Bacon's Rebellion

Looks Like Another Round of Tax Increases

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by

James A. Bacon
in

If Jeff Schapiro and Tyler Whitley at the Richmond Times-Dispatch are right, Gov. Timothy M. Kaine will propose later today a plan to raise nearly $1 billion a year in new taxes to pay for new transportation initiatives. “Capitol sources yesterday said Kaine … favors pushing the tax on motor-vehicle sales from 3 percent to 5 percent, putting it in line with the state’s nickel-on-the-dollar sales levy.” (Read the article here.)

Meanwhile, the state Senate is rolling out its own plan for a tax hike, while Del. Leo Wardrup, R-Virginia Beach, chair of the House transportation committee, has his own ideas about raising taxes. Wardrup’s thinking doesn’t necessarily reflect that of other delegates, but it’s certainly an indicator of pro-tax sentiment within the House.

The only viable political alternative to raising taxes, it appears, is discussion in the House to divert existing revenue streams from the General Fund to the Transportation Trust Fund.

Legislators are willing to consider alternatives to building more roads — building more mass transit! In either case, it’s all about spending more money. Only Gov. Kaine has expressed an interest in addressing a root cause of traffic congestion, the disjunction between land use and transportation planning, but there is little sign that this idea is resonating in either chamber of the General Assembly.

If Kaine is shrewd, he’ll tie his tax hikes to land use reform — pass the entire package, or he’ll veto any effort to cherry pick from it. Otherwise, Virginia will wind up pumping more money into the failed, Business As Usual transportation system without changing anything. The state will continue subsidizing dysfunctional human settlement patterns, and legislators will be back in a few years saying that the billion dollars wasn’t enough.

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8 responses to “Looks Like Another Round of Tax Increases”

  1. Ray Hyde Avatar
    Ray Hyde

    Well, you probably need a billion dollars to spend on current road problems that lnad use reform won’t make a dent in for fifty years.

    Then you need anothe billion dollars to do the studies to determine what land use reforms have some possibility of working.

    Then you need another billion dollars to handle the lawsuits.

  2. Jim Bacon Avatar
    Jim Bacon

    Ray, you assert that land use reform “won’t make a dent for fifty years.” Totally wrong. It may take 50 years to totally transform our communities, but encouraging the right kind of development can have a positive impact immediately on the margins.

    Let’s say you have two projects designed to accommodate 5,000 residents: Project X, a traditional, low-density pod development with segregated and disconnected land uses, is located in a greenfield that will immediately strain the existing transportation infrastructure; Project Y, a mixed-use, pedestrian friendly environment, is located in aging part of town with existing infrastructure.

    Project X quickly overwhelms the rural transportation infrastructure, requiring the state to invest millions of dollars in transportation improvements. Project Y generates only 80 percent of the traffic that Y, and most of that traffic uses underutilized streets that are already in place.

    It makes a huge difference whether we build more Project Xs or more Project Ys. Raising taxes by another $1 billion a year only subsidizes Business As Usual, i.e. Project X. That’s folly.

  3. E M Risse Avatar
    E M Risse

    Jim:

    You are absolutly right, but…

    It does not take building any new structures to make a Fundmental Change in land use. In 18 months the change of use in a dozen core buildings can have a dramatic impact in any region, especially if the change is featured as the first step in a new era.

    First “leaders” need to stop saying “trust us, we can find money and fix the problem”

    Second more citizens need to realize that Fundamental Change in settlement patterns is the only, not one of but only, solution to mobility and access problems in the long term.

    More on this is a later post.

    EMR

  4. John K. Avatar
    John K.

    It’s bad news all over again. To avoid high sales taxes, many consumers shop for major items in low-sales-tax states. Virginia used to be a low-sales-tax jurisdiciton. I’m certain that malls like Pentagon City, just across the river from Maryland and DC, draw (or drew) shoppers seeking to avoid the higher sales taxes imposed by those jurisdicitons. I wonder what impact such sales tax increases have on Virginia’s state and local revenue streams?

