Utt Says What’s What on Transportation Plan

All in the Valley of Death rode the six hundred.

Ron Utt, recently retired transportation scholar with the Heritage Foundation, has elucidated his concerns about Governor Bob McDonnell’s transportation plan. In an op-ed published in the Bearing Drift blog, he makes some salient points:

There is much that is wrong with this plan; chief among them is the end of the fuel tax – which operates as a user fee falling only on those who use the roads. While this user fee/tax is far from perfect, it does closely connect costs with benefits, provides incentives to drive less and operate more fuel-efficient cars, and falls disproportionately on those who drive the most and those who operate cars with poor fuel economy. Is this a problem? Sadly, all of these market-based incentives and disincentives will disappear with the fuel tax, and those who drive the most and do so in gas guzzlers will no longer face any penalty now that their added costs to society and the transportation system will be covered by the state’s consumers through a higher sales tax.

That is exactly the point I have been trying to make.

The other disadvantage in shifting transportation funding from a user fee paid by the motorist to a broad-based tax paid by everybody is that motorists can no longer claim that they have earned a higher priority for road spending, as it is at present. Once this link is broken, the allocation of state transportation spending among the various and competing transportation modes will be determined by politics, not consumer choice and the influential unions and environmentalists will be in a much better position to shift spending from cost-effective roads to costly and heavily subsidized and underutilized trolleys, trains, buses and bicycles.

I don’t necessarily share Utt’s conviction that roads are “cost-effective” (it depends on which road we’re talking about) or that properly financed trolleys and trains are a boondoggle (refer to previous posts on “value capture”) but I do believe he is right to say that transportation spending priorities will be determined by political logic, not economic. Finally…

One leading Virginia legislator calls this a “bold plan”, and I agree that it is: It is bold in the way that the Charge of the Light Brigade, Napoleon’s invasion of Russia, Dien Bien Phu, and Pickett’s Charge were also “bold plans.”

Ouch!

– JAB

6 Responses to Utt Says What’s What on Transportation Plan

  1. Ron Utt and Jim Bacon are well intended policy wonks. Bob McDonnell is a practical politician.

    Utt and Bacon like theoretically correct approaches that will be turned into raw sewage by the Virginia General Assembly within twenty four months of implementation. McDonnell wants an answer that outlasts the Imperial Clown Show in Richmond even if it is less economically correct.

    The key problem with transportation funding in Virginia is that the Imperial Clown Show in Richmond has been unwilling to acknowledge the existence of inflation. They have frozen the gas tax in cents per mile since 1986. The resulting transportation chaos was predictable.

    McDonnell has borrowed a small fortune to help offset the Clown Show’s inability to confront the issue of transportation revenue. Now, he has run out of borrowing capacity.

    McDonnell wants and answer that won’t immediately become another Clown Show circus.

    The key is inflation. Whatever tax plan is chosen, it must automatically inflate with general costs. The existing plan – a flat cents / gallon scheme – has remained frozen in amber by a grosly incompetent state legislature. McDonnell must not let the Clown Show decide whether they believe in inflation as a prerequisite to making his plan work.

    Using a percentage of the cost of gasoline (rather than a flat pegged rate) is a decent idea except that gasoline costs rise and fall rather randomly and newer cars are going further and further on a gallon of gas.

    A VMT would not automatically inflate. The Clown Show would set a cents per mile tax and then go back under the rocks where they live and “forget” that inflation exists.

    By tying the new transportation tax to sales McDonnell has guaranteed that it will inflate with general costs. The Clown Show doesn’t have to take any action. He has also neatly made it less regressive. Since people with higher incomes inevitably spend more than people with low incomes the high earners will contribute more.

    Bacon and Utt are quite right in believing that there should be a better way to tax people to pay for transportation. However, in their theoretically pure zeal they forget the Clown Show Factor. The theory of the Clown Show Factor states that any lasting improvement in Virginia must be pushed as far away from the state legislature as is legally possible. Most importantly, a good solution in Virginia must not require that the state legislature take any regular action to keep the solution working. The existing cents per gallon approach would have worked fine if the Clown Show would have raised the rate to stay in step with inflation. But, that would require a level of competence that simply does not exist within our General Assembly.

