There’s a certain brilliance to Gov. Tom Corbett’s transportation funding proposal, which would raise $5.4 billion in new revenue with something that is technically not a tax increase even though it walks, swims and quacks like one. On top of that, the governor’s plan to uncap the Oil Company Franchise Tax defies any precise forecast of what it will wind up costing drivers. That will depend on how gasoline prices fluctuate and how much added cost gasoline wholesalers will swallow rather than passing it along to the driving public.
None of that is going to stop us from offering an assessment of the impact, though. If a furry critter from the backwoods of Pennsylvania can get away with telling us spring is just around the corner while it’s snowing sideways, we can make a semi-educated guess as to what Mr. Corbett’s plan will cost a typical driver.
Warning: There will be math.
The tax on gasoline at the wholesale level is 153.5 mills but it is only applied to $1.25 per gallon of the actual price. (Wouldn’t it be nice if, say, the sales tax on a new car only applied to the first $5,000 of the purchase price?) Uncapping the OCFT would apply the tax to the full “average wholesale price,” which is calculated by the state Revenue Department based on last year’s prices, announced in December, and stays in effect for the entire following calendar year. This year’s magic number is $3.114 per gallon.
Mr. Corbett proposes lifting only one-third of the cap this year, and the rest in 2015 and 2017. For now, the cap is protecting $1.864 per gallon from taxation; tearing out a third of this tax shelter would subject another 62.1 cents of the wholesale price to the tax. That means 9.6 cents per gallon more (in this game, the rules say we always round up to the nearest tenth of a cent).
For a typical driver (12,000 miles in a 24 mpg vehicle), this translates into a $48 annual increase — but only if the wholesalers pass the full cost on. Some experts think they will absorb at least some of the increase, or maybe even raise prices someplace else (I vote Ohio) to recover the money.
But wait! More math is needed! The governor also wants to roll back the tax paid by drivers at the pump, currently 12 cents per gallon, by a penny. That knocks $5 off the annual impact on Average Motorist, bringing it down to $43.
That’s $43 toward better roads and bridges, solvent transit systems and improvements to rail, airports and trails. That’s less than the cost of a couple cases of beer or 15 minutes in front of a slot machine. And bear in mind, that’s the worst-case scenario.
What will happen in 2015 and 2017 when the rest of the cap would be removed? It’s not even worth hazarding a guess. Pump prices have fluctuated by 60 cents just in the past year. If you know what the price of gas will be in 2015 and 2017, I’ll start listening to your spring weather forecasts and tune out the groundhog.
Feel free to print this out and keep it handy for the next time someone screams bloody murder about the cost of the governor’s plan. We learned this week that traffic congestion is costing each of us $800 a year in wasted time and fuel, and bad roads another $373 in repair costs. The governor’s plan looks like a bargain.
AAA East Central has announced an advertising campaign in support of increased transportation funding, noting that it was founded in 1902 to lobby for adequate roads.
“Pennsylvania’s transportation network has grown considerably since then but today, the state’s roads and bridges are in poor condition due to decades of underinvestment and deferred maintenance,” the announcement said. Forty-three percent of major roads are in poor or just fair condition and 42 percent of bridges are structurally deficient or functionally obsolete.
More from AAA:
Road and bridge repairs and improvements are funded in Pennsylvania primarily through taxes on gasoline but because of increasing vehicle fuel efficiency and other factors, Pennsylvania now collects less fuel tax revenue per mile traveled than at any time in the past. A 2010 transportation study determined that Pennsylvania must invest an additional $3.5 billion annually in the state’s transportation system. The funding gap will nearly double by 2020 if not addressed.
“Deficient road and bridge conditions are a serious safety and economic issue,” said Brian Newbacher of AAA East Central. “Poor road conditions are a significant factor in over half of traffic fatalities. Also, driving on bad roads costs Pennsylvania drivers $3.2 billion a year -- an average of $373 per driver -- in extra vehicle repairs and operating costs.”
Pennsylvania AAA Clubs are launching a statewide public service outdoor advertising campaign to call attention to the state’s crumbling roads and unsafe bridges.
It wasn’t surprising that Democrats, sensing the governor is on thin ice politically, would attack his budget proposal. Here’s House Democratic Leader Frank Dermody:
He offered a gimmick on transportation funding -- lifting the cap on one tax while lowering another. But the net effect of that is to raise less -- far less -- than what is needed to address the state’s broken highways, deficient bridges, and aging transit systems.
For two years, the governor has paid lip service to the need to fund transportation. For the last couple of months, he has been promising a comprehensive, bold plan. What we got today is not anywhere close to adequate. It’s hard to believe that this is the best he can do, but apparently it is. He had a chance to lead on transportation, but he did not do it.
Now it’s time to ditch the rhetoric and get to the bargaining table. Transportation is too vital to get jammed up in partisan politics.
Inspection of the ramp from the 10th Street Bypass to the outbound upper deck of the Fort Duquesne Bridge will cause a traffic shift from 10 a.m. to 2 p.m. Thursday.
Pittsburgh Councilman William Peduto just announced on Twitter that the Highland Bridge connecting Shadyside and East Liberty will close for repairs in early March and stay closed into November.
@pgtraffic on Twitter