The Dumb and Dumber Transportation Funding Policy

by Randy Salzman

If Virginia removes its meager gasoline tax, the state, economic history shows, will have more people driving more places more frequently, which will increase congestion, add to the nation’s oil import tab and force the United States to keep expensive military forces near foreign oil fields. It will accelerate the oil world’s yearning to drill above the Arctic Circle, boost further strip-mining for Canadian tar sands and potentially destroy the nation’s largest underground aquifer with devastating spills, all the while expanding the “need” for more expensive Virginia highways which the state can’t afford to build.

One has to wonder if our political world has lost the capacity for reason. In pandering to motorist-voters, are politicians willing to damage virtually every other aspect of our existence? The governor’s proposal indicates that politicians have lost the ability to think beyond the next election.

As Governor McDonnell can’t run for governor again, perhaps he believes that catering to our driving self-absorption is the way he becomes senator.  Wouldn’t it be grand if he, a la Governor Christie of New Jersey, would want to be a statesman before being a politician?

Why doesn’t our governor seem to care about anything besides drivers? After promising federal gasoline tax dollars for a highway through greater Charlottesville, which virtually no one locally wants, he’s thrown a billion dollars at a toll road paralleling an under-utilized major highway in Southwestern Virginia and now wants to create more congestion by saving Virginia drivers 17 cents a gallon, all but ensuring that they drive more.

In a 2010 comprehensive analysis of the “externalities” – or unrecovered costs — of driving, The Victoria Transportation Policy Institute calculated that American society already pays 54 cents for every mile driven. Most of these externalities, unfortunately, don’t register in drivers’ brains. For example, taxpayers are putting almost $20 million a day (yes, a day) keeping carrier groups in and near the Persian Gulf to ensure that the Iranians don’t squeeze world oil supply by closing the Strait of Hormuz.  America, however, receives only a fraction of that oil flow. Most goes to our primary economic adversary, China.

The National Defense Council Foundation in 2006 analyzed gasoline’s externality costs, not including wars in oil fields and greenhouse emissions, and calculated that, primarily for lost economic opportunity and preventive defense costs, we should be paying $10.06 per gallon in taxes. If we didn’t so greatly undercharge for gasoline and diesel in transportation, NRDC pointed out that local manufacturers, farmers and artisans could compete with Chinese and other foreign imports.

Motorist voters like to think gasoline prices are too high but only Mexico, amongst all the Organization For Economic Cooperation and Development nations, has lower tax-included gasoline prices than the U.S. As a percentage of income, Americans are paying almost exactly what their great, great grandparents paid for auto fuel in the 1920s.

Indeed, the Bowles-Simpson commission specifically called for raising auto fuel taxes as a way to deal with the states’ existing deficits in roadway-repair funding and our national, never-ending, debt crisis.

Yet our governor wants to eliminate gasoline taxes? It’s hard to imagine a dumb and dumber policy for the long-term good of we, the people.

33 Responses to The Dumb and Dumber Transportation Funding Policy

  1. I can’t disagree with you more. The Virginia General Assembly sat on its ass for the last 27 years with a gas tax frozen in cents per gallon. The only other state which has frozen their gas tax for a longer period is Alaska.

    Now, McDonnell has come up with a tax that will naturally inflate with the rise in general prices. He has proposed a plan that will take transportation funding out of the hands of our incompetent state legislature. The clowns in Richmond will not have to take any overt action to keep transportation funding in line with inflation.

    Virginians will drive more. The estimate is 1.25% more. Is that really a crisis?

    As for oil, the MPG of cars is marching upward rapidly. The increased efficiency of the cars on Virginia’s roads will quickly overwhelm the 1.25% increase in driving from an energy consumption perspective.

    The sales tax is very progressive when viewed on a tax dollars per mile driven perspective. Since wealthy people spend considerably more than average income people, they will pay a disproportionately higher portion of the total tax. I know of no evidence demonstrating that wealthy people drive considerably more than average. Therefore, on a tax dollar per mile basis, the tax is very progressive. The gas tax is not.

