(Repeats to remove "hold" from slug)

By Jon Hurdle

HARRISBURG, Pennsylvania (Reuters) - Pennsylvania
Governor Ed Rendell Monday renewed a proposal to tax oil
company profits and increase motor vehicle license fees to
raise $1 billion to pay for repairs to the state's roads,
bridges and public transit systems.

Rendell urged lawmakers to accept a plan that would tax oil
company profits at 8 percent to raise $576 million in the first
year. The proposed rises in license fees would raise another
$434 million .

A gross profits tax would replace a 9.9 percent corporate
net income tax on which oil companies pay a combined $35
million a year by exploiting a loophole, Rendell said.

The new tax would apply to any company that engages in the
exploration, drilling, importation, refining or wholesale
distribution of petroleum products, said Rendell's spokesman,
Gary Tuma.

The governor's office could not provide details on the oil
companies that would be affected by the tax.

Oil companies would be legally barred from passing the tax
on to consumers by giving the state Attorney General's office
power to conduct "forensic audits" of company books. It would
also be able to compare prices in surrounding states for any
evidence of above-market increases in Pennsylvania, Rendell
said.

The Democratic governor is seeking to fill a $472 million
transportation funding gap created by the federal government's
refusal to allow the state to impose tolls on Interstate 80.

At a news conference, Rendell said the funding would allow
the state to reduce a backlog in repairs to roads and bridges
and to improve public transit to prevent cuts in service faced
by some authorities.

State Sen. John Rafferty, chairman of the Senate
Transportation Committee, called Rendell's plan "a quick fix"
that risked long-term neglect of transportation needs. He said
his committee is working on a "comprehensive" package that
would include revenue and spending components.

Rafferty said he has questions about the constitutionality
of targeting individual oil companies and about a mechanism
that would prevent a tax increase being passed on to
consumers.

State Transportation Secretary Allen Biehler told a
bipartisan meeting of lawmakers that Pennsylvania has 5,592
structurally deficient bridges, or about 20 percent of the
total, the worst ratio in the United States. The state average
is 8 percent.

Motor vehicle license fees, which have remained stable
since at least 1997, would be raised in line with inflation and
would result in an extra 33 cents a week for the average
driver, Rendell said. The annual registration fee for a
passenger car would rise to $49 from $36.

Rendell, in the last months of his second term, warned
lawmakers that failing to agree on the package would risk no
funding increase for the next five years if Republican
front-runner Tom Corbett is elected governor in November.

Corbett has pledged not to raise taxes.

"The time for legislative action is now, otherwise future
generations will pay a much higher cost," Rendell said.

He said raising the state gasoline tax is also an option,
although he had not proposed it because of evidence from a
recent opinion poll that the public was opposed to the idea.

The poll, unveiled last week, found 74 percent of 504
people polled supported taxing oil company profits to pay for
infrastructure improvements.

(Reporting by Jon Hurdle; Editing by Dan Grebler)