The $300 Million Pork Product Stuffed into the Governor’s Tax Bill

Sausage grinder bearing an uncanny resemblance to the Virginia legislative process.

There’s been a lot of talk about the tax aspects of Governor Bob McDonnell’s restructuring of transportation revenue sources, with the latest wrinkle coming from the center-left Commonwealth Institute, which observes that the governor’s proposal to shift from the motor fuels tax to the sales tax would disproportionately hurt the poor. According to CI’s new report, “Hit and Run: Virginia’s Transportation Hike Hits Low-Income Virginians Hardest,” Virginians in the bottom income quintile would see their taxes rise by 0.21%, while Virginians in the Top 1% would see taxes rise only 0.05%. By and large, Republicans really won’t care, but if any Dems were inclined to support the governor’s bill, those numbers would put them in a real bind.

However, I have not seen anyone focus on the biggest spending component of the plan — $300 million dedicated to the Rail-to-Dulles project, provided that governance reforms for the Metropolitan Washington Airports Authority (MWAA) outlined by the U.S. Transportation inspector general are adopted. The long-term goal of the tax reform is to replenish funds distributed by formula to all corners of the state. But for the first three years, roughly half the new funds raised for construction would be funneled to Northern Virginia.

The governor’s press release describing that set-aside provided no details on  exactly how it would be used. But it’s a good bet that the funds would be applied to paying down the tolls charged to users of the Dulles Toll Road, the main piggy bank for the heavy rail project. That $300 million would be in addition to $150 in state funds — $100 million from the Virginia Department of Transportation and $50 million from the Department of Rail and Public Transit — allocated last year.

There’s a special irony here: Last year, state Senate Democrats demanded an additional $300 million in state funding for Dulles Rail and Republicans opposed it. Wouldn’t it be delicious if Republicans, lining up behind McDonnell’s bill, now favored the $300 million and Democrats, affronted by the regressive nature of the tax plan, decided to oppose it?

And that, my friends, is how legislative sausage is made.

— JAB

Addendum: Once again is demonstrated the irrelevance of the Commonwealth Transportation Board. If embedded in legislation, this earmark presumably would not require CTB review or approval.

13 Responses to The $300 Million Pork Product Stuffed into the Governor’s Tax Bill

  1. re: wouldn’t it be delicious?

    geeze Bacon.. I don’t think you really understand the party of tax & spend! :-)

    “Democrats’ counteroffer: Raise gas and sales tax”

    January 15, 2013|By Todd Allen Wilson, tawilson@dailypress.com | 804-643-0499
    RICHMOND – Senate Democrats offered a rival transportation funding plan Tuesday that would increase both the state’s gasoline tax and sales tax.

    Senate Minority Leader Richard Saslaw of Fairfax said he is introducing legislation that would raise the gas tax by 10 cents over the next two years and index it for inflation from that point on. The initiative would increase the sales tax from 5 percent to 6 percent to generate revenue for the state’s underfunded transportation infrastructure.

    Half of the one cent increase in the sales tax would be dedicated to transportation; the other half would be set aside for public education. This is in stark contrast to Gov. Bob McDonnell’s proposal that eliminates the gas tax; increases the sales tax to 5.8 percent; and raises the share of the state general fund sales tax revenue devoted to transportation from 0.5 percent to 0.75 percent over five years.

    “We cannot take money from the general fund – any money – unless we raise the revenue,” Saslaw said.

    Saslaw said the gas tax increase would raise roughly $500 million a year, which would keep transportation construction funds from being diverted for maintenance issues.

    As a former owner of gas stations in Northern Virginia and Maryland, Saslaw said McDonnell’s proposal would not lower gas prices in the commonwealth.

    He noted that oil companies tend not to pass the cost of gasoline taxes on to consumers – pointing out that North Carolina’s gas tax is 21 cents higher than Virginia’s, yet gas prices in the two states are within pennies of each other.

    “All last summer (North Carolina was) even with us,” Saslaw said. “In fact there were several weeks their statewide average was lower than ours.”

