Says increasing transportation investment is a good idea
By Eric Boehm | PA Independent
HARRISBURG — State Treasurer Rob McCord said increasing driver’s license fees and uncapping a portion of the state’s gasoline tax are good ideas for generating transportation funding, but he criticized Gov. Tom Corbett’s administration for saying the changes are not a tax increase.
“I think the normal consumer thinks of these fees as essentially a tax burden,” McCord said. “But I thought lifting the cap, for example, was a smart approach to this challenge, and my hope is that on a bi-partisan basis they can get some good traction with their proposals.
McCord was the guest at the monthly luncheon of the Pennsylvania Press Club on Monday at the Harrisburg Hilton.
The governor’s Transportation Funding Advisory Commission wrapped up last week after three months of public meetings and private discussions. The commission will send a final report to the governor next week with recommendations on how to generate $2.7 billion in annual transportation-specific revenue to invest in the state’s infrastructure. More than half of that revenue would come from increasing the cost of driver’s licenses and other driving fees along with uncapping the Oil Franchise Tax, a component of the state’s 32-cent-per-gallon gasoline tax.
State Transportation Secretary Barry Schoch said last week that uncapping the tax is not equivalent to a tax increase, because the rate of taxation would remain the same. The difference is the tax would be applied to the full value of the gasoline purchased instead of only the first $1.25.
In addition to the higher driving fees, the average driver will be paying about $132 more each year for a vehicle driven 12,000 miles annually with an average fuel efficiency of 25 miles per gallon, if the changes are passed into law, according to the commission’s projections.
But McCord also urged the administration to stop splitting hairs over whether such increases would count as higher taxes or fees.
“Look, you’re increasing the cost of driving around a car over the next five years,” McCord said. “Call a spade a spade.”
Legislative leaders on the state House and Senate transportation committees have said they are awaiting the governor’s signal before taking action on any particular plan.
The Oil Franchise Tax was instituted in 1983 and is applied to the first $1.25 of every gallon of gasoline at the wholesale level. After incrementally uncapping the tax over the next five years, the commission estimates the state will generate more than $1.3 billion annually, a significant part of the commission’s $2.7 billion overall recommendation.
Renewal charges less frequent, but higher
The commission also will suggest doubling the length of time between required renewals for driver’s licenses and vehicle registration. Vehicles must be registered every year, and driver’s licenses must be renewed every four years.
Combined with the proposed inflation-based increases, the current $36 annual vehicle registration fee would almost triple to $98 every other year, and the current $29.50 driver’s license fee would more than double to $69 for an eight-year license.
“I think that’s a nice market-oriented solution, because you’re creating value while you’re creating revenues,” McCord said. He said transportation investments would help the state continue a “fragile recovery” from the recent economic downturn by funding construction projects and improving the state's infrastructure, which, in turn, will attract business.
The Pennsylvania AAA Federation, which represents the interests of drivers, has warned that the higher costs might be a burden for those who are poor and living on a fixed-income.
McCord was critical of Corbett’s “no-tax pledge,” saying it has generally tied the governor’s hands.
“I think this kind of policy by ‘rent-a-pledge’ is a really bad idea,” McCord said. “Real business leaders understand that resources need to be allocated to where they yield the highest returns and making a bunch of pledges constrains your ability to make real decisions in real time.”
McCord has an extensive background in business, including a master’s in business administration from University of Pennsylvania and work experience as an investment banker.
With Republicans fully in control of the executive and legislative branches of state government, McCord is one of the most prominent Democrats to hold statewide office at the moment. Despite that, he brushed aside questions about whether he would challenge Corbett in 2014.
McCord can run for a second, four-year term as state treasurer after his current term expires in 2012.
