Bacon's Rebellion

Less Money for Roads — a Cause for Concern?

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by

James A. Bacon
in

The fiscal underpinnings of Virgnia’s road construction and maintenance program continue to deteriorate, John R. Layman, the state Department of Taxation’s chief economist, told the Commonwealth Transportation Board yesterday. “There’s no ‘up’ in this presentation right now,” he said, as reported by Peter Bacque with the Richmond Times-Dispatch.

The state’s highway maintenance fund will see about $125 million less in each of the next two years, said Layman, and maintenance revenues are projected to fall by $739.9 million over the next six years. With reductions in other state tax revenues, Virginia will have about $300 million less annually for transportation. And that’s the best case, said Pierce R. Homer, secretary of transportation.

Adjusted for inflation, the state’s motor fuels tax collections are the lowest they’ve been in 20 years, Layman said. The underlying cause is one that Bacon’s Rebellion has been warning about for years. When gas prices soar, people (a) drive less and consume less gasoline, and (b) shift to more fuel-efficient vehicles. Virginia’s transportation funding system, based primarily on the gasoline tax, is living on borrowed time.

“Every time you see a [hybrid electric] Prius on the road, that’s somebody consuming less gas, but driving anyway,” Layman told the board.

However, there could have been an “up” to the situation, if Layman had chosen to present it: People are driving less. When people drive less, there’s less traffic congestion — the very reason we need more construction dollars in the first place.

Sales of new vehicles in the current 2009 fiscal year are expected to fall to levels not seen since the mid-1990s, Layman said. It would be interesting to see what’s happening to total Vehicle Miles Driven. If people are driving less, reducing the number of cars on the road at any point in time, then we may need to re-think road-building plans that are predicated on the outmoded assumption that traffic will continue to increase as it has for the past 25 years.

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17 responses to “Less Money for Roads — a Cause for Concern?”

  1. Anonymous Avatar
    Anonymous

    Undoubtedly traffic will not increase at the rate it has for the last 25 years. But, we still have 25 years of catch up work to do, just to cover all the deferred construction.

    Layman’s comment on hybrids is thouroughly misguided. The state encouraged people to buy hybrids by allowing the on th express lanes, if he had a problem with the fiscal outcome of that, then he should have spoken up years ago.

    Anyway, fuel taxes are not the only source of revenue for roads. He is making a mountain out of a molehill. Hybrids are still a fraction of the cars on the road, and they tend to be small vehicles, which would get high mileage anyway. They probably tend to be city vehicles with low VMT. Therefore the total gas reduction for all hybrids is still very small.

    Eventually, high mileage vehicles will become a concern, but to blame our current troubles on them now after 25 years of funding neglect is just not credible.

    The thing to do is to rise the gas tax, and rise it substantially. If you are worried about plug in hybrids eventually decimating the (relatively) small portion of road funding paid with fuel taxes, and if you are worried about other pollution as well, then just expand the gas tax to be an energy tax, covering electricity, diesel, and home heating fuels as well. Let those big homes out in the country pay for part of their roads through their heating bill.

    After all, every time you see someone driving a diesel or propane, or natural gas powered vehicle they are also using less gas, but dribving anyway.

    Failing that, simply recognize the association between driving and the economy, and pay for roads with a sales tax.

    What would happen if we suddenly started driving 25% or 50% less? We would STILL need to keep most of the roads in operation. They would STILL deteriorate faster from the weather than they do from hybrid traffic.

    Where would the money come from then?

    RH

  2. Anonymous Avatar
    Anonymous

    We want people to drive less, right?

  3. Larry G Avatar
    Larry G

    In terms of maintenance – if we drive 25% less – then roads will last longer.

    I don’t think the question is about maintenance because maintenance is guaranteed to be fully-funded in Virginia’s transportation budget.

    In other words, every single penny of the gas tax will be spent for maintenance – soon.

    so the bigger question has been and is – how will NEW infrastructure be funded?