    Yes, a VMT would be better. But I’ll be playing strong safety for the Redskins before our intellectually crippled General Assembly can wrap their heads around something like a VMT. Remember, this is the same General Assembly that wrote and passed a massive transportation bill that was immediately and unanimously found unconstitutional by the Virginia Supreme Court. It will be a cold day in hell before our General assembly could pull off something as sophisticated as a VMT.

    McDonnell’s proposal will solve a quarter century old transportation funding fiasco. That’s something a long succession of Democratic and Republican governors have tried to do and failed to accomplish.

  2. DJR, I agree with much of your comment. But the blame for the transportation legislation being declared unconstitutional lies with Tim Kaine. The bill originally had elected officials imposing the higher taxes, but Kaine wanted the bill amended to give authority to the unelected NVTA. I like the concept of putting more revenue into transportation and the sales tax is a reasonable way to do that. It grows with inflation.

    • TMT:

      I’ll buy the Kaine argument. However, you would have thought that the lawyer laden General Assembly would have refused to go along since it seems to be patently unconstitutional. Sometimes I wonder if the whole thing was just a charade to convince people that the clown show was trying without really having to raise taxes.

  3. There’s one big problem with DJ’s continuing caustic analysis of the Va GA and the McDonnell sales tax……

    it’s a proposal that has to get through the GA and I’m betting it has a snowball chance…

    It will depend entirely on how many people in the GA support it and stand up to speak for it.

    that is.. if it makes it out of committee… Whose the Transpo chair?

    • As usual, you miss the political calculation. McDonnell has made a proposal. It should be considered the Republican proposal. Most voters in Tidewater and NoVa want a fix to the transportation funding problem. They will watch this very closely.

      From here:

      1. Cuccinelli will support McDonnell’s proposal. I assume that McDonnell has already “socialized” this with the rest of the Republicans in the GA. Other than those who will lose the next election if they support it – they will go with McDonnell.

      2. The Democrats are on their heels. They won’t get a lot more votes in the red areas of Virginia by opposing the legislation. However, they will lose a lot of votes in Tidewater and NoVa if they oppose, unless…

      They propose a better alternative. If they do make this proposal, the ball is in their court. They had better damn well get their proposal passed or Terry McAuliffe can kiss his chances of election goodbye.

      So, the Democrats have a choice:

      1. Go along with McDonnell and pass his legislation. This will do them little harm. It will bolster McDonnell’s reputation as an effective governor. However, few who would have voted for them will vote for Cuccinelli if they support this.

      2. Propose an alternative. This is risky. They must then get their proposal passed or suffer the consequences from independent voters in Tidewater and NoVa in November’s election.

      3. Complain but offer no alternative. This is suicide. The Democrats will lose in rural Virginia and lose enough independents in Tidewater and NoVa to lose the governor’s election as well as more than a few House seats.

      McDonnell has out-maneuvered the Democrats by making this proposal.

      Terry McAuliffe’s best move is to support the proposal and thereby blunt the momentum it would have given the Republicans.

      This is the kind of clever political strategy that just might get Cuccinelli elected governor.

  4. TMT/DJR
    As one who was there, I must be sure the record is correct. There are many to blame for the bill being declared unconstitutional.
    Yes, Tim Kaine signed HB 3202 and was part of the negotiations, but the patron of the original bill was one William Howell.
    The bill was initially drafted with the active participation of then-Attorney General Robert F. McDonnell.
    The Republican-dominated House adopted the final bill with almost all members of that party voting for it, including Lt. Governor candidate Lingamfelter.
    The Republican-dominated Senate adopted the final bill with all but one member of that party voting for it, including Attorney General/Governor candidate Cuccinelli, Lt. Governor candidate Martin, and Attorney General candidate Obenshain.
    I am sure that all of them wish this was not known, but they cannot hide from their record. Bosun

    • I’ll buy your explanation with one caveat – the original bill was constitutional. So, the point about McDonnell’s involvement in the original bill is somewhat irrelevant.

      However, the only thing that counts (politically speaking) is what the voters remember. They remember yet another failed attempt to solve the transportation funding issue. Enter Bob McDonnell with his imperfect but simple proposal. End the gas tax. Raise the sales tax. Is it revenue neutral? Not over the mid term. However, it is not just a tax hike. It is a tax hike and a tax elimination. GA members can vote for it and claim that (net, net) they have not raised taxes. Brilliant politics. Meanwhile, voters remember the buffoonery around 3202 even if they don’t remember the details of that fiasco. Again, it looks like brilliant politics by McDonnell.

