Fuel-tax drop reflects need for funding solutions

John Finnerty, who covers the Statehouse for newspapers in Johnstown, Meadville, New Castle, Sharon and Sunbury, dug up an interesting story recently noting that Motor License Fund revenue fell $58 million short of projections in the recently ended fiscal year.

While the percentage of the shortfall is relatively small, it portends a growing threat to highway funding in Pennsylvania. As fuel efficiency continues to improve, and demand for alternative fuel vehicles grows, our reliance on a consumption tax presents challenges.

As we mentioned a few weeks ago, Rep. Mike Carroll, of Luzerne County, Democratic chair of the House Transportation Committee, has introduced a bill that would establish an annual fee for entirely electric vehicles. The bill advanced through the transportation panel with overwhelming support and awaits a full House vote and Senate consideration this fall.

While EVs are supposed to pay an alternative fuel tax to make up for the revenue lost by avoiding a gasoline or diesel tax, the procedure is cumbersome, and many EV owners are probably not even aware of the requirement. The Carroll bill would eliminate the alternative fuel tax and replace it with the annual fee.

There are other issues that need to be resolved, such as how to make sure that hybrid owners, who pay some fuel taxes, pay their fair share for road maintenance and repair. Perhaps they will be asked to pay a smaller fee than EV owners.

Representative Carroll believes the ultimate answer will be a mileage-based fee, which would most closely align the cost of highway maintenance with the responsibility for wear and tear.

To read Finnerty’s entire article, click here.

Electric vehicle measure advances in PA House

House Bill 1392, the measure that would impose annual fees on all-electric vehicles, was approved by the Pennsylvania House Transportation Committee this week and continues on in the legislative process.

Rep. Mike Carroll

Sponsored by Democratic Transportation Chairman Mike Carroll, the bill would eliminate the alternative fuel tax on electricity and replace it with a $150 fee for noncommercial electric vehicles and $250 for commercial vehicles.

The measure was conceived as a way to make sure that electric vehicles contribute to the upkeep of the roads and bridges on which they drive. Conventional vehicles contribute by paying a liquid fuels tax.

Republican Transportation Chairman Tim Hennessey, speaking at a PHIA Policy Breakfast on Tuesday, surmised that the bill will come to the full House when the General Assembly returns from its summer break. From there, it would be considered by the Senate before advancing to Governor Wolf for final approval.

“It’s important for public policy to change with the times, and this measure is an example of that,” said PHIA Managing Director Jason Wagner. “Electric vehicles cause as much wear and tear on our roads as traditional vehicles, and their owners need to pay a fair share.”

Good news this week for public transit agencies and PennDOT

Our friends at public transportation agencies across the state received good news this week as the PA Turnpike Commission authorized borrowing $800 million, enough to provide a mandated subsidy for public transportation for two years.

The money will cover the payments withheld for the last year due to a lawsuit by independent truckers that made the bond market skittish, plus the next year.  The payments will drop drastically after 2022, however, and policymakers do not have a plan for replacing that money.

Another bit of good news surfaced this week as the U.S. Department of Homeland Security informed state officials that Pennsylvania’s Real ID program is now in compliance with antiterrorism standards. PennDOT’s certification came a year ahead of schedule.

Using highway money for its intended purpose

The Pennsylvania auditor general created quite a stir recently when he unveiled an audit that said the Commonwealth had diverted more than $4.2 billion from the Motor License Fund (MLF) in the last six years to support State Police operations.

The MLF, as many PHIA followers know, was created to receive the revenue generated by fuel taxes and license and registration fees (and some fines) and, per the PA Constitution, be allocated strictly for highway purposes.

Many PHIA followers also have been aware that PA has been diverting revenue from the MLF for much longer than six years. While the annual diversions have been growing to support some three-quarters of the State Police budget, the total diverted amount now totals $9 billion since 2001.

Recently, as gasoline prices have again approached $3 per gallon, news reports have noted that Pennsylvania has the highest state gasoline taxes in the country, at about 58 cents per gallon.  Each penny of the gas tax produces about $65 million annually, so when the diverted amount exceeded $800 million in the last fiscal year, that meant that about 12 cents – more than 20 percent – of the tax was funding State Police operations instead of building and maintaining bridges and highways. Read more

Small businesses feel a bigger pinch from deteriorating infrastructure

Transportation funding advocates often support their case with the assertion that a sub-par transportation system is bad for business and the economy. But which sectors of the economy suffer the most?

According to the U.S. Chamber of Commerce, small business owners are more likely to feel the pain of higher maintenance costs, safety risks and the anxiety of trying to move people, products and materials through increasingly congested regions of the country.

Conversely, small businesses can be the greatest beneficiaries of infrastructure investment, according to Ed Mortimer, the U.S. Chamber’s vice president of transportation infrastructure policy.

Among the U.S. Chamber’s three million members, 96 percent have fewer than 100 employees, and 75 percent have fewer than 10.

“This shows why the highway construction industry and transportation advocacy organizations such as the Keystone Transportation Funding Coalition receive such a positive reception when we reach out to local Chambers across the Commonwealth,” said PHIA Managing Director Jason Wagner.

“Virtually every Chamber we’ve visited over the last several years has strongly supported a reasonable level of transportation funding because they know how important that is to local businesses, most of which are small.”

The U.S. Chamber’s position on transportation can be found here.