Analysis of Act 89 of 2013

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1 Analysis of Act 89 of 2013 (HB 1060, PR # 2697) Transportation Funding Package SUMMARY: Act 89 of 2013 amends Titles 74 (Transportation) and 75 (Vehicles) in order to provide a comprehensive transportation funding package. The legislation would generate an additional $2.3 billion per year by fiscal year for the Commonwealth s comprehensive transportation system. Projections are that local governments should expect to see in their March 1, 2018 liquid fuels payment approximately 60% more than they received in Local government will see a partial increase in their liquid fuels payments in 2015, 2016 and 2018 when the act is fully implemented. The legislation would minimally increase licenses and registration fees in the initial year and then they would be indexed for inflation; it would eliminate the cent-per-gallon state gas tax and adjust the Oil Company Franchise Tax to offset the elimination; it would remove the artificial cap on the wholesale price of liquid fuels under the Oil Company Franchise Tax over a five-year period; it sunsets the Turnpikes annual obligation to PennDoT per the requirements of Act 44 of 2007; it raises the speed limit to 70 mph on limited access highways; it increases 7 existing surcharges on certain serious moving traffic violations; it increases the allocation to the Dirt and Gravel program from $4 million to $35 million: and, it raises the cap on the Prevailing Wage threshold to $100,000 for local government transportation projects. The legislation also provides for new programs to address the new signalization of traffic lights and bridge bundling programs. ANALYSIS: This analysis only pertains to those sections that directly affect local government. Review of increases to the fee schedule is not included since no portion of that money goes directly to local governments. Title 74: (Transportation) Chapter 21: Multimodal Transportation Funding: New Chapter under Title 74. Creates a dedicated fund to be known as the Multimodal Transportation Fund. Establishes minimum annual funding levels for each mode. o Aviation, rail freight, passenger rail, port and waterway, bicycle and pedestrian facilities. o Funds to be distributed annually. o Department shall award funding on a competitive Basis. o Remaining revenues designated for eligible programs distributed upon agreement of House and Senate Transportation Committee chairs. 1

2 o Local or private match shall be not less than 30% of non-federal share. o Local match shall only consist of cash by one or more counties or municipalities. Chapter 92: Traffic Signals: New Chapter under Title 74. Creates a program where a municipality or a group of municipalities that have traffic signals within a designated traffic corridor can enter into an agreement with the Commonwealth. o If the traffic corridor is designated a critical corridor the municipality shall enter into the agreement. A critical corridor is designated as having traffic greater than 10,000 vehicles per day. o If the traffic corridor is a designated traffic corridor the municipality may enter into the agreement. A designated traffic corridor is a state highway segment, other than a critical corridor. Department will prioritize corridors to provide the best benefit. The Commonwealth would be responsible for the replacement of the traffic signals. Municipalities would be responsible for the maintenance, coordination and timing of the traffic signals. Term of agreement would be for the useful life of the traffic signal. Department would determine whether traffic signals are being maintained in accordance with the agreement. o Municipality may contest the department s decision. o If Department and municipality cannot come to an agreement than both parties shall submit to mediation. o Implies that no matter what comes of mediation, the municipality pays. o If Department performs work on traffic signals in accordance with the agreement, the municipality shall be billed for actual cost which will be deducted from their liquid fuels money. Chapter 93: Bridge Bundling Program: New Chapter under Title 74. Creates a new program where the Commonwealth can bundle the design and construction of state, county and local bridges that are part of the Bridge Budget Act. Eligibility criteria: o Are within geographical proximity to each other. o Are similar in size or design. 2

3 o Inclusion in the program will meet the purpose of the program. Department will develop a list annually from different regions (on rotating basis) of the state of those bridges meeting eligibility requirements. o Local governments that are notified will have 60 days to agree or decline to participate in the program. Failure to respond in writing shall be considered a refusal to participate. o Depending on response, the Department will decide the number of eligible bridges that can participate in the program. o Decisions by the Department are not appealable. Local governments that participate shall enter into an agreement with the department. o The agreement will define the department s responsibilities of design and construction. o The agreement will stipulate that the local bridge is still owned by the local government and define their maintenance responsibilities. o The local government has 90 days to execute the agreement. o Failure of the local government to execute the agreement will remove the municipality from participation in the program. Upon execution of the agreement, the Department will manage the project design and construction. Local governments participating in the program may see a reduction of their share of the costs associated with the design and construction of the bridge of up to 100% of the local share. o Savings are to be realized from the mass design and production of the material. Local governments that do not participate in the program will be required to pay 30% of the non-federal share of the cost if and when the bridge is rehabilitated or reconstructed. Title 75: (Vehicles) Section 1935 of Title 75: Allows a County to impose a $5 registration fee for each nonexempt vehicle registered in the county. o Funds received shall be used in accordance with Section 9010 (b) or allocated by the county in accordance with Section 9010 (c) of the vehicle code (distribution to municipalities). Effective January 1, Section 3362 of Title 75: Increases the speed limit to 70 miles per hour where the department has posted such speed. 3

