Road money drops as traffic thins
The lack of traffic on Pennsylvania’s roads during the COVID-19 crisis could have a profound effect on road projects next year.
Less driving will mean a substantial decline in revenue generated by the state’s highest-inthe-nation gasoline tax of 57.6 cents a gallon, which produces nearly $4 billion a year for the Pennsylvania Department of Transportation. In March alone, when stay-at-home orders didn’t begin until the middle of the month, liquid fuels tax receipts were down about $50 million to $270 million compared to the average of about $320 million a month.
It’s too early to say what might happen if the shortfall continues, but PennDOT is watching the situation closely, said Larry Shifflet, deputy director for planning.
“It’s way too early to have an exact amount [of the expected shortfall], but certainly there will be an impact,” Mr. Shifflet said. “We would be foolish to think otherwise.”
In addition to funding for state roads, the reduced gasoline tax receipts also will mean less money for municipalities and counties, which receive a portion based on their population and the number of road miles they maintain. That liquid fuels money amounted to $487.5 million for counties and municipalities across the state this year.
Mr. Shifflet said PennDOT estimates traffic is down about 45% on core highways and as much as 65% on local arterial roads as a result of Gov. Tom Wolf’s order for residents to stay home except for essential travel for food, medical care and work in essential businesses and services. Gas prices are among the lowest in the past decade, which usually encourages more driving and an increase in tax revenue because the flat tax remains the same regardless of the price of fuel.
“Of course, that’s good that people are heeding Gov. Wolf’s order and staying home,” Mr. Shifflet said. “Typically, lower gas prices mean more people travel, but that certainly isn’t the case right now.”
The reduction in gas tax revenues comes at a time when the state already is facing problems caring for its own roads. Officials decided last year that the declining condition of interstate highways was close to the point where the state risked losing about $900 million in National Highway System funds, so it decided to shift $3.15 billion from local roads to the interstate system over the next nine years.
As a result, the PennDOT district for Allegheny, Beaver and Lawrence counties expects funding for local roads to drop from $90 million last year to about $11 million for 2028. In the 10-county region, the Southwestern Pennsylvania
Commission said spending will drop from $470 million in the four years ending this year to $279 million for 2021-24.
“In Pennsylvania, we recognize the overall importance of our highway system, which has only been highlighted by their role in the supply chain during this period,” Mr. Shifflet said. “We were already making those hard decisions to switch money from the local roads to the interstates.”
Tax receipts have been taking a hit in recent years as a result of more fuel-efficient vehicles, hybrids and electric cars. When that’s combined with an anticipated inflation rate of 2.25%, PennDOT estimates the state will lose about $100 million in buying power over a 12-year period.
At the local level, Cranberry Manager Jerry Andree said his growing community already saw liquid fuels money drop from $980,355 in 2019 to $958,000 this year. The township uses the money to help pave 132 miles of roads it maintains.
“I think we’re all bracing for a big decrease next year,” Mr. Andree said. “I think in our community we will find the money to continue paving streets.
“You don’t want to kick the can down the road because it just gets more expensive. It’s an allocation of resources. What else can you give up for a year [to maintain paving]?”
For Monroeville manager Tim Little, a reduction in the $871,000 the municipality received this year would continue a trend in recent years. Monroeville received about $900,000 last year.
The municipality uses its money to pay for streetlights, rock salt and maintenance vehicles.
“It’s pretty black and white,” he said. “Like anything else, you get less money, you buy less things.”
In Allegheny County, the public works department uses $4,077,382 in liquid fuels funds for snow removal and general maintenance on its 408 miles of roads.
“Liquid fuel funds are just one of several funding sources that we use for our winter operations and road maintenance,” Stephen G. Shanley, public works director, said in a statement. “If the liquid fuel funds were reduced, we have the budgetary flexibility to continue to ensure proper maintenance and public safety on our roads. As we always do, we will strategically maximize the resources available to us.”
One possible source for local communities is the state’s special loan program that allocates $25 million to $35 million annually for loans to local communities for road projects. The money is available at half of the prime interest rate and can be paid off using future liquid fuels allocations.
For now, the state will wait to see how long driving will be limited and adjust next year’s road program based on the funds available. So far, none of the federal assistance money has been earmarked for state roads, although there continues to be talk about a national infrastructure program that could start after the pandemic subsides.
“We’ll see how the phased reopening may impact [gas tax receipts].” Mr. Shifflet said. “We’re not sure what May will bring.
“As things slow down — now things are changing by the week, but when this first started they were changing by the hour — we can analyze with a little more specificity. Certainly that will start to shape how we proceed.”