Right and Wrong Transportation Money

The LiberalMSM (oneword) Daily Press (Feb 23,2006) on The Peninsula notes Del Waldrup (R- Va Beach) had a blog meeting on transportation. Catch how they say…

Waldrup “gathered with a collection of Internet acolytes on Tuesday night, saying on a Web blog, “the press doesn’t want to do their homework. Show me the money they say. They haven’t reported on a ton of legislation that is new and different. They just sit back and say that the House is paving the roads with school books, but what about all these increased revenues that we have accumulated from the surplus over the last two years?” Too bad they didn’t cite the blog addresses to let readers read all for themselves.

Then, the DP gave the first explanation I’ve seen for the buzzwords – sustainable, reliable, dedicated, permanent – revenues.

Apparently, dear Acolytes, they’re against borrowing money with bonds to pay for roads today. That’s odd. When we had the VA ballot referendum for huge bonds for the environment and higher education – they were all for those bonds. Also, they were terrified that VA would lose its AAA bond rating to keep borrowing – unless VA raised taxes in 04. Except, the report actually said VA could raise ONLY $800m in NEW bonds unless it spent less or raised more money.

The real rub is that the taxaholics (D and R) don’t want to use General Funds for Transportation. Ah, that is why we have the Transportation Trust Fund – the one regularly raided for General spending by Republicans and Democrats.

So, get this, using money from the General Fund or from the surplus in the General Fund or from bonds is wrong. The DP quotes His Lordship Sir John Chichester’s insight, “By its very definition, a surplus is inherently unpredictable and unreliable. We concluded this is not how we want to fund transportation in Virginia.”

Like the money for the General Fund, Transportation Fund, any bond issues and any other colored pot of money in Virginia Treasury comes from some sources that are subject to the economy going up and down and some that are not. LOL.

Earth to DP and Taxaholics: All revenues come from the economic health of the Commonwealth. If the economy goes down, revenues go down. If the economy goes up, revenues go up.

Let’s try it another way. If VA planned on spending $70b, but revenues after the Chicken-Little-the-Infrastructure-Is-Falling Tax hike, Bush’s tax cuts and massive Federal spending in VA – are $72b, then the $2b is a surplus. If the economy is expanding and the Gov and GA spend only $71b and taxes come in at $73b there will be another $2b ‘surplus’ the taxaholics can spend on anything – including transportation. It will continue that way IF spending dies NOT grow faster than inflation.

When the economy went down during the Clinton/9-11 recession of 00-02, the revenues flattened but still increased from $48 to $50b (or was it 50 to 52?) in VA because not every sector of the economy contracted – and not every household.

So, if our $72b revenues stayed flat at $72b for two years – if (IF almighty IF) the Gov and GA didn’t increase spending in other areas – the same money that was spent on transportation in one year would be available in the next – if they didn’t spend it on something else!

The business staff of the DP must be different from the editorial staff or they couldn’t make a profit. EC 201: The government gets its revenue from the same economy The People get their revenue from. The government gets their money from The People – including corporate taxes.

The distinction between these ‘sustainable, reliable, dedicated, permanent’ taxes for transportation and the ‘sustainable, reliable, dedicated, permanent ‘ of the 1985 transportation tax hike which would fix transportation forever is that these taxes are just new and additional taxes for 2006.

Last lesson from EC 201 (Department of Social Sciences, USMA)(or EC 10 at Harvard) is that every $150m in taxes kills 5000 jobs. The first to go are part time and minimum wage earners – the working poor.

Where is Jim Miller when we really need him?


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Comments

15 responses to “Right and Wrong Transportation Money”

  1. I don’t understand.

    Are you saying that if we had not raided the transportation fund previously, then we would be in less of a fix now?

    That even if we get new money now then it is stillunreliable, partly because of the funding source and partly because we can’t trust government to leave the transportation fund to transportation?

    I think you are right about escess taxes killing jobs, but how mwny jobs does insufficient transportation, or sufficient transportation in the wron places cost?

    Roads last a long time, I don’t think it is reasonable to epect they should be paid for 100% up front.

  2. James Atticus Bowden Avatar
    James Atticus Bowden

    My point is this: All government money comes from The People. All government money depends on a healthy economy – if you want government to spend more. Taxes – whether they are reliable, sustainable, permanent or charming or not – kill jobs.

    The RINO (yes, I use that term as a desription) Senators who will raise our taxes are making a phoney baloney distinction in taxes – reliable, sustainable, permanent,yada, yada – that is devoid of wisdom and specious economically. It may impress the editors of the DP, but that isn’t hard to do if it involves more taxes and government.

    Is that clear enough?

    As to your other questions…

    The GA should not have raided the Transportation Trust Fund.

    The only thing reliable about new, EXTRA, money – which makes any surplus predictions unreliable – is the marginal propensity of the politicians to spend every penny of it.

    The gridlock in NoVa and Hampton Roads hasn’t killed jobs yet. Has it? It is a pain, not a crisis. it is an inefficiency with clear economic costs to citizens. Great econ article from the 70s discussed how sitting in a line at a gas station equaled stomping on fine crystal glasses.

    There are many ways to pay for roads, rail, private-public partnerships, and encourage telecommuting, use tolls, make developpers/owners of new sprawl pay the transportation infrastructure costs of their new place, etc. But the RINO and Dem rhetoric is political whitewash.

  3. Anonymous Avatar

    Funny you should mention Jim Miller. It all gets a bit hazy, but isn’t he the intelligent, successful Reagan-appointee that the VA GOP rejected in favor of Ollie North, thus ensuring Chuck Robb a term in the Senate that he didn’t deserve? It’s been a long time – maybe I’m “misremembering”, but it seems that Mr. Miller is another good example of our not following someone with sterling credentials in favor of someone who pushes not very elevated buttons of our nature, thus ensuring electoral success to our rivals.

