The state Senate has passed a budget bill, which must reconciled with the House of Delegaes budget bill, that seemingly does something right: It rejects Governor Bob McDonnell’s idea of diverting up to one-quarter of a percentage point from the state’s 4.5% sales tax from the General Fund to transportation. Transportation should be funded on a “user pays” basis to the greatest extent possible and should not compete with other core functions of government that lack a dedicated revenue source.
In place of that diversion, the Senate proposes indexing the motor fuels tax, now 17.5 cents per gallon, to the U.S. Department of Labor’s producer price index for non-residential construction. This provision recognizes that the gas tax, adjusted for inflation, has eroded so dramatically since 1986 that the state is fast running out of money for new construction.
Eventually, Americans will shift to alternate energy sources such as all-electric vehicles, propane, natural gas or even fuel cells. At that point, Virginia will have to give serious consideration to a Vehicle Miles Driven tax. But that day is years off.
A more immediate concern is that the Senate bill dumps more money into Virginia’s transportation system without reforming the way the money is spent. It is widely acknowledged that Virginia needs to align decision-making for transportation and land use at the same level of government. The McDonnell administration is inching closer to doing precisely that: devolving responsibility for secondary roads to local governments. The political sticking point is the localities’ fear that they’ll get get stuck with the expense without sufficient means to pay for it.
Added revenue from indexing the gas tax could make devolution more palatable politically if it were used to sweeten the pot for local government. As such, the tax should be tied to a fundamental reform of the transportation system, not part of a Business As Usual budget bill. Use the money to drive structural change that not only puts more money into road building/maintenance but encourages local government officials to make more responsible decisions about land use, which determines demand for roads and highways in the first place.
— JAB
