Corbett's challenge: Raising funds, keeping 'no tax' pledge

HARRISBURG - Tax or no tax?

That was the parlor game playing out in some corners of the Capitol on Wednesday, one day after Gov. Corbett outlined his plan for raising nearly $2 billion to pay for long-overdue transportation projects.

In his budget address, Corbett asked the General Assembly to begin a five-year phaseout of what he called "an artificial and outdated cap" on the tax paid by oil and gas companies on the wholesale price of gasoline.

With the specter of the "no tax" pledge signed by Corbett and two dozen state lawmakers hanging over the debate, the governor was emphatic: "This is not a new tax, nor am I proposing to increase the rate of the existing tax."

Others were equally unequivocal that lifting the cap - which analysts say will likely mean a nickel-a-gallon increase at the pumps annually over five years - constituted a tax hike.

Americans for Tax Reform, the Washington-based group led by antitax leader Grover Norquist that circulated the pledge among members of Congress and state legislatures, issued its decree Wednesday.

"It is a tax," said spokesman Patrick Gleason.

Distributors will pass the cost of uncapping the wholesale price of gas on to motorists, who will see spikes in the price of gas, said Gleason. His group tussled with Corbett over the natural-gas drilling "impact fee," which is now law, and his decision to start collecting, well, taxes on items sold by online retailers such as Amazon.

Americans for Tax Reform's ruling on those proposals: Taxes.

If the governor signs an oil franchise cap measure into law, ATR would consider it also to be a violation of the group's no-tax pledge, which Corbett signed when he ran for governor in 2010, Gleason said.

There is enormous pressure to generate new revenue to fix the state's more than 4,000 "structurally deficient" bridges and 10,000 miles of deteriorating roadways, which have only gotten worse as each budget year passes with no new funding.

In addition, transit systems, such as SEPTA, are struggling to stay afloat. SEPTA faces a $38 million operating shortfall next year even with a planned fare increase.

Rep. Daryl Metcalfe (R., Butler), who also signed the no-tax pledge, described the lifting of the cap as a "huge tax increase" that would hurt Pennsylvanians still coping with a difficult economy.

"Whatever you call it, it is still impacting my constituents in their pockets and pocket books," said Metcalfe, who says Corbett and the legislature should fund transportation with public welfare dollars and proceeds from the sale of the state liquor stores.

The House and the Senate appear split on transportation funding heading into two months of budget hearings. Republicans who control the Senate have sought movement on the transportation question for years and have been frustrated by the governor's reluctance to act on the issue.

In fact, the Senate will likely look to boost transportation funding beyond the $1.8 billion that the governor is proposing to spend over five years. A hearing on the governor's plan is scheduled before the Senate transportation committee on Tuesday.

The House, on the other hand, gave a cool reception to Corbett's transportation plan. Asked Tuesday whether he could persuade the more conservative members of the Republican caucus to vote for the proposal, House Minority Leader Mike Turzai (R., Allegheny) was at first circumspect, and then gave it the political equivalent of a death knell:

"I think everybody wants to make sure, on both sides of the aisle, that dollars being sent to Harrisburg are responsibly used. People are going to want to know how we are using existing dollars, and do we need to invest more or do we need to look at existing dollars?"

In other words, he wants to study how the Department of Transportation is spending the money it already gets.

"I think people are open to a discussion across the board," Turzai continued, "but I don't think that the governor's proposal is by any means necessarily the definitive proposal."

Corbett spokeswoman Kelli Roberts said naysayers may be jumping to conclusions about the certainty of a tax hike, particularly when the governor is proposing at the same time to reduce another gas levy, liquid fuels tax.

She said the price of gas went down when the cap was last lifted in 1997.

"Assuming a complete pass-through has not been borne out by history, and there are a lot of factors that contribute to fluctuations in the price of gas," said Roberts.