According to VTrans2025, Virginia faces a $108 billion revenue shortfall over the next 20 years to pay for the state’s tax-and-build, sprawl-inducing transportation policy. That averages out to $5.4 billion a year. Meanwhile, the price of gasoline has risen about $1 per gallon over the past year, sucking another $5 billion a year out of Virginians’ pockets. In a post on the Road to Ruin blog, I argue that our current transportation policy is sending Virginia straight to the poorhouse.
Hurricane Katrina, $3-per-Gallon Gasoline, and the Bankruptcy of Virginia’s Transportation Policy
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Is every other state as far behind in transportation spending as we are?
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GOPHokie, Is VA as far behind in spending as other states? It all depends on what kind of assumptions you make. I regard the VTrans2025 study, with its $108 billion estimate, as a politically inspired document designed to stampede Virginians into a tax increase. I critiqued its assumptions in my most recent column, “Does Not Compute.”
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Well I realize alot of people are saying how bad shape we are in.
Do they mean we need more roads right now, or that we will need them.
The reason I ask is that w/ the exception of NOVA and certain sections of Richmond and Hampton Roads, our roads are more than enough to handle capacity. Our roads also seem to be in good shape. -
Apparently GOPHokie hasn’t traveled to Hokieland® recently, though it’s possible by a different route. Interstate-81 is not “more than enough to handle capacity”. The cargo-traffic through the state is horrendous.
In this (Shenandoah Valley) rural area there’s inadequate attention or funding for high-fatality and dangerous roads. The money’s allocated “elsewhere”, a case of misplaced priorities.
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I don’t doubt Virginians will be paying $5 billion more for gasoline, but isn’t it kind of a shame that none of that money will go to any form of transportation improvement, even the improvements you advocate? If folks have absorbed a buck or more a gallon, would they even have NOTICED 6 or 8 cents more on the gas tax? Wouldn’t they say, at least that’s money that won’t be paid to the oil companies and our dear friends in Mexixo, Saudi, Iran and Venezuela? That’s a part of the higher price I might actually get some benefit from?
Just for the sake of argument.
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Steve, I’ve always argued that if you’ve got to raise taxes for transportation, the gas tax is the way to go. The principle is simple: He who uses the transportation system pays for the transportation system. According to the Kilgore campaign, Kaine made a remark today in opposition to raising the gas tax right now. Well, if you believe in raising taxes for transportation — as Kaine does, as long as the transportation “lockbox” is in place — you ought to be willing to go to bat for the gas tax.
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Yes I have been to Hokieland lately, I am here right now. I realize some people don’t like traffic, but 81 is not a problem. Unless there is a wreck or major construction, it moves and at the speed limit from Hburg to Cburg. I know some of you out there think we should have 5 cars in sight of each other at a time, but its not really that bad.
Perhaps I just don’t travel it when its heavy, but NOVA people would call 81 a walk in the park compared to what they have. -
Shees, GOPHokie, now why did you go and reveal that? I’ve invested effort for years trying to convince Northern Virginians that the rest of us have problems too and we need a statewide approach. Luckily most NoVa folks who experience Hokieland do it on Tech Move In Day, Radford Move In Day, or game days so we’ve maintained the impression of congestion.
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Steve Haner, can you identify any Republican running for election or re-election who supports your very logical proposal?
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Jim, didn’t you argue in your article that the needs were no where near $108B? And now you claim it is a blueprint for bankruptcy?
I think Steve Haner is right, we are going to see people suck up $3.00 gas without a whimper, a couple of cents for tax should be no problem and would not have ever become a problem if the gas tax was per dollar instead of per gallon, and if it wasn’t raided for the general fund.
The fact is we don’t know, and no one does, whether roads induce sprawl, or whether it is based on many other confounding factors, not the least of which is what, apparently, many people actually want and are willing to pay for.
You can’t blame sprawl on our road policies on one hand, and then blame sprawl for our need for roads. The fact is that no one knows what the relationship of density to VMT is, even though the idea that there is a relationship is widely promoted: there is no evidence.
