Pennsylvania Increases Gas Tax, Modifies Prevailing Wage, Gives Transit Big Money

Pennsylvania increases its gas tax to fund road repairs and transit. Image - Darrel Sapp, Pittsburg Post-Gazette.

Pennsylvania increases its gas tax to fund road repairs and transit. Image – Darrel Sapp, Pittsburg Post-Gazette.

The Pennsylvania Legislature passed a $2.3 billion, five-year plan to repair roads and bridges, and address transit and bike-ped facilities. The Governor is expected to sign the bill into law. The bill had bipartisan support, and passed despite some Republican opposition “to raising taxes and spending too much on urban transit systems” and opposition “from and from pro-union Democrats [objecting]” to a reform of prevailing-wage regulations.

It’s interesting to contrast this bill to the proposal my home state (Washington) is wrestling with. The Pennsylvania bill allocates about 21% of the funding to transit - about $475 million. Although, it sounds like much of that funding is for maintenance and repairs, not so much service. About $1.65 billion is allocated “to repair thousands of bridges and thousands of miles of roads.” The Washington state proposals range from about 2% to about 13% for transit depending on the proposal, and how the numbers are calculated. A number of Washington state transit advocates are calling for a state funding percentage closer to the federal government’s 20% allocation to transit, and for operations.

The Pennsylvania bill also reforms prevailing wage, raising the dollar threshold on public projects that require the use of union-scale pay from the current $25,000 to $100,000. Democratic legislators said that would drive down wages for workers, and some unions feared it could erode higher-scale wages in other sectors down the road. Pennsylvania Transportation Secretary Barry Schoch said that most transportation projects cost far more than $100,000, that the provision would have applied only to 17 state projects in the last year, and would likely largely affect only municipal projects in rural areas.

Modifying the prevailing wage system for transportation projects in Washington state is one of key reforms under discussion. The Senate’s Republican-dominated Majority Coalition Caucus wants to enact what it characterizes as very modest changes; some Democrats in both chambers seem open to the idea but others are opposed, as is labor. The House and Senate allegedly have agreed to changes changes in the way prevailing-wage surveys are conducted. A non-partisan study, requested and sponsored by the legislature, has found that

To pay for the Pennsylvania bill, motorists’ fees for drivers’ licenses, registration, and moving violations will increase beginning in 2015. But “most of the money – about 82 percent – will come from higher gas taxes.

The plan calls for the state to gradually remove the decades-old limit on the wholesale tax on gasoline (now capped at $1.25 per gallon, while the actual wholesale price is about $2.70 a gallon) and eliminate the current 12-cents-a-gallon retail gas tax. Within five years, if wholesalers pass on the full increase to consumers, that could increase the gas tax by about 28 cents a gallon. That would boost the state gas tax from the current 31.2 cents a gallon to 59.2 cents by 2018. Gas taxes in Pennsylvania were last increased in 1997.

Gene Barr, president of the Pennsylvania Chamber of Business and Industry, who supported the bill, said it was impossible to know how lifting the cap would affect gas prices. “How much is passed down is determined by competition, and there could be [state] border issues, too,” he said. “We now know there will be dollars going into necessary projects that will have good consequences for the commonwealth.”

According to a 2011 blue ribbon commission, “a typical driver can expect to pay $22 more a year in 2014 and $132 more by 2018. . . .That would amount to a 42-cents-a-week increase next year, and $2.54 a week by 2018.” That was assuming the typical driver owns one vehicle, drives it 12,000 miles a year, and gets 24 miles per gallon.)

According to an analysis by TRIP (a national transportation research group) 42 percent of Pennsylvania bridges are in need of repair, improvement or replacement. 25 percent of the state’s bridges are structurally deficient and 17 percent are functionally obsolete. 37 percent of major locally and state-maintained roads and highways in Pennsylvania have pavement surfaces in poor or mediocre condition, providing a rough ride and costing motorist in the form of additional vehicle operating costs. Read TRIP’s news release (pdf) or the 20-page report (pdf).

Getting to final passage wasn’t easy. The House rejected a similar bill last week (103-98) before passing the bill the next day. “Without enough Republican votes, leaders knew they needed Democrats who – particularly in Philadelphia – were reluctant to vote against unions on the prevailing-wage provision. In a last-ditch push midday Monday, [Governor] Corbett mobilized union leaders, among them Philadelphia Building Trades business manager Pat Gillespie, and others, including former Gov. Ed Rendell, to join him at a rally in the Capitol to urge passage of the bill.” The Senate had approved the plan last June.

Sources:

Pa. House OKs transportation bill it rejected a day earlier Philadelphia Inquirer

What Pa. transportation bill will cost you Philadelphia Inquirer

House sends $2.3B transit bill to Corbett, Philadelphia Inquirer

Road crew: Most lawmakers voted in favor of Pennsylvania, Pittssburgh Post-Gazette

Pa. House votes down transportation spending measure, Philadelphia Inquirer

Future Mobility in Pennsylvania: The Cost of Meeting the State’s Need for Safe and Efficient Mobility, TRIP