    Saslaw said McDonnell’s plan was full of gimmicks that takes any tax burden away from out-of-state drivers who use the commonwealth’s highways and puts the tax onus fully on Virginians.

    http://articles.dailypress.com/2013-01-15/news/dp-nws-ga-sen-dems-trans-ed-20130115_1_gas-tax-sales-tax-gas-prices
    ——————- end of quote from article—–

    Here’s the problem: The GOP is so fouled up on taxes that they have to wrap themselves around the axle with all kinds of gimmicks and foolishness so they can avoid be tagged a a tax&spend guy.

    so first.. McDonnell said we’d pay for highways with gas and oil drilling royalties – remember that?

    then he said we’d pay for roads by selling liquor stores and getting a cut of sales…

    remember that?

    so now..he got his pretzel twisted yet another way

    If this were Kaine or Warner, blogger folks like TMT would be well into a Grand Maul fit… about Kaine/Warner’s “lying eyes” and stuff.

    notice how quiet TMT gets when the GOP Gov goes off the rails with foolishness …

    what say you TMT?

    yeah.. I’m stirring things up here…

    BR is way too quiet the last 2 days despite this Govs virtual trans vaginal transportation idea…

    ;-)

    • Dick Saslaw has been in office since Jimmy Carter was president.

      In all that time he has not been able to address the transportation funding issue in Virginia.

      Why, in God’s name, would anybody trust him to get anything done now?

      • because year after year he has offered bills to deal with transportation funding and year after year the GOP has shut it down?

        You know. This is almost like the GOP won’t let the Dems increase taxes because they want to do it, eh?

        Now some folks would call that hypocrisy.

  2. “Virginians in the bottom income quintile would see their taxes rise by 0.21%, while Virginians in the Top 1% would see taxes rise only 0.5%.”.

    If you make $5,001 per year in Virginia your income tax rate is 5%. If you make $5,001,000 per year in Virginia, your income tax rate is 5.75%.

    Side note: A person making the minimum wage full time in Virginia makes $15,080 per year.

    Meanwhile, the gas tax is not progressive in any way.

    And McDonnell’s plan is flawed because it is not progressive enough?

    It seems to me that McDonnell’s transportation funding tax is the most progressive tax in the state.

  3. I omitted a decimal point. That should read 0.05%. I have made the correction in the original post.

    • As usual, special interests dominate Virginia’s taxation policies.

      “If all exemptions for Virginia’s sales tax are removed, it is estimated
      that the state sales tax rate can be reduced to 1.0%, to collect
      revenues equivalent to current sales, BPOL, machinery and tool,
      and merchants’ capital taxes. If business-to-business transactions
      are exempt, the current sales tax rate can be reduced to 1.6% to
      achieve the same result. If additional exemptions on potential
      double taxation remain, the current sales rate can be reduced to
      2.5% to achieve the same result.”.

      http://www.thomasjeffersoninst.org/files/3/TaxRestructure_appendix2_Chmura.pdf

      If McDonnell had real guts he’d reform the sales tax exemptions at the same time he uses the sales tax to fund transportation.

      Of course, people buying things like machinery for agricultural use would have to start paying sales tax on those purchases and we couldn’t have that, now could we?

      If the people of Virginia ever wake up to the endless special interest bull**** perpetrated by the Imperial Clown Show in Richmond against the people of Virginia there will be hell to pay.

      • Here’s the truth.

        For years, for decades, the Dems have offered no gimmickry, straight forward, proposals to increase the gas tax … to catch it up with inflation, etc.

        And for that same length of time, the GOP – and their supporters, like Jim Bacon and others, have supported the GOP and reveled in the Dem’s GOP opponents at elections – beating them over the head for being in favor of gas tax increases.

        Giving McDonnell credit for “FINALLY” doing something – is the absolute height of revisionist history – that is becoming so commonplace these days.

        The truth is the Dems have tried and tried and each time the GOP slams them and uses that advocacy as an election issue.

        to wit: ” Even if McDonnell won’t admit it explicitly, it’s satisfying to see him finally yield to the reality that higher taxes are needed to meet Virginia’s pressing needs for roads and transit.

        He irresponsibly promised not to raise taxes when he ran for office in 2009. He lambasted his opponent, state Sen. Creigh Deeds (D-Bath), with TV ads accusing him of planning to increase levies.”

        http://articles.washingtonpost.com/2013-01-12/local/36311996_1_gasoline-tax-sales-taxes-net-tax

        Now fess up here DJ.. admit it…

        • I couldn’t agree with you more. The Republiclowns are the problem when it comes to transportation funding. As for Jim Bacon – I can’t decide if he is just a well educated enabler of the Republiclowns or naive. His demands for things like a VMT in a state where the legislature is observably incompetent leave me wondering.