The best available evidence suggests that a ten percent increase in density results in a 0.7% decrease in VMT, and further, that the increase in pedestrian and bike traffic associated with such development is, guess what, primarily induced traffic, not a substitute for vehicular traffic.
Genevieve Giuliano, from the
School of Policy, Planning and Development at
University of Southern California
discussed these issues in a paper presented to a conference on policies to promote sustainable transportation technologies.She argues that:
The standard economic response to questions of environmental externalities is
efficient pricing, or pricing that reflects the full costs of consumption.Sound familiar?
“What kind of pricing
policies are required to substantially reduce private vehicle use?”In Singapore, a city with high density and excellent public transportation, a vehicle quota scheme is in effect underwhich auto users bid for the right to have a vehicle, on top of all the other fees imposed to discourage auto use. The result is that in 1997 a $10,000 car cost $49,000.
That is price elasticity, so don’t expect current gas prices to have a lot of effect. Surely, extended periods of high gas prices will change the relationship of how far people are willing to drive for lower housing costs, but it will not change the direction of the relationship.
Here is what Giuliano has to say abut tranit and pedestrian frindly developments: “While in some cases a relationship between transit use or non-motorized travel and neighborhood design is
demonstrated, a relationship with auto use is not demonstrated.”“On the basis of the existing evidence, it is difficult to support the use of any land use
policy as a means for achieving environmental objectives associated with private vehicle use.”“The real policy question is, therefore, can metropolitan densities be increased to a level
would lead to significantly less private vehicle travel? As noted above, this would require
substantial increases in densities from existing levels and a reversal of development trends that
have been in progress for many decades. I do not think such increases in density can be achieved,
and increases in density that might be achieved would have at best little effect on private vehicle
travel for the following reasons….Most firms have no economic incentive to locate in dense, high cost centers.
Globalization makes it increasingly difficult to impose controls on where firms locate
Most households have no incentive to locate in dense, high cost centers
Density policies required to achieve reductions in private vehicle use have no political
constituencyDensity policies that could be implemented will be swamped by larger trends”
She goes on to point out that the growth of homeowners associations which maintain their own streets and parks is a result of the failure of government to provide those amenities.
Lest you think this is an American phenomenon she points out evidence of similar trends in European countries, and in particular, points out that the widely acclaimed program in the Netherlands to promote higher density is having problems due to a lack of people willing to live in densely populated areas.
In fact, I have several neighbors here in rural Virginia who are refugees from such policies and in fact, flew their horses to the US.
It is true; VMT has increased faster than the population, but it has not increased faster than the increase in commerce or faster than the increase in per capita income. There is simply no evidence anywhere that low density development is a primary cause of the increase in VMT, even though this belief is widely held. There is even less evidence that increasing density will solve any of our existing problems.
More likely, it is a result of many factors which increasing density won’t change. To the extent 0.7% that it does change, it will take decades to achieve and won’t relieve any of the problems already existing.
Despite the elasticity in demand for transportation, I believe we will soon see a considerable decrease in transportation activity, and it will be associated with a like decrease in economic activity.
Soon, we may be yearning for the “good old days” when we had congestion and prosperity. If that happens your complaint that $108 B in roads are not needed will, unfortunately, prove correct. In the extreme, this could lead to fuel riots and looting in Charlottesville.
The other possibility is that Chinese and developing country elasticity is less than ours and a modest increase in fuel prices puts advanced development out of their reach. Under such a scenario gas and fuel oil would be available at higher cost, similar to Europe, and our density patterns and home sizes would eventually adjust accordingly.
Policy changes are not the correct means to preserve open space. Even if we set pricing that reflects the full costs of consumption for both congestion and other externalities, the effect of this would be to increase costs in congested areas and increase sprawl.
If your goal is to decrease auto use, then you need to be ready to accept the economic consequences, which will be far worse than a tax increase.
If your goal is to preserve open space, then you should approach that goal directly, and not through some fantasy economic argument based on policies that have no likeliehood of succeeding.
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Wow, well done, Ray. The economic downturn will be evident soon, unless the bump in inflation is incredibly fast, and is Micro and Macro Econ 101. Every $150m you take out of the economy costs 5000 jobs – starting at the bottom with minimum wage workers.