    Do you think – you are going to make an effective case for substantial increases in the gas tax to pay for NEW infrastructure?

    so the answer is……?

    A. – when heck freezes over

    B. – when NoVa drivers – in protest – park their cars until their taxes are increased for roads that the EPA won’t let them build?

    C. you betcha

    in this case “you betcha” doesn’t mean anything – other than “you betcha”.

    🙂

  4. Anonymous Avatar
    Anonymous

    “In terms of maintenance – if we drive 25% less – then roads will last longer.”

    Yeah, but they won’t last 25% longer. I’d bet they wouldn’t last 5% longer.

    We will either pay for new infrastructure or do without – and still pay. If you are right about the huge inventory of unsold homes, the developers aren’t going to be paying for it.

    When the money comes out of our pocket, the mechanism won’t make a lot of difference. Anyone who thinks they will avoid the cost or most of it by virtue of where they live or how much they drive is kidding theirselves.

    I notice the Bridge over the Mississippi has been repaired already. Funny what you can do when you really want to.

    RH

  5. Anonymous Avatar
    Anonymous

    If every single penny of the gas tax will be spent for maintenance – soon, then won’t they have to raise the gas tax to fulfill the maintenance guarantee?

    Considering the amount of deferred maintenance out there now, shouldn’t they have raised the gas tax long since? The money they lost by not doing so, doesn’t look like it is coming back.

    RH

  6. Bob Avatar
    Bob

    “Virginia’s transportation funding system, based primarily on the gasoline tax, is living on borrowed time.”

    Sigh. Why does Bacon’s Rebellion continue to peddle this absolute nonsense? Repeat after me: GAS TAX COLLECTIONS ARE NOT DOWN. This is not a matter of speculation, the money is audited.

    “Motor fuels tax collections declined by 2.5 percent this August but are 3.4 percent ahead
    on last year on an annual basis.” —Virginia DMV numbers pdf

    Gas this year is 80c/gallon higher than it was last year. Collections are up 3.4%. So can we finally drop this “broken system” nonsense?

    Motor vehicle sales, down 16.9% is the real killer. People aren’t driving less, they’re cutting back on luxuries. Who wants to buy a car in Virginia when you have to pay all kinds of sales and personal property taxes? It’s cheaper to keep driving the old, unsafe junker while times are tough.

    Virginia government is the victim of its own greed.

  7. Larry G Avatar
    Larry G

    there's no denying the gas tax numbers but there is also no denying that even a 3.4% increase (not even counting the net overall decrease) will not deliver significant monies for new construction and coupled with the inflation costs of highway construction & maintenance – the bottom line is that the current trend towards no money for new construction – will continue.

    but there is something funny about the July Report:

    " Motor fuels tax collections were $8.6 million this July compared to $4.0 million last year."

    http://www.dmv.state.va.us/webdoc/pdf/tracking_jul08.pdf

    anyone know why ? Bob?

  8. Bob Avatar
    Bob

    Can't explain that blip. Looks like several months' worth of gas was paid for in advance (crazy) or some kind of accounting issue (nuts).

    Here's what's going on. The Commonwealth predicted 4.5% growth in gas tax revenues. Only 3.4% growth arrived. This increase is sold as a 1.1% "cut" in revenue to gullible and lazy media who in turn present it as an excuse to raise taxes or impose toll taxes. This is the oldest trick in the book and it's sad to see people still fall for it.

    "will not deliver significant monies for new construction"

    This is VDOT lie #2. WHAT NEW CONSTRUCTION? There is none, and will be none. Kaine and his buddy Homer are anti-growthers. There has been no new construction (fact); there will never be new construction as long as they're in power.

    Larry, you and I agree that infrastructure repair should be a larger priority. But Kaine & co. don't care about that either. Instead, we get driver taxes stolen for boondoggles like Dulles Rail that cater to the NOVA lefty political base. "I like rail because it's a great option for commuting. Oh, not for me, for the little people. Vote Obama!"