  4. Rtwng Extrmst Avatar
    Rtwng Extrmst

    Anon,

    You are almost right, but there’s more. The GOP did reject Jim Miller in the 1994 state convention and then as a result John Warner ran an independent candidate for Senate thus costing Ollie the Senate seat and providing us with 6 more years of Chuck Robb.

    BTW, as a return favor Jim Miller ran against John Warner in a 1996 primary where Sen. Warner was able to garner enough dem cross-over votes to stay in his seat when he handily defeated newcomer Mark Warner in the general. So, the poor choice of Republicans in this primary has kept us with John “Middle of the road” Warner for 12 more years. Not to mention that if we had elected Ollie and subsequently Jim Miller it probably would have provided us with candidate George Allen for governor in 2001 and we would not be in the pickle we are today. Therefore I would say Mr. Miller is another good example of our not following someone with sterling credentials in favor of someone who instead turns on his own party whenever he doesn’t get his own way. BTW this same activity is repeated in the state Senate almost daily.

  5. Rtwng Extrmst Avatar
    Rtwng Extrmst

    Back on thread, JAB great post. I like your thinking, and Jim Miller’s.

  6. James Atticus Bowden Avatar
    James Atticus Bowden

    Thanks for the attaboy. I supported Miller. I love North’s one-liners, but wouldn’t want him in public office. If he used the government credit card for snow tires, as I read, then the USMC should have court-martialed him.

  7. Thanks for answering the questions.

    Good Post.

    I agree with all, except we don’t know if the transportation logjam is killing jobs. Some employers have reported difficulty in getting employees because of high housing costs or long commutes. but you are still right, how much better can we stand it? Congestion is an inefficiency with clear economic costs, and so is taking the money out of the economy through the developers pockets.

    Again, I agree but we don’t have all the numbers to fully understand. Ah well, that’s what politics is for.

  8. Jim Patrick Avatar
    Jim Patrick

    By its very definition, a surplus is inherently unpredictable and unreliable. …

    Hogwash! A surplus is something that’s over what’s needed. That’s the simple answer.

    On the other hand, perhaps he’s signalling that the Senate-gang has found the current $4.9 billion over what was needed is now crucial to some porkbarr… uhh, I mean VITAL projects to obtain constituent loyalty. Constituent loyalty is notoriously “unpredictable and unreliable”. So this “surplus” may disappear into the Bottomless Black-hole of Richmond in an arbitrary and untrustworthy process.

    Perhaps not the simple answer, nor the answer you want or favor. But I’d submit the second explanation is closer to the truth than either Chichester or we will publicly admit.

  9. Yeah, but if the revenue stream is not predictable, then it is only surplus RIGHT NOW.

    Maybe that’s why the powers are so intent on spending it.

    Meanwhile, at the local level, the powers are blessed with a stable revenue stream tha is, however, enormously regressive. Their only rational response is to ignore the plight of their constituents, knowing that when they are forced out, someone with more money will be there to take over.

    Maybe what we need is to have half the real estate tax go to the stae and have the state taxes come back to the localities. The sate would have more assurance and the localities would have more money.

    They could fix their own road problems, by contracting out (to their favorite buds) thereby guaranteeing their lineage.

  10. James Atticus Bowden Avatar
    James Atticus Bowden

    Ray: You are right to show there are many ways to slice the pie, like sent a % of the income tax directly back to localities.

    But,predictable schmictable. How do you and your family and your business or large corporation plan your budget. You plan on the expected and deal with the unexpected – that may mean spend more or cut back. How is that so hard to grasp in Richmond?

  11. JAB:

    You are a hundred %.

    Spend more or cut back.
    I just didn’t want to insult anybody’s intelligence.

    As I see it there are a hundred ways to cut the pie, but there are two hundred fingers already in it.

  12. NotGroverNorquist Avatar
    NotGroverNorquist

    “Where is Jim Miller?” Maybe rereading that analysis he did on ’04 that said the state’s economy would go to Hell in a handbasket if we raised the sales tax – a piece of work Speaker Howell paid $25 Grand for.

  13. James Atticus Bowden Avatar
    James Atticus Bowden

    NotGN: Miller, as a good econ PhD, probably began the paper with the words – assume – and included in the body – ceteris paribus. Those two terms make economic analysis stand. The money the sales tax sucked out of the economy was replaced by the Bush tax cuts continuing boom and billions in Federal – especially Defense – spending.

    Take a look around the Commonwealth and you’ll see that all boats aren’t rising the same because the tide is uneven in different spots.

    Miller’s analysis was probably (didn’t read it) like the ex post facto work I’ve seen that showed how Clinton’s 93 tax hike dampened growth. The Reagan tax boom and the dot com bubble fueled the 90s, and the tax hike slowed growth.

    Let’s list where and when taxes brought prosperity. (Null)

  14. Anonymous Avatar
    Anonymous

    Didn’t the Reagan Tax boom also create the biggest run up in inflation ever?

  15. Jim Bacon Avatar
    Jim Bacon

    Anonymous 10:28, I quote here from Wikipedia:

    “During the Reagan presidency, the inflation rate dropped from 13.6% in 1980 (President Carter’s final year in office) to 4.1% by 1988, the economy added 16,753,000 jobs and the unemployment rate fell from 7.5% to 5.3% (although it increased at one point peaking near 10%). In addition, the poverty rate fell from 14% to 12.8%.”

    The Reagan years saw a large run-up in the national debt, not inflation.

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