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The industry’s transportation funding needs explained

February 21, 2022

Governor Wolf’s proposed budget for the fiscal year beginning July 1, unveiled last week, contained a bit of good news regarding transportation funding. Rather than gradually reducing the annual amounts of revenue diverted from the Motor License Fund to support State Police operations, the governor proposed to take the diverted amounts down to $500 million in the upcoming fiscal year.

It means that PennDOT would have around $140 million more available next fiscal year than it would with the more gradual rollback. While that is good news, it does not completely close the transportation funding gap that Pennsylvania now has.

Most readers of this newsletter are probably aware that Pennsylvania is slated to receive $4 billion in federal transportation funding over the next five years under the recently passed Infrastructure Investment and Jobs Act. Again, good news. However, Pennsylvania must provide a local match of 20% in order to leverage the entire $4 billion in federal money. The math is easy – that’s about $1 billion in new Pennsylvania money.

As reported here two weeks ago, APC and seven other transportation construction trade groups have called for Pennsylvania to halt all diversions from the Motor License Fund. It has proven too tempting and convenient to backfill General Fund operations, such as the State Police, with revenue that was originally intended for highway construction.

It is clear from APC’s annual polling that Pennsylvania voters strongly prefer that the revenue from fuel taxes and license and registration fees be used for its intended purpose, not for other things.

At its peak, the State Police diversion was just over $800 million, which added up to the equivalent of 12 cents a gallon – more than 20% of the nearly 60 cents per gallon in fuel taxes. At $500 million, it’s the equivalent of more than 8 cents per gallon, or 14% of the state fuel taxes.

Re-dedicating all of the Motor License Fund revenue for repairing and maintaining bridges and highways would cover the matching funds requirement to receive the federal money, allow for a modest bonding program, and get Pennsylvania back on track for addressing the Commonwealth’s transportation needs – without raising fuel taxes. And it would make Pennsylvania voters happy.

 

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