  9. Larry G Avatar
    Larry G

    Is there no new construction because there is no money?

    or are Kaine and the “no growthers” sitting on a bunch of money but refusing to use it?

    or…more likely… there is no money and Kaine and company are not going to raise taxes to generate new money?

    so we both agree on the infrastructure maintenance..

    let’s see what we can agree on in terms of new construction…

  10. Anonymous Avatar
    Anonymous

    If we actually drive 25% less, we won’t need any new construction.

    If that happens, what we will need is jobs.

    Then we can put the new jobs close to where we live and cut back on that (relatively small) portion of travel that is commuting.

    RH

  11. Larry G Avatar
    Larry G

    It would seem that if commuting is only a relatively small part of the driving – then we wouldn’t need much new construction anyhow.

    And with $4 gal and a buck a mile tolls – again… why all the hollering if commuting is but a “small part” of the demand?

  12. Anonymous Avatar
    Anonymous

    Commuting is about 20% of the demand. Congestion involves about 10% of our roadways 15% of the time. The problem with your buck a mile tolls is that they are targeted to commuters only or mainly.

    Propose generalized buck a mile tolls (which would nab the OTHER 80% of drivers) and they will make a dollar a gallon gas tax look dirt cheap.

    But, you are absolutely right, commuting is only 20% of traffic, but if we cut it by 25%, it would eliminate most of the congestion because it would eliminate trips to the most congested places.

    It woul eliminae the need for most new road construction, but that would be replaced by the need for constructing soup kitchens.

    RH

  13. Larry G Avatar
    Larry G

    the assumption being that if you cannot drive – that you cannot work?

    you mean all those people who don’t solo drive ….at rush hour – don’t have jobs and need soup kitchens?

  14. Anonymous Avatar
    Anonymous

    All those people who don’t solo drive are not 25% of the travel.

    People who drive less are generally poorer. People who use less energy generally produce less.

    It is not ALWAYS true. There ARE exceptions. But just because some people can manage a certain way, or one state manages certain efficiencies does NOT mean that it is possible in general.

    If you want people to drive less, and use less, just make them poorer. Conversely, if you raise the price of driving, in order to get them to drive less, you will almost certainly make them poorer.

    Now, I suppose we can put them all to work building subway and train systems, and driving jitneys to provide us with similar mobility – but we will likely find out it is a whole lot more expensive than driving (for the same tasks).

    Yes, there are certain things we can do to economize, but they are not unlimited. After we do them, we still need more transport, more roads, more energy.

    Yes, Washington state is producing more GNP with less energy use per GNP produced. It still means more energy use over all. And how long can they continue such “gains”, until they can get something for nothing? By what means are they getting these “gains”, by exporting energy intensive jobs to Texas?

    A buck a mile road tax makes a dollar a gallon gas tax look dirt cheap. If it is targeted against only commuters it is probably illegal as well AND it is a subsidy to urban landowners. If you use bogus arguments to target commuters “save the environment”, “let them pay free market prices for the demand they cause” then the argument is dishonest besides.

    Yes, we can make some real savings, in the short term. Long term they won;t make much difference. But many of the savings proposed are NOT SAVINGS AT ALL, because they do not consider the externalized costs these “savings” impose.

    RH

  15. Larry G Avatar
    Larry G

    re: “All those people who don’t solo drive are not 25% of the travel.”

    you mean the folks who go to work in carpools or commuter rail/bus are poorer than the folks who drive solo?

  16. Anonymous Avatar
    Anonymous

    No, I mean thse that carpool are not 25% of travel. Usually it is around 5%.

    Yes, they are poorer than those that drive solo. You won’t believe that, but check it out.

    RH

  17. Bob Avatar
    Bob

    There’s a reason HOT lanes are “Lexus Lanes” and not HOV lanes.

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