John Taylor,
President of the Virginia Institute for Public
Policy, publisher of Virginia Viewpoint.
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By
Ronald D. Utt, Ph.D.
Escalating
levels of road use now make traffic congestion in
the Washington area third worst in the nation.
How to address the problem has been a source
of debate for years? The
solution now recommended by many state officials and
the business community is a half a percent increase
in the sales tax in Northern Virginia, and a full
percent increase in Hampton Roads to fund more road
and rail projects. On
November 5, residents in both locations will vote
for or against the increase.
Both sides are gearing up for a fight between
now and then.
Before
frustrated Virginia commuters commit themselves to
higher taxes, they might want to have their elected
officials take a closer look at how the federal
highway program mistreats the Old Dominion.
Doing so will reveal opportunities for
fundamental reform that can send substantially more
federal highway money to Virginia at current
tax rates. One
promising reform – called “turn back” –
would devolve the federal program to the states by
allowing each to keep the federal fuel tax revenues
raised within their borders rather than sending them
to Washington. If
enacted, this reform would guarantee that federal
fuel taxes paid by Virginia drivers will no longer
subsidize motorists in the wealthy states of the
North, or the special interests that divert fuel
taxes to other purposes.
For
the most part, the predominant share of public
spending for roads and transit comes from the fuel
tax motorists pay every time they fill their tank
with gasoline. In
Virginia the price of each gallon of gas includes a
state fuel tax of 17.5 cents and a federal fuel tax
of 18.4 cents. The
Virginia tax stays in the commonwealth for local
transportation purposes, but the federal tax first
goes to Washington before a portion is returned to
the state. In
the case of Virginia as well as twenty-nine other
mostly southern states, the amount of money returned
in 2000 was less than the taxes paid.
The other twenty states, mostly in the North
and West, got more back than they paid in.
Between
1992 and 1996, Virginia received only an 83 percent
share of what it paid into the highway trust fund,
while Massachusetts got back two and a half times
its contribution. Several
other southern states fared even worse than
Virginia, receiving less than 80 percent of their
contribution. All the states in the Northeast,
however, received paybacks exceeding the fuel taxes
they paid.
Although
federal legislation passed in 1998 was supposed to
lessen these disparities, the effort fell short, and
southern states still subsidize highway spending in
the North. In
2000, Virginia received back only 89 percent of its
contribution to the program, and the missing eleven
percent was a costly loss.
Had Virginia received back as much as it paid
in that year, it would have had an extra $95 million
dollars for roads, and an extra $80 million in 1999.
With annual deficiencies like this stretching
back over the past decade, is it any wonder our
roads are so inadequate?
Obviously,
a more equitable program would eliminate much of the
need for an increase in the sales tax.
Given how poorly Virginia fares under the
federal law, perhaps a more useful endeavor for
Senator John Warner would be to restore to Virginia
its fair share of the federal money, rather than
promote an increase in a regressive tax to
compensate for his inaction on a problem that has
existed for much of his 24 years in the U.S. Senate.
A
second congestion-causing flaw in the federal
program that burdens Virginia is the diversion of
the federal fuel tax revenues to purposes other than
roads. When
the trust fund was created in 1956, all federal fuel
taxes were spent on the interstate highway system,
but by the early 1980s as the system neared
completion, the federal fuel tax was increased with
more and more of it siphoned off into non-highway
programs such as mass transit and other uses of
little value to motorists.
Although
motorists contribute almost 20 percent of their fuel
taxes to transit programs, this diversion leads to
even greater regional inequities because 75 percent
of transit ridership occurs in just seven
metropolitan areas. As
a result of these competing claims on the trust fund
and the diversion of federal highway money from the
South to the North, Virginia motorists are getting
back as little as 58 cents in general purpose
highway money for every tax dollar they send to
Washington.
The
enactment of turn back legislation will rectify this
persistent inequity and allow each state to spend
its gas tax revenues on the transportation
priorities of its own choosing, not Washington’s.
It
also allows states to do so unencumbered by costly
federal regulations that try to force a
one-size-fits-all program on a diverse nation. And
most importantly, the fast-growing southern and
western states would keep their fair share of the
funds, and end the traffic congestion that past
inequities, and Senators asleep at the wheel, have
helped create.
--
Sept. 23, 2002
Ronald
D. Utt is the Herbert and Joyce Morgan Senior
Research Fellow at The Heritage Foundation.
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