    • Bosun, As I recall, the original bill HB 3202 did not give the NVTA authority to levy taxes, but the Governor’s substitute did. You are certainly correct about the voting. Everyone has a hand in it. But the big switch in authority to impose the taxes came from Tim Kaine.

  5. Bosun… ZINGS… not once, not twice, but a volley!

    there are GOP fingerprints all over 3202!

    It IS curious that the GA – with an on-call staff of legal eagles whose
    sole job is to ensure the Constitutional mettle of legislation USUALLY do that job correctly but something went seriously sideways with 3202 and and kudos to Bosun for setting TMT/DJ straight so they can both stop bashing Kaine!

    but regional funding for transportation is still a serious and unresolved issue.

    Regions need an ability to identify priorities and to interact with taxpayers on those priorities and the unfortunate truth is that most people have no clue what an MPO is or whether they have any real influence over it (they don’t) and the folks who DO know what an MPO is – like in Hampton Roads … would apparently burn it to the ground with all sitting members inside it – in a heartbeat!

    I’ pretty sure if voters had a direct say in Cville, that VDOT would be exiting stage left with door whacking them on the butt as they left.

  6. larry g – Yes the legal eagles that serve the GA might have raised some red flags, but, interestingly, it is the AG’s job to do that as well. His team is suppose to review all bills and bring any constitutional deficiencies to the attention of the GA.
    One might say that the then-AG [now Transportation Legacy Seeking Governor] might have had a conflict of interest since he helped broker the deal, but I surely would not. Bosun

    • Again, you miss the political angle. HB3202 is Tim Kaine’s transportation bill. You only get four years as governor and you must try to solve the transportation crisis. Kaine took his half-assed shot. Regardless of how the bill went through the GA, Kaine put his name on the bill when he didn’t either veto it or say, “I have my doubts about the constitutionality but I’ll let the courts decide”. Having neither vetoed the bill nor publicly questioned the constitutionality of the bill – it became his bill. Meanwhile, McDonnell had a choice – oppose the bill on constitutional grounds or just let it go. AG McDonnell might have been well advised to oppose. However, future governor candidate McDonnell can’t be seen as an obstructionist. Better to be asked why he didn’t see the legal issue than to be called an obstructionist.

      As usual, McDonnell made the right political calculation.

      My bet is that he is making the right political calculation again. 99.99% of Virginia voters don’t know and don’t care what a VMT is. Maybe they should but that’s not the point. However, about 75% of Virginia voters in the key population centers in Tidewater and NoVa are sick of congestion and equally sick of the endless, overpriced, narrowly targeted tolls that seem to have become Virginia’s only lame brain answer to the problem.

      In rural Virginia ending the gas tax while increasing the sales tax seems like a wash. They are not going to suddenly vote for Terry McAuliffe over this.

      McDonnell and the Republicans seem to be in the catbird’s seat here.

      Everybody knows that the GA (regardless of party) has been incompetent when it comes to transportation. Now there is what most Virginians consider a reasonable proposal on the table. Oppose it at your political risk.

      McDonnell 2016. For president, that is.

    • the fatal flaw in 3202 was not some obscure esoteric legal technicality though.

      Two things I have never fully understood with respect to Va Constitutional governance:

      1. – what circumstances require a public “hearing” – REQUIRE it vs things that can be decided without holding a public hearing. I’ve seen a plethora of issues at the local level that require a public hearing at which no one other than the elected show up to consider it.

      2. – When there is a regional authority that provides services for a fee or tax – how does the charter of that authority differ from the one enacted in 3202?

      For instance, most regional authorities for things like libraries, transit, jails… can and do appear to set their fees by vote of the governing body which is appointed not elected.

      I had erred originally in thinking 3202 was legal because it appeared to me to be a lot like other existing regional authorities and I had assumed that the legal eagles had configured it the same way.

      oh, and as usual, I have an additional question:

      what changes REQUIRE a referendum – a vote from the public as opposed to only from elected officials?

