Commission on Fiscal Reform and Responsibility to fully fund the federal Transportation Trust Fund instead of relying on deficit spending.  The commission also recommended dedicating a 15-cent per gallon increase in the federal gas tax to transportation funding, and limiting spending if necessary to match the revenues the trust fund collects each year.  To view a copy of the full release, click here.

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Higher than expected revenues don’t negate the need for additional transportation investment

October 4, 2010 by · Comments Off on Higher than expected revenues don’t negate the need for additional transportation investment
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The Commonwealth of Pennsylvania reported slightly better than expected Motor License Fund (MLF)* collections in September.  While this is a welcome and encouraging sign, the MLF is still yielding far less than needed for an adequate highway program. Read more

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Analysis shows gas taxes lowest ever

July 6, 2010 by · Comments Off on Analysis shows gas taxes lowest ever
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When inflation and improved gas mileage are factored in, motorists today are paying half the gasoline taxes that they paid in 1975, according to a USA Today analysis.  The story is a must-read for anyone who wonders why our transportation infrastructure is crumbling.   To view the article, click here.