Management & Operations

Pennsylvania may tax oil companies to fund transit

Posted on May 11, 2007 by Darin Youker

Pennsylvania public transit systems are in a crisis over a lack of state funding. State officials want to solve the problem with an unusual solution — taxing oil companies.

Gov. Edward Rendell proposed a 6% profit tax on oil companies doing business in Pennsylvania.

The tax would be used as operating revenue for the state’s 70 public transit systems. The tax would generate approximately $760 million a year for transit, according to state estimates.

Currently, Pennsylvania pays for transit through money from sales tax, lottery proceeds and operating subsidies. Last year, lawmakers cut subsidies by 6%, forcing some systems to run a deficit.

Managers of transit systems are left guessing as to how much they will receive annually from the state, said Dennis D. Louwerse, CEO of Berks Area Reading Transportation Authority (BARTA), a bus system serving the Reading area.

Louwerse, who also chairs the board of directors of the Pennsylvania Public Transportation Association, adds that bus systems in the area are often left scrambling to find money to meet rising fuel and health insurance costs.

In January, the lack of state funding forced BARTA to raise fares by 10% and cut back some routes. A new source of state revenue would allow systems to meet costs and forecast budgets without making dramatic fare hikes, he said.

“Transit funding in Pennsylvania is broken,” Louwerse said. “It needs to be fixed, and it needs to be fixed now.”

John Paul, executive director of the Butler Municipal Transit Authority, said Rendell’s proposal would face a legislative fight, especially from lawmakers opposed to new taxes. However, he believes that the idea makes sense because oil companies have made record profits in recent years.

Michael Johnston, director of the Town and Country Transit in rural Armstrong County, said that Rendell’s proposal would likely win over lawmakers, because people are fed up with high gasoline prices. He also feels that taxing oil company profits would be a popular move. “Honestly, who is going to say we need to give more money to the oil companies?” he said.

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