Patrick McSweeney


They're Baaaackk!


Now they want higher taxes for roads -- subsidies for an inefficient transportation system that has become too expensive to support.


Here we go again!


A number of members of the Virginia General Assembly have suggested yet another special session to consider a tax increase, this time for transportation.  Here is further evidence that the only sure result of a tax increase is pressure for even more tax increases.


There has been much hand-wringing by Gov. Mark R. Warner and pro-tax legislators over the status of Virginiaís credit rating. After decades of having the highest rating, Virginia shouldnít risk losing it, these officials insist, if only because it is an important psychological barrier.


Virginiaís AAA credit rating is not the only psychological barrier to be concerned about. The traditional legislative inhibition to raise taxes in response to constant demands for more funding is another, perhaps more important one. As a matter of fact, it is difficult to maintain the highest credit rating without a strong inhibition against raising taxes.


When the taxing option is easily availed, fiscal discipline withers. Instead of rigorously examining ways to avoid raising taxes, such as cutting waste, elected officials become more and more inclined to choose a tax increase as their first response. Thatís what happened in California.


It seems that key legislators already have their minds made up about raising taxes to fund transportation projects. The only questions are which tax and how much to increase it.


This approach is foolish on many levels. Letís consider a few.


The way Virginia has developed since World War II has as much to do with governmental decisions about infrastructure as with any other factor. We were slow to understand the costs involved.


Without recounting the lessons learned, we should be especially troubled by any policy that leaves us so dependent on a resource over which the United States has so little control. Blindly continuing the pattern of road construction we have followed for a half century involves a gamble that we will have a steady supply of oil at relatively low cost for the foreseeable future. Based on what is happening in Saudi Arabia, Georgia, Venezuela, Iraq and other major producing countries, that bet may need to be hedged.


Another result of our decades-old transportation policy is an inefficient system that we can no longer afford to support. The only way to make that system more efficient is to let market forces and private investment play a larger role.


Letís look at a specific problem to illustrate how this would work. Transportation in Virginiaís major urban areas has become more congested year after year. We canít build infrastructure fast enough to keep up even if we had enough funding.


As we increase tax support for road building, we make transit less viable, which leads to demands for even higher transit subsidies. Taxpayers shouldnít subsidize either mode, not because itís unfair, but because those subsidies are causing market distortions and gross inefficiencies.


We need to make various modes compete within urban areas. We should also encourage greater private investment and market-oriented solutions, and less of the old way of financing transportation.


On a day when gasoline futures set an all-time high, Maryland transportation officials by coincidence were considering building a network of toll lanes to reduce congestion. Virginia has been considering this course for years. Thatís encouraging.


We should be exploring fundamental change in transportation policy instead of raising taxes to fund the same old approach.

-- May 10, 2004




















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McSweeney & Crump

11 South Twelfth Street
Richmond, VA 23219
(804) 783-6802

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