  5. Ray Hyde Avatar
    Ray Hyde

    I agree you can never get anywhwere unless you start.

    But fifty years to transform the communities is hopelessly optimistic. It took two hundred years to get where we are and annual turnover is only around 1%. We are making more and more historic districts, specifically to prevent change, and some structures and locales are extremely durable.

    Your second paragraph is total conjecture, unproven, and as far as I can figure out, mostly false. That infrastructure in an aging part of town is also aging and probably inadequate as well. You are going to have to tear much of it all up and start over, otherwise you will never attract those 5000 people. The biggest cost will be in schools, not streets.

    Millions in improvements of all kinds go a lot farther out in the greenfields than they do in the city, particularly aging city.

    At least we agree that if they go there, 80% or more of their travel will still exist. Adding that travel, whatever it is, to already overloaded urban streets will only add to existing congestion. Since these are new residents, not relocating ones, what we are talking about is additional travel, not less travel.

    Over time, incremental development does overwhelm rural sytems, but it overwhelms urban systems immediately, because they are already overcrowded. If the solution is mass transit, that is even more expensive, and as you imply, only accounts for 20% or less of the problem.

    We have only a little knowlege of where that travel will take them, but you can bet that some of it will be to the big box stores so they can escape the price tyranny that usually comes with convenience. Some of those people will want to escape to the countryside, and the countryside is increasingly desperate for eco-tourism. You are going to wind up building more roads and other facilities, regardless.

    If you look at, for example, the MCOG study, it is based on the assumption that government policy will be able to entice only 15% of new housing into the areas they think will be best. It doesn’t do a thing for the rest which changes only slowly over time. The money to fix our existing problems is going to have to be spent anyway. It is not a question of trading 80% of one for 100% of the other.

    5000 people are going to spend what 5000 people spend, and the government support to them will be much the same. Schools and public safety will probably be more costly in that renovated neighborhood. The reason some people try to get out is that the savings and utility you claim, don’t in fact exist, as TMT frequently points out.

    What you are really talking about is making a system where they can’t get out. I don’t believe an urban prison is going to fly.
    Much of that 20% savings isn’t going to happen, so maybe you have 5%, and that’s if you get all the new residents. But MCOG thinks you only get its only 15% and 15% of 5% is what, less than 1%? I think that is being very generous.

    At 1% change we are looking at a hundred years.

    On the other hand, EMR is right. If we move the Pentagon, we can eliminate a lot of urban congestion and traffic.

  6. Ray Hyde Avatar
    Ray Hyde

    Let’s try it another way. If we take your example, and if we talk 5000 people into moving into an aging neighborhood and try to rebuild a place that didn’t work the first time around, and if we can get them to do it entirely at their own expense, then we are getting somewhere.

    But we are talking about 2,000,000 new residents, so all we have to do is pull off that miracle 400 times.

    And if we do, then we will have managed to reduce the resulting increase in traffic by 20% at best. And all it is going to cost us is the price of a 10% increase in the capacity of Metro.

  7. Anonymous Avatar
    Anonymous

    We are not talking about transportation improvements –
    The Warner/Kaine machine is
    further dividing the GOP –
    House v. Senate v. Statewide Candidates in 2009 and
    looking foward to more successes and redistricting in 2010.

  8. Jim Bacon Avatar
    Jim Bacon

    Ray, Here’s what I’m hearing from you: Because more rational development patterns will reduce traffic congestion by “only” 20 percent, it’s not worth trying.

    The one thing that you and I have agreed upon in the past is that there is no silver bullet solution for traffic congestion. What’s required is a wide range of solutions, each of which addresses a part of the problem. You want to build more roads. Fine. But why build more roads and institute land use reform?

    Why does the necessity of building more roads preclude land use reform?

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