      These things, not well understood by many, seem to be more well understood by legislators, their legal staffs and the AG – USUALLY!

      and of course – ABSOLUTELY understood by the Va SC.

  7. t I think DJ has been smoking something if he thinks the GOP in Va is okay with this idea.

    the Conservative blogs have been going bonkers over this.

    even if this proposal did not involve an increase in the sales tax – the accompanying decrease in the gas tax is pretty radical for the Va GA that often moves almost glacially on tax issues.

    They have no problem ordering trans vaginal probes at women’s expense but increasing the sales tax under a Republican administration – holy moly!

    Let’ s put this in context – if this proposal came exclusively from a sitting GOP member of the GA and it was his/her own “original” idea and he/she were not carrying it for the Gov – this thing would be consigned to the very gates of legislative hell in a matter of nano seconds.

    The fact that a “no-tax” GOP gov has proposed it has upset the proverbial conventional wisdom apple cart.

    Tell the truth now DJ. If Kaine had proposed something like this would you have been as surprised?

    McDonnell for POTUS. OMG! you ARE delusional!

    The one thing I will give credit for is that McDonnell has truly shattered the idea that Grover Norquist calls the shots on tax policy for the GOP!

    Of course there is also a HUGE RISK that some miscreant is going to step out from the right wing fog and with a hot branding iron with the words RINO plant it firmly on McDonnells butt.

    ;-)

  8. The other thing I get from DJ’s musings is that he basically is pro-tax, he appears to support increases in taxes.

    DJ (at times) appears to walk and talk like one of those awful tax and spender… it actually appears to be at the root of why he wants Home Rule for Fairfax (more money) and I made him an offer the other day to trade Home Rule for the right of citizens to initiate referenda and recall in the jurisdiction to get Home Rule and I got the distinct impression, he’s not in favor of such a thing – which is ironic because this is essentially why the Va SC turned down 3202.

    So, DJ… can you, would you, explain your views on taxes and increased taxation…. it appears to me that you support increases in gas taxes and now sales taxes… correct? Doesn’t that put you firmly in the Kaine/Warner/Mcauliffe Democrat “throw more money at something” camp of politics?

    ;-)

    • I’ve explained my philosophy 99 times for you. This will be the 100th and last time.

      1. Taxes that increase commerce and/or employment are welcome so long as the overall tax rate is competitive. Even with the additional sales tax proposed by McDonnell Virginia will have the lowest sales tax of all the adjoining states except North Carolina. And, when you add in the locality sales tax in North Carolina, Virginia will be lower than most places in North Carolina.

      2. Localities should have the right to set their own balance between taxes and government services. Many of the highest tax localities in a state are the most successful job creators in the state. San Francisco, CA, Austin, TX and Cambridge, MA come to mind. The absurdity of letting the Imperial Clown Show in Richmond dictate to localities is evident to me every day.

      3. Entitlement programs are a waste and a mess. The government cannot be trusted to run large entitlement programs. The politicians inevitably use these programs to buy votes today by overspending and, thereby, jeopardize America’s future. Did you get your Obama – phone yet?

      • I like checks and balances. Tension in government is usually good. Neither party has all the answers. The views of the executive and legislative branches are not always the same. Ditto for the Senate and the House of Delegates. Similarly, some times local officials are going in the right direction. Other times, it’s good to be able to seek help against them from the state or federal government.
        I don’t want local government to have unlimited powers to tax and spend. For every Sharon Bulova in local government, there is a Gerry Connolly. I’m willing to see limits on the Bulovas as a price for the same limits on the Connollys.

        • Agree on the checks and balances. My feeling is that the General Assembly has too much power. Too much power versus other state entities like the executive and judicial branch and too much power versus the localities.

      • re: 99 times… eh? I don’t think so.. but okay.

        1. – I GENERALLY AGREE with your view on taxes for the purposes you state but then you fumble a bit because the “purposes” you espouse are highly subjective.

        but perhaps you also would support methods to determine cost/benefits… ?

        2. – you still have not answered the question about citizens having the ability to rein in taxes they don’t agree with at the local level and/or recall errant politicians… do you support that? That’s a fairly common feature of many other “home rule” jurisdictions.

        3. – I do not think the govt uses entitlement programs to “buy” votes unless you will admit that such policies have been in effect for decades not just this POTUS and under both GOP and Dem governance.

