by James A. Bacon
Virginia’s 17.5-cent tax on motor fuels is like an over-the-hill ball player. Back in 1986, when the rate was last set, the tax could run, leap and throw like a champ. These days, it wheezes just walking around the block.
With each passing year, the gas tax is less able to fulfill its task of paying for the maintenance and construction of Virginia’s roads and highways. Within five years, Transportation Secretary Sean Connaughton has warned, there won’t be enough gas tax revenue to pay for new construction. Beyond that five-year time frame, one can only presume, gas tax revenues won’t even cover proper maintenance. As maintenance is deferred, the deterioration of roads, bridges and highways will accelerate, requiring even more money to fix. Unless something changes, Virginia’s highway infrastructure will slip into a death spiral.
The obvious solution is to raise the motor fuels tax. Trouble is, the tax is widely loathed. Voters perceive, with some justification, their tax dollars funding mega projects that benefit developers, ideologically driven money-losers like mass transit, or roads to nowhere that please powerful politicos. Until that distrust is dispelled, it will be exceedingly difficult to persuade the electorate to increase the tax.
What I propose here is far from a complete transportation financing solution but it would accomplish two things. First, it would fully fund Virginia’s road maintenance program far into the future, which the current arrangement will not. Second, it could be sold to the public. My proposal would not raise revenue for new construction — that would have to come from somewhere else. But citizens would be assured that the state’s massive investment in streets, roads and highways would be kept in top condition.
As I see it, the motor fuels would be adjusted annually to ensure enough revenue to accomplish three goals: (1) service state transportation debt, (2) provide state matching funds for federal highway projects and (3) fully fund the maintenance of state and local roads and highways. If more money is needed to accomplish those three goals, the tax ticks up; if less is needed, the tax inches back down. That’s it. When citizens gas up their cars at the pump, they will know that their gas tax is paying to maintain the roads they drive on — not to enrich some politicians’ developer buddy — and that they are paying in proportion to which they add wear and tear to the system.
I can’t imagine how this would get push back from taxpayers. No one contests the need to meet the state’s debt obligations. Very few would dispute the desirability of raising enough money to qualify for hundreds of millions of dollars yearly in federal highway grants (for which Virginians have already paid through the federal motor fuels tax). And not even the most hardened taxaphobes could object to maintaining the existing transportation network by means of a user fee like the gas tax.
As an aside, I would suggest re-balancing the share paid by heavy trucks and ordinary motorists. Every analysis I have seen suggests that heavy trucks in Virginia pay less than it takes to offset the disproportionate pounding they dish out to state roads. If trucks paid their full freight, so to speak, automobile drivers would pay a slightly smaller share and might, until maintenance costs inevitably marched higher, enjoy a momentary reduction in the tax rate.
The floating gas tax would accomplish one other important goal: finance the devolution of secondary road maintenance to the counties. Nearly everyone agrees that secondary roads should be the responsibility of local governments to build and maintain. Why? Because county supervisors make land use decisions that create the demand for those roads. If local officials think that paying for those roads is VDOT’s problem, not theirs, they will make very different decisions than if they are held accountable for dealing with traffic congestion themselves. Pushing counties into coordinating land use and transportation will lead to better decision making for each.
The state has offered county governments the opportunity to take control of their own road maintenance but none have agreed (other than Arlington and Henrico Counties, which opted out of the current system back in the 1930s). The reason is basic: Counties don’t think that VDOT will pay the full cost of ongoing road maintenance, much less enough to work down the backlog of roads and bridges in disrepair. Therefore, the gas tax would have to be set at a level sufficient to induce counties to assume responsibility for their secondary roads.
How, then, would Virginia pay for new transportation projects? There still would be buckets of bucks to draw upon: federal transportation dollars, tolls, public-private partnerships, proffers, impact fees and special tax districts, not to revenue streams from the sales tax, the motor vehicle sales tax, motor vehicle registration fees and miscellaneous sources.
Floating the motor fuels tax as I have suggested won’t create more money for new construction. But given the mood of the electorate, positioning the tax as a user fee may be the only way to persuade taxpayers to inject more money into the system. In the years ahead, it will be no small accomplishment to preserve what we’ve already got.
