It’s only an idea for now, but Pennsylvania’s proposed switch from a fuel tax to a miles-driven fee to help generate more money for transportation could be a boon for the trucking industry and a big hit in the wallet for drivers of passenger vehicles.
Based on the Transportation Revenue Options Commission recommendation to switch delivery and freight trucks from a diesel tax of 73 cents a gallon to a miles driven fee of 8.1 cents, the cost to truckers would drop by an average of almost 33%. That’s based of figures provided by the Pennsylvania Motor Truck Association that show the average truck now pays about 12 cents a mile in state taxes.
Based on 13,000 miles driven in a year — although many truckers average more than double that — and an average of six miles per gallon, the cost would drop to $1,053 from $1,582.
For passenger vehicles, based on 13,000 miles a year and a vehicle that gets 25 miles per gallon of gasoline, the cost would more than triple.
With Pennsylvania’s gasoline tax at 58.6 cents a gallon, second highest in the country behind California, that motorist now pays $306 a year.
With the miles-driven fee, that driver would pay $1,053 annually.
And in a strange twist, people with more fuel-efficient vehicles would pay the same as a person with a gas-guzzler. Their current advantage with the gasoline tax would go away.
For example, for a driver with a vehicle that can go 40 miles on a gallon, the gasoline tax amounts to $190 a year now. Under the miles-driven fee, that driver also would pay $1,053.
Put another way, the more efficient a vehicle is, the more expensive it would be to drive.
Alexis Campbell, a spokeswoman for the state Department of Transportation, said those figures seem accurate but she stressed that more study needs to be done before legislation is developed to switch to the miles-driven fee. Transportation Secretary Yassmin Gramian chaired the 42-member group appointed by Gov. Tom Wolf in February and PennDOT officials served as the support staff for the commission.
Ms. Campbell called the proposal “an exercise” to show how funding could be changed and revenue increased to pay for road work. The department says spending needs to be more than doubled, to $15 billion a year from the current $6.9 billion, to meet transportation needs.
Completely switching to the miles-driven fee is probably 10 years away, in third phase of the commission’s plan for eliminating fuel taxes. The plan also calls for new fees for package deliveries ($1 each) and rides with services such as Uber and Lyft ($1.11 per ride).
The potential that truck operators could have reduced costs if the state switches to fees based on miles driven was unexpected, said Rebecca Oyler, president and CEO of the Pennsylvania Motor Truck Association.
She served on the commission and said she realized there hadn’t been a separate fee recommended for truckers but figured that was just a detail the commission didn’t get to during its five-month mission.
Ms. Campbell said it wasn’t an oversight and the commission intended to recommend the same fee for all motorists.
The Transportation Revenue Options Commission “did not differentiate between passenger and commercial vehicles for the purposes of its analysis and when setting its example rate of 8.1 cents,” she said. “Rate setting is complex, and discussions around a potential [miles-driven fee] will be ongoing.”
Ms. Oyler said her members would be “glad to hear that” if they would save money.
“Obviously, that would be great for truckers,” she said. “In the context of what truckers pay now, I don’t know whether that would hold when they actually set the rate.”
Right now, Ms. Oyler said, truckers provide about 38% of the fuel tax revenue that Pennsylvania receives. It would be a nice surprise if changing the funding system helped the industry by substantially reducing that percentage, she said.
“We know trucks have a greater impact on the condition of roads than passenger vehicles, so that’s why they pay more,” she said. “That 38% is a huge amount of the overall money, and I would be surprised to see that come down much. I’ll be interested to hear if that changes.”
Overall, Ms. Oyler expressed concern that the commission rushed through its work to finish by Mr. Wolf’s Aug. 1 deadline. As a result, she agreed with Republican legislators that the group only looked at ways to generate additional funds, not ways to cut costs.
“The commission was given a really bold charge — find a way to eliminate the gasoline tax,” she said. “I just don’t think there was great time given to finding ways to save money, just how to generate revenue.
“We eventually pushed ahead with the funding options and said, ‘OK, all of the above.’ Everyone at every point where they come into contact with the transportation system will have to pay something.”
Since fuel tax revenue is becoming stagnant with gasoline vehicles becoming more efficient and the growth of electric vehicles, it makes sense for the state to switch to a fee for miles driven, Ms. Oyler said.
The commission recommended that the Wolf administration spend the rest of the year refining proposals and building support for the recommendations and make a big push when the governor introduces his budget in February.
In addition to the mileage fee, delivery fees and surcharges for Uber and Lyft rides, the commission recommended doubling the vehicle registration fee to $76 initially, then switching to charges based on the value of the vehicle; increasing the state vehicle rental tax to $5 from $3; and establishing a miles-driven fee for electric vehicles until fuel tax is eliminated and all vehicles pay for miles driven.
The commission estimated the changes would generate $3.5 billion annually in the first two years; $6.6 billion annually in the next two years; and as much as $11.5 billion annually after the fifth year. In addition to needing more money to care for roads and bridges, PennDOT needs to replace $400 million a year it has been receiving annually from the Pennsylvania Turnpike for public transit because that obligation ends in June 2022.
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