        Remember, Reagan supported Social Security – he was the one to support reform to start saving up for the boomer transition…. the GOP supported the individual mandate for health care in 1993 and in 2003 – the GOP supported Medicare Part D and further enriched the Medicare Part C – govt giveaway for Medicare “gap” subsidies to wipe up the 20% co-pay for original Medicare.

        The GOP also supported the earned income credit and child tax credits with Reagan himself calling them ” President Reagan called it “the best antipoverty, the best pro-family, the best job creation measure to come out of Congress.”

        so do you think the GOP also “buys” votes with entitlements?

        but you have a big problem here DJ – because the GOP does not support your view of taxation – at all.

        so that sorta explains your wild swings between pro-Obama, anti-Obama, pro-Dem Gov candidates, pro-GOP GOvs… etc.

        MOST.. Conservative BLOGs and Conservatives themselves are violently opposed to tax increases of any kind including the sales tax even if it is partially offset by reduced gas taxes because most GOP believe as Jim Bacon (and most businessmen) doe- in the free market approach not the govt taxation approach.

        • “but you have a big problem here DJ – because the GOP does not support your view of taxation – at all.

          so that sorta explains your wild swings between pro-Obama, anti-Obama, pro-Dem Gov candidates, pro-GOP GOvs… etc.”.

          You may actually be getting it!

          I have never claimed to be a modern Republican.

          Obama has more bad ideas than good ideas but he does have some good ideas.

  9. So the proposal is to replace the state wide fuels tax with a state wide general sales tax? And a conservative Republican in a rapidly bluish turning state actually came up with this scheme? Did they not notice all those little blue spots appearing in the last few ROVA election results maps? Aren’t they the least bit curious what those mean?

    • Regardless of red vs blue, people in the population centers are sick of the congestion. They are even sicker of the inept state government and its multi-decade inability to address the problem.

      The liberals in Virginia will never like Bob McDonnell. However, he will get a grudging respect from them if he can address the transportation problem – even if his approach is less than theoretically pure.

      What are the Dems going to say? “We should go back to the failed policies of the past?”.

      Nobody in NoVa trusts the General Assembly to do anything intelligent. I suspect that attitude is growing in Tidewater as well. Governors, however, can be seen as effective. Warner was one of those governors. McDonnell is another.

      Avoid the incendiary social issues while moving the Commonwealth forward economically. That’s the formula for successful Republican politicians in today’s Virginia. Give or take the vaginal probe fiasco, McDonnell is accomplishing this.

      • WTF DJ! Every year the Dems advocate increasing the gas tax and/or indexing it and every year the GOP runs opponents against them calling them tax & spenders!

        where have you been living boy, in a cave?

        • The very man who most often backs this indexing legislation is Chap Petersen – the state legislator I most admire and who I most support.

          However, it hasn’t happened.

          Now, McDonnell has a proposal that isn’t as good as indexing the gas tax but it’s good enough to address the transportation funding problem. Moreover, I assume that McDonnell has “socialized” the idea with the Republican representatives from rural Virginia.

          The Democrats have to decide whether perfection is required or whether good is good enough.

          For most non-fringe voters in NoVa good is good enough.

          LarryG – As I have routinely written, I think the Republican Party of Virginia is a disaster. From their star chamber approach to primaries to their love of extreme social issues, they do not represent me or my views. Meanwhile, centrist Democrats like Chap Petersen are far more in line with my thinking.

          Unfortunately, a coalition of rural Republicans and Richmond-area throwbacks dominate the General Assembly. This will change. In the meantime, however, we need to solve the transportation funding fiasco.

          Perfect is the enemy of good.

          A sales tax increase that eliminates the gas tax will increase driving by 1.25% – all other things being equal. That’s acceptable collateral damage for me although I know that some others (including Sen,. Petersen) disagree.

          When standing within smell distance of the RPV you must sometimes hold your nose and plough forward. This is one of those times.

  10. re: curious?

    the GOP?

    naw… they’re still in denial…. it might last 4 more years.

