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Fuel tax may go up

State may add penny a gallon

HARRISBURG — Anyone fueling up a vehicle in Pennsylvania soon may have to hand over an additional penny per gallon to pay to clean up damage from leaking underground fuel tanks.

Five years ago, the Underground Storage Tank Indemnification Fund was so flush with cash that legislators and then-Gov. Mark S. Schweiker borrowed $100 million from it to plug a hole in the state budget. Less than a third of that amount has been repaid.

But even if the loan is fully repaid, a state consultant says the obscure, state-administered insurance fund will be out of cash by 2015.

As a result, the fund's board, with backing by the administration of Gov. Ed Rendell, has proposed nearly doubling one of the fees that finances it to 2 cents a gallon, and asked for a speedy approval from a state regulatory panel.

Senate Republicans accuse the administration of trying to mount a stealth tax increase, and question whether the higher fee is immediately necessary.

"We're disturbed that the administration would propose what amounts to a $50 million increase in the gas tax without apparent justification," said Joe Pittman, the chief of staff for Sen. Don White, R-Indiana, the Banking and Insurance Committee chairman.

The state Insurance Department, which administers the fund, defended the increase. Officials said it is bad policy to let the projected deficit get bigger, even if there is still cash in the account right now.

"From our perspective, it's just a short term vision," said Joe DiMemmo, a deputy secretary for the Insurance Department.

Owners and operators of the underground tanks that store fuel until it is pumped pay the fee and normally pass it on to consumers at the pump. The proposal by the fund's board would boost the fee from the current rate of 1.1 cents per gallon.

If approved, the increase would widen the gas-price gap between Pennsylvania and the lower prices charged in neighboring states. The Insurance Department estimates that the increase would work out to about $9 a year for the average household.

The fund board voted to approve the higher fee at a September meeting after receiving the report by the consultant, the Milliman Co.

The Insurance Department has asked an independent panel that reviews changes in state regulations to approve the fee, effective Jan. 1. That panel is scheduled to vote Dec. 6.

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