So, the bump in energy prices will cost us. The adjustments in prices and wages have a lag time.
The Daily Press had a particularly smarmy editorial about how Jim Miller, PhD Econ, predicted the job losses in 04 from the tax increase but shazam there was a net gain of 58k jobs in VA. I considered writing something, but decided it was wasted on Marxists of the Press.
The sum of capital increases from the Bush tax increases (one dollar makes 4 or 5) and huge investments of Federal spending (noted in the Commonwealth’s budget report) surpassed the loss of capital from the tax hoax and surplus.
Likewise, your point about low and high density development is well taken. You probably should approach the problem of open land directly. Although I wish there was a macro-econ model of VA to plug and chug numbers from my op ed about taxation on taxing property based on how hard we use it. I’d love some super econometrician to ‘show me the numbers!’.
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You know, what is really painful about this is that, philosophically, I agree with much of what Jim Bacon, and even EMR believe. But, try as I might, I can’t find any way to intellectually rationalize a position based on the published facts, my own observations of what is going on around me, and my position in both an urban and a rural area.
Consider today’s story in the Post about an Australian company that bought the “Greenway” for $588 million. This is a project that bankrupted the original owners, yet it is now profitable because Route 7 eventually filled up. It is so profitable that private enterprise envisions expanding it to six and then eight lanes.
Evidently roads are not cost effectve/profitable if they are built either too soon, or as in the case of Route 66, too late. Every other solution is in the feasible range.
Why is it that Government can’t see this?
It is the same with housing. Those money losing $350,000 homes we rejected five years ago would now be above the threshold of property tax profitability to government, yet those idiots insist on shooting us in the foot, twice.
It is the same in business. It is hard to justify any worthwhile project if you insist on a two-year ROI. Government must necessarily take a longer view.
One reason our roads are about to bankrupt us is that we are now faced with 20 years of catch-up work that we didn;t do when we needed to. But, as Jim points out, and as I have argued previously, many of the causes for that need are no longer extant drivers, so the costs will not be anywhere near the amounts he claims are going to drive us to bankruptcy in the cause of promoting the economy we need to pay the bills.
I’d rather have the economy that allows me to earn the money to pay the tax than have the alternative. We might get that anyway, but why make it a function of government policy?
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Ray, you seem to find some inconsistency in my argument that the the $108 billion in “unmet transportation needs” is a bogus number. Yes, it’s a blueprint for bankruptcy if we pass a $5 billion-a-year tax increase based on a false premise. Would you prefer that we raise the $5 billion in taxes to build roads that even you acknowlege we probably won’t need?
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I do think there is inconsistency in claiming that $108 B will bankrupt us, but we don’t need $108 Billion, but whatever we spend, it won’t work if it is spent Business As Usual.
I’m saying, as you have said that some number smaller than $108 B is needed. I think we agree that number is inflated for all the reasons stated in your article: we are not going to introduce women to the workforce agin. We are not going to invent just-in-time deliveries again, etc. There is no current reason to project past growthrates into the far future.
The difference is that I think we need it (whatever the figure really is) now, and we need a plan to spend it where the biggest problems are. I’m willing to raise and commit dedicated funding to the problem. I don’t believe we can make a dent in solving our current problems by claiming they can’t be solved (business as usual) or that they can only be solved through an unproven idea that takes 50 years to implement.
I also believe that a huge part of our maintenence problem is caused by heavy vehicles which are not paying anywhwere near their fair share. We didn’t design our roads to be temporary real estate for rolling warehouses. So let’s figure out what a fair allocation of costs are, how much we can afford, what is most important and cost effective, and then get on with it.
If we are afraid that it means we are going to pave over paradise, then we need to allocate funds to prevent that, also. It is not going to be cheap. If we believe conservation is more valuable than housing and roads, then we need to be prepared to pay more for it than we do for housing and roads.
Otherwise, turn roads over to private enterprise who can recognize a profitable enterprise when they see one. But, if you think the Gov’t is screwing you on road cost now, just wait till private enterprise picks all the cherries and leaves you with the extended, low density roads to maintain. It is going to be private health care all over again.
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