Governor's Transportation Funding Advisory Commission Releases Report

Posted by Ryan Jeroski August 4, 2011

On August 1st, Pennsylvania Secretary of Transportation Barry Schoch delivered the final report from the Transportation Funding Advisory Commission (TFAC) to the desk of Governor Tom Corbett. To help close Commonwealth's current $3.5 billion transportation funding gap, the governor formed by TFAC by executive order in April, tasking them with finding an additional $2 to $2.5 billion annually for the state's transportation infrastructure needs. The panel's 40 members, all experts in the fields of transportation, finance, local government, and other fields, spent the last several months discussing new and innovative ways to meet the Pennsylvania's transportation funding needs.

The TFAC was instructed not to consider raising the state gas tax or leasing of the PA Turnpike as ways to generate new funding. They also assumed the federal funding for transportation systems in Pennsylvania would remain flat. Recognizing that their report should not just recommend revenue increases, the panel included many recommendations for state and local agencies to work smarter in stretching transportation dollars and increasing convenience for motorists. Among the many recommendations for improving efficiency are:

- Implementing biennial registrations, which will save PennDOT $5 million a year
- Issuing eight-year driver's licenses, improving convenience for Commonwealth motorists and saving PennDOT $500,000 after year four of implementation
- Eliminating safety inspections for vehicles under two years old, saving motorists statewide $24 million
- Eliminating vehicle registration stickers, saving PennDOT $1 million a year

As important as improving efficiency and customer service are, the fact remains that the only way to close the sizeable transportation funding gap this Commonwealth faces is through revenue generation. The TFAC realized that aligning revenue with needs would require incremental funding increases from several sources, and combined promising funding options into various packages for further evaluation.

From the funding package that was chosen, the largest single transportation funding generator is removing the cap on PA's Oil Franchise Tax, which would generate an additional $1.36 billion in funding by the fifth year of implementation. The oil franchise tax is currently based on a fixed millage rate set against the Average Wholesale Price of gas and diesel up to a ceiling set in 1983. However, the actual Average Wholesale Price of gas and diesel is more than double the ceiling established in 1983. Removing this ceiling would be a significant revenue generator for state and local transportation agencies. Other funding recommendations include:

- Increasing vehicle and driver fees to the Consumer Price Index allowing them to keep pace with inflation, at a rate of 3% a year going forward and phased in for commercial vehciles over 26,000 pounds. This would generate $574 million for transportation a year
- Capping and/or moving costs for the PA State Police from the Motor License Fund to the state's General Fund. The PSP currently receives $570 million per year from the Motor Licnese Fund. This option would cap and move a portion of the amount (between $0 and $300 million) to the General Fund, creating additional transportation funding
- Restructuring Act 44 to allow for additional transit revenue. Somewhere between $0 and $200 million, currently directed from Act 44 to highways and bridges, would be redirected to transit

These represent the largest proposals to increase funding in the report. To view a full copy of TFAC report, click here.

If the report's funding package is implemented, the TFAC believes it could lead to a "decade of investment", which increases funding for highways and bridges by $1.8 billion, funding for transit by $300-400 million, and funding for local government transportation projects by $300-400 million. The TFAC estimates that 135,000 to 145,000 full-time jobs could be created over the next decade by this investment.