    Adhering to the Clown Show Factor Theory is more important than theoretical, economic purity.

    Jim, if you want to get to policies that work and meet you “economic cost / benefit matching philosophy” yo must reform the governmental process in Virginia. As long as we have a hopeless state legislature that is kept in office by endless gerrymandering and the least competitive state elections in America, you cannot have what you want.

  2. I’d support a one percent regional sales tax for transportation as long as citizens had to approve it because it allows citizens to have more involvement in the selection of projects whereas at the state level it becomes a massive slush fund – although as I noted in a previous thread – using the sales tax provides a transparent accounting because the sales tax revenues can be easily determined even by ordinary people.

    I predict this is going to fail. The opposition is coming from all quarters and it’s the same reason – that using the sales tax is wrong on several levels – although it is a specific carve out rather than having transportation and education contest undesignated revenues.

    but there are more than a dozen various transportation funding bills in the GA and what this may do is shake up enough people who normally would just sit on the problem – to actually make some concessions – perhaps on indexing or the like.

    McDonnell has pushed Va past the tipping point when he has committed future Federal transportation revenues to pay back borrowed bond money.

    He also corralled the stranded transpo monies earlier in his administration so now we are truly looking at the bottom of the barrel.

    He has supported HOT lanes and has secured permission to toll the interstates also.

    Any way you cut it – whether you like what he’s done on not – you have to give him credit for NOT kicking the proverbial can down the proverbial road – pun intended.

    He’s teed up the GA so that if they do nothing, they’ll take the blame for not acting.

    I’m still not sure the guy who screwed up Confederate History month and the trans vaginal kerfuffle is THIS SMART but he HAS put the issue front and center – as a lame duck no less!

  3. I do not read Utts commments to imply that ALL roads are cost effective. However the cost effectiveness history of mass transit is not encouraging. We need much better methods to assess the relative costs and values of each mode of transport and then do what the numbers say, not what the special interests say.

    There are some places where mass transit does what it does very well, and places where it is an economic failure and a boondoggle. Even where transit and bicycle modes work well, they still need to be complemented by auto and truck transit that does what bikes and trains cannot.

    We will not find the right mix by baldly promoting one mode over another.

  4. I still think, like Bacon, that we have yet to develop believable need/performance/cost-effectiveness metrics for either mode.

    toll roads would prove their worth. Certainly (regardless of the morality) the DTR is cost-effective by most measures.

    Rail and High speed rail in Japan is said to operate solely on revenues from farebox.

    and I do not totally buy the “cost of congestion” unless people are willing to pay for less congestion – as a choice.

    where have you been Hydra..?? you’ve been laying low here lately!

    ;-)

  5. Metrics are absolutely needed for fair allocation of resources, but the state also needs stated, measurable goals for transportation mode shares. Funds should then be allocated to support those goals. Urban areas would have different standards which should be based on objective standards and local public opinion, not on politicians’ whims. For instance, in the Tysons Metrorail Station Access Management Study, among survey respondents living near the new Silve Line stations, about half said they would prefer to walk to the station to take Metro, 37% said they would like to get there by bike, and 33% would prefer to take a bus to the station. For all survey results, see page 49 of the TMSAMS study. http://www.fairfaxcounty.gov/fcdot/pdf/tmams/tmsams_final_report.pdf

  6. but nothing keeps Fairfax or any other jurisdiction from prioritizing funds towards what their citizens want.

    Arlington proves that.

    The issue is not more money as much as it is what the locality wants to prioritize – IMHO.

    For many years, VDOT gave the option to counties to add sidewalks and bike lanes to new roads or road improvements and it was not unusual for the county to opt out of them.

    I just think the idea that more money will result in my bike/ped facilities is well intended but not true.

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