A commission created by Gov. Tom Wolf has proposed replacing the state’s gas tax largely through the creation of fees based on how much people drive and increased use of tolling.
Pennsylvania has the third-highest gas tax in the country but PennDOT has been warning that the tax revenue isn’t keeping pace with the financial demands of keeping the state’s roads and bridges in repair and that the gap will only increase as vehicles become more fuel-efficient or switch entirely to electric power.
Only California and Illinois collect more in gas tax per gallon at the pump than Pennsylvania, according to the Tax Foundation, a Washington, D.C.-based group that studies tax policy.
Critics, even those who welcome some of the proposals, say the proposed user fee plan would be difficult to implement without getting other states to cooperate to ensure that out-of-state travelers contribute to the cost of repairing roads and bridges.
The mileage-based user fee would generate the biggest chunk, almost $9 billion, of $11 billion in revenue that the Transportation Revenue Options Commission’s plan would provide to replace the state gas tax by the time the plan was fully implemented, five years down the road.
Under the plan, motorists would pay 8.1 cents per mile of travel. Pennsylvania motorists are now paying 58.7 cents per gallon in state gas, on top of the federal gas tax of 18.4 cents per gallon.
The plan wouldn’t eliminate the federal tax and the General Assembly would need to pass legislation before the commission’s recommendations can be put in place.
House Majority Leader Kerry Beninghoff, R-Centre County, immediately threw cold water on any hope that the proposals will be fast-tracked in the General Assembly.
“Raising multiple taxes on Pennsylvanians to pay for transportation infrastructure at this juncture is both ill-timed and short-sighted given the transportation infrastructure funding discussion happening at the federal level,” he said.
“Before we go imposing multiple tax increases on Pennsylvanians who are already paying too much and receiving too little in return, raising the cost of commerce and energy, and prohibitively pricing Pennsylvania out of its status as the Keystone State, we should first see what comes out of ongoing federal discussions and how our continued economic recovery progresses,” Benninghoff said.
State Sen. Wayne Langerholc, R-Cambria County, the chairman of the Senate Transportation Committee, a member of the TROC, said he doesn’t support the proposal produced by the group.
“I implore the Wolf Administration to heed the advice of the majority in the General Assembly – higher taxes, fees and tolls in the Governor’s plan will be squashed as we continue to face a turbulent economic recovery,” he said.
Earlier this summer, Langerholc had unveiled The DRIVE SMART Act, a plan that would use a portion of the state’s American Rescue Plan funding to fix roads and bridges, while making numerous other reforms, including a mileage-based user fee for electric vehicles only.
“The DRIVE SMART Act is a better alternative to reform and invest in the Commonwealth’s multimodal transportation system without imposing new taxes, fees or tolls on the backs of hardworking Pennsylvanians,” Langerholc said. “Solving the transportation needs will require both sides of the aisle and both chambers of the General Assembly to act in a bipartisan manner and find compromise on reforming and investing in all modes of transportation,” he said.
James Sikorski, the Pennsylvania advocate for the National Motorists Association, said that there are privacy concerns related to the way the state would collect user fees -- since the state would need to know where and how much people are traveling.
The mileage-based user fee “is good in one aspect,” he said, “as it gets electric car owners to pay to use the roads, but the overall rate seems high. It would seem logical that you will need some form of GPS or transponder to implement this, as it needs to be shown where you were, and in the case of congestion tolling, when you were there. Tracking people is bad,”
Sikorski said that it’s unclear how the state can deal with out-of-state travelers.
“What if Pennsylvania drivers leave the state? What if people from say, New York, drive into Pennsylvania? Canadians? How will this work?” he asked.
Robert Latham, executive vice president of the Associated Pennsylvania Constructors, a member of the commission, said that his organization supports many of the recommendations, but questions whether it would make sense for the state to begin trying to collect mileage-based user fees without action by the federal government.
“While we agree with and strongly support replacing federal and state liquid fuel taxes with mileage-based fees as a fairer, more accurate way to recover the cost of building and maintaining roads and bridges, we do not believe that such a system can exist without the vigorous leadership of the federal government,” he said. “We believe that leaving it up to individual states would create insurmountable challenges. While liquid fuel taxes are not a perfect funding mechanism, they are likely to remain the most dependable transportation funding component for years to come,” Latham said.
Ted Leonard, executive director of the Pennsylvania AAA Foundation, another member of the commission, said it’s clear the state needs to tackle the funding gap and that as a long-term solution, mileage-based user fees would make sense.
“Although the gas tax is the best near-term transportation funding source, it is becoming unsustainable due to inflationary pressures, more efficient gas consuming vehicles and more electric and hybrid vehicles. Pennsylvania, whose gas tax is third highest in the nation, relies more on the gas tax as a revenue source – nearly 78% of revenue – than most other states. That’s a large gap to fill,” Leonard said.
He said that a 2019 pilot study of mileage-based user fees involving Pennsylvania and Delaware drivers, found that participants became less concerned about privacy the longer they participated.
”The pilot used a plug-in device with location, a plug-in device without location, and a smartphone with a location for mileage reporting options. Over the course of the pilot the rating of “privacy of my personal data” as a high concern from surveys dropped from 57 to 30 percent,” he said.
In addition to the mileage-based user fees, the proposal would call for increased use of tolling, with high-occupancy vehicle lanes and congestion pricing to charge motorists more when they travel when traffic is heaviest. The plan would also increase vehicle registration fees and add a $1 fee on all package deliveries in the state.
The TROC report notes that Pennsylvania relies more heavily on gas tax than neighboring states, with West Virginia getting 60 percent of its road and bridge funding from gas tax; Ohio getting 52 percent of its road and bridge funding from gas tax; Maryland, 41 percent; New Jersey, 32 percent; and New York, 18 percent.
Maryland, New Jersey and New York use corporate taxes to help pay for their roads, the report noted. New Jersey also uses a portion of its casino revenue for roads.