  11. “Taxes that increase commerce and/or employment are welcome so long as the overall tax rate is competitive.” There is a fine line here between tax spending that improves infrastructure, including transportation and education, and crony capitalism. Are we building roads or transit that are needed to reduce congestion or improve safety, or are we enabling development and pushing landowner costs to taxpayers? Are we protecting national defense and homeland security or enriching contractors? Are we funding basic research or are we investing tax dollars in some one’s risky business? The devil is in the details.

    • I agree. The opportunity for crony capitalism and special interests based spending is always in play. However, I see the Tyson’s situation as a good approach to building something that will benefit the area and the state without giving all the benefit to the developers. My belief is that this kind of program is best managed at the local level because the locals understand the situation.

      • Tysons is much better in reality than was earlier proposed. Density was not allowed to spread throughout the area, but was concentrated within one-quarter mile of the stations. Fairfax County’s business-as-usual, where development occurs without the infrastructure, was not approved. Rather, development is tied to infrastructure construction. The typical Fairfax County giveaway, wherein costs are socialized and profits privatized, did not occur. The final plan adopted by the Supervisors transferred $403 million in costs (2012 dollars over 40 years) from federal, state and local taxpayers to the landowners starting from the original staff proposal. Further, language making Fairfax County funder of last resort was stripped from the financial plan.

        I agree that, in this instance, decision-making at the local level produced a much better result than what would have occurred at the state or federal level. However, it was the innate benevolence of local government that caused this result. It stemmed from several factors: 1) gross over-reaching by the Tysons Task Force; 2) the elimination of Gerry Connolly from the decision-making process through his election to Congress; 3) the constant and consistent advocacy from citizen groups; and 4) the varied interests of the landowners. Planning Commissioner Walter Alcorn’s proposal to concentrate development at the four stations split the landowner coalition, a fissure that only grew over time.

  12. I always hate to add something on a long string that nobody will read, but here goes.

    For more than a decade I’ve been a strong supporter of raising or indexing the gas tax, or some combination, and the anti-growth and development crowd (including our namesake) have fought that tooth and nail. The unholy alliance with the anti-tax Republicans served them very well in blocking every avenue, objecting to every proposal, throwing up more and more unreasonable demands for planning and land use controls. Nothing was enough because the goal really was — doing nothing. They want us on bikes eating wheat germ.

    When you oppose the reasonable in the face of overwhelming need, you end up getting an unreasonable solution to address those needs. You get tolls on already-constructed interstates. You get private financing that enriches private interests (often foreign) and adds a layer of profit to a public infrastructure asset. And now you get a proposal to eliminate the very tax you fought so hard to freeze in place, and that does (admittedly) break the nexus with the user. I think the Governor’s tactics here have been quite creative. Seeing Bacon defend and extol the gas tax has been a real LOL moment for me. For a decade I’ve been telling him it was the solution that best met his philosophical goals. But of course, the PEC’s real goal was DOING NOTHING and that is what is now threatened — this bill DOES SOMETHING. So I am cheering it on.

    • Well stated, Breckenridge. McDonnell has done SOMETHING about transportation funding. Or, at least he’s trying. We’ll see how the Imperial Clown Show in Richmond reacts over the next couple of months.

      But … woe to any GA member from Northern Virginia that goes against McDonnell’s plan! Any legislator who does that better be damn sure that he or she can get an alternate, better plan adopted in this session.

  13. If the two evils to choose from are more transpo dollars for folks like T’il Hazel to use to make their developments more profitable – and private, even foreign companies that can generate investments for more tranpo infrastructure that is actually needed (or else it would not be viable as toll roads) AND they keep the developers from exercising the worst extremes of crony capitalism… I’ll take the lesser evil.

    The opponents of increases in the gas tax are far wider and deeper than just one or two small groups. Poll after poll shows an opposition rate of 80% and it’s just simply unrealistic to believe than any normal politician is going to fall on their political sword in a fruitless attempt to pass something that voters are overwhelmingly against.

    It’s true also that people dislike tolls but the opposition rate is 20 points lower… only 60% oppose tolls.

    the question now is (and will soon be answered) is how many people oppose an increase in the sales tax – for transportation.

    Any guesses?

    here’s a recent Hampton Roads Poll that might provide some hints:

    http://hamptonroads.com/2012/04/even-tax-beats-tolls-regional-poll

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