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William Lloyd

November 10, 2013

William Lloyd | House should bite bullet, approve tax hike

JOHNSTOWN — When it returns to session this week, the state House of Representatives will face a critical choice: Either allow the transportation system to crumble or raise taxes.

Earlier this year, Gov. Tom Corbett, the Senate, and the House proposed differing tax and fee packages to provide more funding for highways and bridges. Although the Senate approved its plan by a bipartisan vote of 45-5, the House has yet to act. If a compromise ultimately does win approval, the centerpiece is likely to be higher prices at the gas pumps.

The reluctance of House members to vote for higher taxes is understandable. Most of their constituents are not eager to pay more for gasoline. That’s one reason why the Legislature has not raised highway taxes since 1997 and why the Legislature opted in 2004 to place tolls on Interstate 80 and tap into turnpike revenues as an alternative.

Unfortunately, that 2004 action is producing about $300 million per year less than expected for highways and bridges because the federal government disapproved the tolling of I-80.

Admittedly, this is not a good time to raise taxes. The economic recovery is still sluggish. To make matters worse, the decision by congressional Republicans to shut down the federal government and threaten a default is expected to cut the fourth-quarter economic growth rate by about 20 percent. That will mean fewer jobs than otherwise would have been generated.

Nevertheless, the House should bite the bullet. According to the governor, approval of the higher taxes he has requested could create 50,000 new jobs by the end of this decade; in contrast, rejection of the tax increase could result in an estimated loss of 12,000 jobs over the same period of time.

Furthermore, a gubernatorial task force calculated that state taxes on gasoline actually cost the average Pennsylvania driver significantly less per mile today than they did in 1970, after inflation is taken into account. The reason is that, on average, vehicles use much less gasoline per mile than they did in 1970. In short, improved fuel efficiency has more than offset the effect on the average motorist’s pocketbook of all of the gasoline tax increases since 1970. Because of an agreement between the federal government and the auto industry, fuel efficiency should continue to improve, thereby offsetting the long-term impact of the gas tax increase currently under consideration.

PennDOT has documented the need for higher taxes. For example, the percentage of state highway miles in poor condition declined from 25 percent in 2003 to about 15 percent in 2008. However, that trend has reversed over the past five years. In fact, without increased funding, more than 35 percent of state highway miles will be in poor condition within a decade.

Similarly, more than 17 percent of the state-owned bridges are structurally deficient. Although that percentage declined for about five years, it will climb to 20 percent within a decade without more funding.

In addition to having a negative impact on current highways and bridges, rejection of a tax increase will also jeopardize new construction. Business leaders and elected officials frequently tout the potential long-term economic benefit to our region if Route 219 was completed as a four-lane, limited access highway from New York to Maryland.

Although the link from Somerset to Meyersdale is now under construction, the Corbett administration has refused to commit to begin even preliminary work on the section from Meyersdale to Maryland. The stated reason is a lack of money. Therefore, without a tax increase, new highways are likely to be built only in heavily populated parts of the state where there are many more voters than there are in regions such as ours.

Ironically, many of the House members who are refusing to vote for a gas tax increase in 2013 gave a green light to a 2012 law that made it easier for utility companies to raise rates on consumers to fix or replace aging electric, gas, water and sewer lines. In unanimously passing that 2012 law, the General Assembly apparently was persuaded that deferring utility upgrades would cost consumers more money in the long run. That same principle applies to the state’s highways and bridges.

To postpone a tax increase, some motorists may be willing to accept the inconvenience of weight-restricted bridges and to tolerate a rough ride. However, failing to act now will likely mean an even bigger tax increase at some point in the future.

In short, voting “no” on a gas tax increase this fall may be politically popular, but it will be penny-wise and pound-foolish.  

William Lloyd of Somerset represented Somerset County in the state House of Representatives (1981-1998) and served as the state’s Small Business Advocate (November 2003-October 2011). He writes a monthly column for The Tribune-Democrat.


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