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Transportation proposal a good package despite cost, groups say

By - Last modified: August 8, 2011 at 2:52 PM

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The Transportation Funding Advisory Commission's five-year proposal to pay for Pennsylvania's roads, bridges and transit infrastructure is a necessary and overall good package of ideas, despite some increased costs to businesses, industry groups said.

The group that Gov. Tom Corbett assembled in April to propose solutions for filling transportation funding gaps voted July 18 on its final proposal and issued its report to the governor on Aug. 1. The proposals include raising as much as $2.7 billion over five years by uncapping the oil company franchise tax, funding the state police budget from the general fund, raising vehicle registrations and modernizing initiatives to save money at PennDOT.

The target for the proposals was $2.5 billion in five years, but if all proposals are implemented by the governor and legislature, the amount could be more, said Dennis Buterbaugh, the PennDOT press secretary. The smaller number only addresses maintenance of the state's existing infrastructure, he said.

""If we can get to that ($2.7 billion), it'll give us some extra to address adding infrastructure," he said.

The state and commission did not study the total cost to businesses, but on average the typical consumer would pay about $2.54 more per week by the fifth year, Buterbaugh said.

The cost could be greater depending on the trickle down from increased corporate expenses, said Jim Runk, president of the Cumberland County-based Pennsylvania Motor Truck Association and an advisory commission member.

The funding package as a whole is good and the association supports it, he said. But there are a few items — such as truck registrations — that it does not like, he said.

Registration for trucks over 80,000 pounds would increase from about $1,700 to $2,300, Runk said. That would mean a small 10-truck firm would spend $23,000 a year to register its vehicles, adding $6,000 to the cost of business, he said.

"It's a regressive tax," Runk said. "It's ultimately going to be passed on to the consumer."

The largest component of the proposal is uncapping the oil company franchise tax to raise $1.36 billion, or more than half the total. That's important because the tax was capped in 1983 and doesn't allow the state to tax average wholesale prices above $1.25 a gallon, Buterbaugh said.

That cap prevents the tax from floating with market pressures and inflation at a time when average wholesale prices are about double the cap, he said. That prevents the state from fixing its infrastructure, he said.

"That's the problem. The cost of concrete and rebar and labor has all gone up since that cap was placed on the tax," Buterbaugh said. "That's what has hamstrung transportation construction."

Uncapping the tax on oil companies will give PennDOT more money, but will likely mean a small increase for anyone buying gasoline and diesel fuel, Buterbaugh said. For every 10 cents the tax increases, 1 cent would be passed on to consumers and businesses at the pump, he said.

The construction industry isn't worried about the minimal fuel increases, especially since the added work for firms has far more benefits, said Bob Latham, executive vice president of the Harrisburg-based Associated Pennsylvania Constructors. The group represents infrastructure construction companies in the state. Latham also was a member of the advisory commission.

"This is survival for our industry," he said. "Without this, there will be thousands of layoffs over the next several years."

Last year, construction companies said the same thing — that some companies could fail without government work and other would have to decrease their workforces significantly.

The oil company franchise tax has to fluctuate with the market because fuel economy is increasing in cars, which means the state collects less total revenue with caps, Latham said. But cost is not the end-all of what business and residents will get from the proposals, he said.

"We have to stop looking at this in terms of cost," he said. "What are the benefits?"

Road improvement is one of the largest benefits because it's how we primarily move goods and people around the state in support of our economy, Latham said.

Richard Farr, executive director of York-based rabbittransit, echoed the road benefits as a driving factor in the economy. The agency runs bus transit lines in York and Adams counties. Farr also was a member of the advisory commission.

"If we allow our roadways to deteriorate at their current rate, I'd hate to see their condition in five years," Farr said.

Transit agencies of all stripes would get a significant boost to their capital budgets, according to the commission's proposal. If the legislature chooses to amend Act 44 — the 2007 law that directs money from the Pennsylvania Turnpike Commission to fund statewide transportation projects — then transit would get the total $450 million from that contribution for capital projects.

That means new buses, operational facilities and possibly regional or metropolitan train lines that could provide new options for mass transportation of people to and from their homes, jobs and recreation.

That's badly needed because transit hasn't received capital funds in about two years, Farr said. The lack of money put rabbittransit's new headquarters on hold.

Still, the benefit to the state's economics over the next five years is reason enough to do it, he said.

"If we're going to advance our businesses, we have to do it," Farr said.

The Associated Pennsylvania Constructors commissioned a study last year that found a $2.5 billion increase in the state's transportation spending would add bolster key parts of the economy. That would include $6.5 billion in added industry output, or slightly more than 1 percent; 50,000 new jobs with about 4,000 in manufacturing and more than 5,000 in retail; and $80 million added to state income and payroll tax revenue, according to the study.

"I think in the end you'll see a lot of support for this," Latham said.

Jim T. Ryan

Jim T. Ryan

Jim T. Ryan covers Cumberland County, manufacturing, distribution, transportation and logistics. Have a tip or question for him? Email him at jimr@cpbj.com. Follow him on Twitter, @JimTRyanCPBJ.

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