          I support McDonnell’s proposal because its an effort to move the ball forward despite an empty-headed legislature full of Republiclown obstructionists. Automatically indexing the gas tax is a better idea but Chap Petersen has proposed this and the Republiclowns have defeated it.

          McDonnell could do nothing. Or, he could be completely ineffective – as Tim Kaine was. Instead, he is proposing Plan B. It’s not as good as Plan A but it’s better than nothing.

          Bacon’s idea of demanding a VMT is a non-starter and he knows it. Our General Assembly is incapable of keeping pace with the other 49 states. Something as innovative as a VMT is clearly far beyond the capability set of our legislature.

          Meanwhile, Kookinelli gets a free ride here? Kookinellui was one of the Republiclowns in the state legislature when all reasonable (and constitutional) efforts at solving the transportation problem were defeated. Now his governor has made a proposal. What does the Kook think of this?

          • I think it’s time for Bacon to explain his past GOP-sympathetic obstructionism to taxes to pay for transportation…

            I cannot remember a single blog post from him decrying the GOP clown show when it comes to taxes and transportation.

            ;-)

            I think he rather enjoys taking potshots at targets of opportunity…

            ;-)

  4. The simplest, less gimmickry thing to do would have been to put a percent tax on gasoline purchases and give tax credits to low income folks.

    Right now – 20 gallons of gasoline cost you about $3.50 (and another 3.50 fed tax) – so right now we pay about $7 for 20 gallons of fuel.

    6% tax on 20 gallons at 3.30 when generate about $4 and and at $4.00 a gallon about $4.80.

    but the price of fuel has proven to be a bit volatile as of late and I can see why that idea lost out to the sales tax which would be better modulated from spikes in individual products.

    but the biggest problem to me is that we’ve got a “needs” number that is a flying fig seat of the pants number – at least to most people and how it plays out per region or per county is anyone’s guess unless more info is forthcoming.

    Someone needs to do an analysis of how the Gov’s proposed would have performed over the last 10 years or so and see how it would have played out in the regions, VDOT districts and counties.

    Of course, that’s probably not going to happen – which is pretty ironic because when we talk about more money for schools – my local school system is so totally wired into the process that within hours, they can come up with a number for their county – for education.

    we have no such process for transportation for state wide money but I do remember for the regional taxes for NoVa and Hampton Roads, there were numbers but the problem was the would-be spenders were not elected or “un-electable” and the list of projects that would be paid for were totally TBD… with than answer coming only after voters approved the tax.

    People want more transparency and accountability in transportation funding.

    The regions – each one, NoVa, Hampton, Richmond – all suspect they are getting screwed….

    and people have no idea at all in terms of how the money translates into local benefits to them.

    there is a ton of ignorance out there – as quite a few folks still believe that once a road is built, it is “paid for” and VDOT and the politicos do nothing to better inform people about the maintenance and operational costs.

    Mr. Byrd basically created an opaque and unaccountable agency when he created VDOH (The Va dept of highways).

    Since that time – that agency, in many respects, views the public, as a potential threat to the way they do business – and it shows whether they are doing hearings for a project or doing an environmental document or informing people at the county level just how much it costs to provide them with maintenance and operations … so people basically have no way to even know how much they pay in gas taxes verses how much money is being expended on the roads they use.

    So Jim Bacon invokes the sausage word which is not only appropriate for the annual GA ruminations in general but very appropriate also when describing how proposed changes might translate out to the regions, districts and counties – and I maintain this kind of thing – just further undermines taxpayers suspicions and their typical response – transmitted to their local elected is to oppose.

    I don’t think this thing has a chance of a snowball in hell but there are competing bills and what this did – was to break open the status quo and open it up to change… but change is a funny thing.. it often is what you did not expect.

  5. change is a funny thing.. it often is what you did not expect.

    Yeah, like taxpayers tapping out. Like workers chasing wages. Like homeowners returning to key mail. Like borrowers declaring bankruptcy. Like ruined retirees residing in Medicaid homes. When every politician wants your money it’s time to cut your losses. America is one party now and you pick up the check.

  6. I’m sure you have heard of jingle mail, where a homeowner sends in the house keys and moves out. Turned out that was a bad plan because many owners could stay free in their home for years. They learned that the best way was to send an email to the lender with a picture of a key and dare them to come and get it.

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