4 Section 4902 of Title 75: Allows the department and municipalities to issue appropriate letters of local determination to haulers of at-risk industries. o The department is to issue a statement of policy adopting an appropriate methodology to identify particular vehicles, routes and uses as local in nature. o Exemptions shall remain in effect until December 31, Section 4962 of Title 75: Allows oversized vehicles to operate from sunrise to sunset every day of the week. o Affects over-length, over-width, or over-height vehicles with proper permits. Exclusions as specified in department regulations. o Holiday periods. o During inclement weather. o In urbanized areas. o As restricted by the permit. Effective January 24, Section 6118 of Title 75: Beginning July 1, 2014 an appropriation of $5 million to the PA State Police for the Municipal Police Officer Education and Training Commission for reimbursement of municipal expense. o If funding is not sufficient for full reimbursement the Commission shall pro rate it. Effective January 24, Section 8901 of Title 75: Payments by the Turnpike Commission to the Department for debt service will be limited. o To $50 million after o Will result in counties and municipalities losing their $5 million and $30 million share of Act 44 moneys respectively. Municipalities and counties made whole under Section 9301 of Title 75. Effective July 1, Section 9002 of Title 75: Increases the threshold of the wholesale price of liquid fuels under the Oil Company Franchise Tax (removal of the artificial cap that has been in place since 1981). o For 2014 the price will be $1.87 per gallon. o For 2015 and 2016 the price will be $2.49 per gallon. o For 2017 and thereafter the price will be no less than $2.99 per gallon. 4

5 Price set by the Department of Revenue based on the 12 month period ending on September 30 th. Section 9004 of Title 75: Eliminates the 12 cent per gallon liquid fuels tax. o Tax is replaced with a millage tax under the Oil Company Franchise Tax under Section 9502 of Title 75. Effective January 1, Section 9024 of Title 75: Increases the Prevailing Wage threshold for locally funded highway and bridge projects. o Increased to $100,000. o Defines public work to mean construction, reconstruction, demolition, alteration and repair work, other than maintenance work. o Defines locally funded to mean any project funded by liquid fuels, municipal funds, state funds, etc. Effective January 1, Section 9106 of Title 75: Changes the name to Dirt, Gravel and Low Volume Road Maintenance. Increases the amount to DCNR for dust and sediment pollution control on forestry roads from $1 million to $7 million. Increases the amount for the Dirt and Gravel Road Program from $3 million to $28 million. o A minimum of $ 8 million shall be for maintenance of low volume roads. o Low volume roads are defined as sealed or paved roads with an average daily traffic count of 500 vehicles or less. Funds in this account are nonlapsing, nontransferable. Effective July1, Section 9301 of Title 75: Provides an annual supplemental appropriation to counties and municipalities. o $5 million to counties, and $30 million municipalities. Replaces funds lost from Act 44 provisions in Section 8901 of Title 75. Effective January 24, Section 9502 of Title 75: Continuation of the Oil Company Franchise tax. o No change in the existing distribution of funds to municipalities under Oil Company Franchise Tax. 5

6 Municipalities continue to receive 12 percent of the OCFT. o Distribution of the state allocation to different programs is changed. Replaces the 12 cents per gallon liquid fuels tax with an equivalent millage rate under the Oil Company Franchise tax. o Municipal share of this portion of the Oil Company Franchise Tax will be 20 percent of the equivalent millage rate. Section 9511 of Title 75: State Highway Transfer Restoration Restricted Account is expanded to include local bridges. o Amount increased to 3 mills. o For fiscal year and each year thereafter 1 ½ mills to be deposited into the account for highway transfer payments. o For fiscal year and each year thereafter 1 ½ mills to be deposited into the account for local bridges. o Provides that all annual maintenance payments are made before funds go to bridges. Allocates funds for traffic signal replacement, synchronization and maintenance. o For use in traffic corridors as defined in Title 74, chapter 92. o Up to $10 million for fiscal year o Up to $40 million for fiscal year and thereafter. o Funds are to be used for upgrading traffic signals to light-emitting diode technology, performing regional operations such as retiming, and the monitoring the traffic signals. o Requires a 50% match by the municipality. POLICY: PSATS, based on standing resolutions and Executive Board policy, has been advocating for additional transportation funding for townships since the last increase in In that time, the annual funding received by townships through the Liquid Fuels Allocation Fund has remained relatively stable at approximately $300 million. With cities, boroughs and townships spending approximately $1.5 billion per year, new funding is greatly needed. Act 89 is projected to raise an estimated $2.3 billion annually by the fifth year. The amount municipalities will receive when totally implemented is projected to be an approximately $237 million annually from the Oil Company Franchise Tax. Municipalities will also benefit from funding to upgrade traffic lights, the bundling of bridges, the increasing of the threshold amount of the prevailing wage for transportation projects, multimodal funding, Dirt, Gravel and Low Volume roads, and the annual supplemental allocation to offset the loss of revenue from Act 44 of 2007 being eliminated. 6

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