HARRISBURG – As part of his 2007-08 budget address, Gov. Edward G. Rendell outlined a long-term, comprehensive and innovative plan to address the long-standing financial crisis facing public transit and the critical backlog of deteriorated bridges and roads in Pennsylvania. The Governor said taxpayers will not have to bear the cost of the $1.7 billion package.
Based on a review of the report released in late 2006 by the bipartisan Transportation Funding and Reform Commission, Rendell proposed options that will revive public transportation, bridge and highway systems in a way that will not cost Pennsylvania residents.
“Even with innovative, cost-saving efficiencies implemented since I took office, 36-percent inflation in construction costs over the past two years has threatened to undermine PennDOT’s ability to build smoother pavements and tackle a multi-billion dollar bridge backlog. And a lack of a dedicated funding source is crippling public transit systems that provide more than 400 million rides a year and are facing 25-percent service cuts.”
“I have reviewed both traditional and non-traditional approaches, including a variety of taxes and fees and even the possibility of tolling Pennsylvania’s interstates,” Rendell said. “I worked very hard to develop a solution that has the least impact on the people of Pennsylvania, keeping in mind that we must make critical transportation funding choices or face the real possibility of a transportation crisis of devastating proportions.
Under Governor Rendell’s plan:
-The commonwealth would develop a plan to take advantage of the value of the Pennsylvania Turnpike through a private leasing agreement. The proceeds would be used to create a new revenue stream for transportation projects. Preliminary estimates show this could produce as much as $965 million a year for transportation.
-A new oil company gross profits tax would be levied on oil companies that do business in Pennsylvania. The 6.17-percent tax would be based on “combined reporting,” meaning the company would be taxed on the portion of total profits on a company’s tax return attributable to activity in Pennsylvania. Oil companies would be exempted from the 9.99 percent Corporate Net Income Tax. Part of the proceeds from the new tax would cover the loss of CNI to the General Fund. The new tax, beginning in March 2008, would generate $760 million a year for transit.
“The reality is that only a tiny fraction of the profits earned by the nation’s major oil companies in Pennsylvania are subject to the Corporate Net Income Tax. Like many other big corporations, the oil companies have gotten very good at structuring their profit reporting so that our taxes don’t apply, even if the money they make comes directly from the pockets of Pennsylvania consumers.
“It is nothing more than a sophisticated shell game and we need to stop this practice.
“I believe that the imposition of this tax places the burden squarely on the shoulders of those who enjoy tremendous benefits from the commonwealth’s operation of state highways and bridges. America’s oil companies have earned record profits in the past few years, and these profits come from one source: the pockets of the American people.
“The numbers remind us that instead of asking our citizens to pay yet again to fund our transportation needs, it is time for the oil companies to finally pay their fair share of the transportation tax burden in Pennsylvania. The enabling legislation we will propose will grant to the Attorney General the power to ensure that these taxes are not passed on to our citizens at the pump.”
Rendell said that any lease of the turnpike must include protections of the public’s interest, such as constraints on toll increases and excellent maintenance standards.
The additional funds generated by the plan would enable:
-PennDOT to aggressively reduce the critical bridge backlog and more quickly eliminate structurally-deficient bridges;
-PennDOT to bring smoother pavements to the lowest-volume roads, 32 percent of which are in poor condition; and
-Public transit to gain a firmer financial footing, meaning increased investment in vehicles and equipment, setting the stage for systems that can attract and keep riders.
While facing a transit shutdown in some cities in 2005, Rendell won agreement from regional planning partners to “flex,” or transfer, $412 million in federal highway and bridge dollars as an emergency stopgap. The Governor’s new plan would establish a reliable funding stream that would ensure that those temporary solutions are not repeated and transportation services can be maintained for senior citizens, students, people with disabilities and a significant portion of the workforce across Pennsylvania.
“Our economic prosperity rises or falls on the state of transportation,” Rendell said. “My plan builds a solid framework to keep us moving forward through the 21st Century.”