Statewide Gas Tax Hike Is a Political Loser. Solutions Must Be Regional.

There’s been a lot of loose talk recently about raising the statewide gasoline tax to pay for transportation improvements. The gasoline tax has three main virtues: First, it is easy to administer. Second, it is a rough form of a “user pays” tax. Third, it can raise a lot of money.

Here’s the problem. When you raise the tax, it’s a statewide tax. The political pressure for raising taxes to build more roads is limited largely to Northern Virginia, Hampton Roads and perhaps far SW Virginia where there’s a lot of agitation for a Coalfield Expressway. But people in the rest of the state, which includes roughly half the population, have little interest in paying higher taxes for something they don’t regard as a problem. Politically, it will be very, very difficult to enact a hike in the statewide gas tax if the purpose is to fund road construction that half the state doesn’t want or need.

That’s the reason why legislators last year tried creating regional transportation authorities: so the regions that were willing to tax themselves more could do so. Unfortunately, the cure — giving taxing powers to unelected, unaccountable bodies — was worse than the original problem.

Lawmakers need to take another crack at devising regional solutions — solutions that avoid the pitfalls of the ill-fated regional transportation authorities. After exhausting all other options, lawmakers should consider regional congestion authorities operated by special “congestion corridor authorities” under very tight guidelines. Authorities would be given power to administer congestion-pricing tolls that (a) maximize throughput on existing highways, (b) allocate scarce highway capacity during periods of peak demand, and (c) provide a stable flow of revenue to invest in congestion mitigation within the corridor.

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  1. Anonymous Avatar

    Maybe your right about construction projects.

    But definately not for maintenance. There’s tons of public support for maintaining and improving the infrastructure we already have.

    I don’t think a modest gas tax increase to improve the current infrastructure for bikes/peds/transit and efficiency of auto use is unfeasible. And it’s still user pays…

    – OGS

  2. Jim Bacon Avatar
    Jim Bacon

    OGS, Quite right. I have written on many occasions that motorists would be willing to pay higher gasoline taxes for maintenance — as long as they know that the taxes are going for maintenance, not construction projects somewhere else in the state or some developer-driven boondoggle. Indeed, I have suggested that the gasoline tax be converted to a maintenance user fee that floats year to year based upon the cost of maintaining the state road/highway network.

  3. James Atticus Bowden Avatar
    James Atticus Bowden

    We don’t need a statewide gas tax or any other tax to pay for the major projects in HR/Tidewater.

  4. Anonymous Avatar

    At the Hampton Roads transportation meeting yesterday Pierce Homer really spelled out the maintenance deficit issue. Over the past six years about $1 billion earmarked for construction has gone to maintenance, and the next billion will get sucked out in about 30 months. This is 100 percent due to the fact that the main revenue sources for maintenance, the fuels taxes, have been unchanged since 1986.

    He then had a slide that put the money raised by some possible regional solutions, side by side with the construction money disappearing thanks to the maintenance issue. I don’t have it front of me, but I recall in one of the out years the revenue from HB 3202 or as an alternate the revenue from a 1 percent regional sales tax was say $225 million, but at the same time $115 was being lost from existing construction funds for maintenance.

    The point is you have to do both. Raising the gas tax modestly, FOR THE FIRST TIME IN TWENTY TWO YEARS, would just get the system back in balance. Yes, the gas tax would all go to maintenance. But every legislator could say that what it really did was provide more primary, secondary, urban, and mass transit funding — because those are the categories hurt by the maintenance deficit.

    If you fail to solve the maintenance problem, a growing percentage of what you do raise for the regions will still be sucked away.

    At a Hampton City forum Wednesday night most speakers, really, most of them, were positive on the gas tax. The dynamic on the Peninsula has really changed now that the HRBT is back on the table.

    As to the other comment above, sure JAB, you can build them without taxes, but the tolls will be absolutely astounding. If you don’t want them, that is one thing, but don’t tell anybody they can be had without somebody paying somehow.

  5. James Atticus Bowden Avatar
    James Atticus Bowden

    Anon: Show me the numbers.

    I’ve never said there was a free lunch.

    The funding for a vertical priority -that means build what you can afford – of major projects in HR/Tidewater would be a combination of allocations from the Transportation Trust Funds, Federal money, bonds, and tolls.

  6. Groveton Avatar

    “Politically, it will be very, very difficult to enact a hike in the statewide gas tax if the purpose is to fund road construction that half the state doesn’t want or need.”.

    Translation: Virginia’s state government does not work and cannot be expected to work anytime soon – at least for transportation.

    “After exhausting all other options, lawmakers should consider regional congestion authorities operated by special “congestion corridor authorities” under very tight guidelines.”.

    Translation: Virginia’s state government does not work and cannot be expected to work anytime soon – at least for transportation.

    The General Assembly and Governor no longer effectively represent one half of the state’s population.

    We do not need “tight guidelines”. We need the state clown show out of regional matters that they (the state government) cannot solve.

    Message to GA and Governor:

    When it comes to transportation, go away and stay away. You have failed repeatedly and miserably.

    Death to Dillon.

  7. Larry Gross Avatar
    Larry Gross

    I’m not sure how unique Virginia is with respect to transportation funding issues.

    There are at least two dozen states that are dealing with funding shortfalls.. affecting both maintenance and construction.

    Some like Georgia and North Carolina and Texas are in as least as much political upheaval (that’s Groveton-speak for incompetence).. as Virginia.

    And to be fair.. I’m not sure I see the Maryland (Home Rule) side of Wash Metro substantially different from the Virginia side in terms of funding and congestion… etc…

    The ICC – supposedly Maryland’s “proof” that Nimby’s can be overcome is a debacle in terms of cost and funding.

    Even though it will be tolled, the word is that because it is so expensive that tolls alone cannot pay for it .. what I heard was that some toll revenues from other toll roads in Md may be used to make up the difference.

    By the way.. North Carolina and Pennsylvania and New Jersey are all thinking of doing something like this also.

    I’m not sure if these ideas would be welcome in Virginia any more than the abuser fees or the embarrassing constitutional faux pas for transportation authorities.

    While I agree.. that Virginia’s GA haven’t exactly covered themselves in glory over transportation – they have lots of company in other states also.

    I do agree though.. that if nothing is done at the state level with respect to adequately funding maintenance that it appears that by law… what little construction funding might be left would have to be moved to maintenance … and what that means is that quite a bit of federal funding is contingent on matching money… so the effect of not adequately funding maintenance – on a sustainable basis is going to have severe impacts…

    .. and this is all separate and apart from the funding needs of NoVa and HR/TW.

    .. and here’s what I do not understand.

    As bad as the Dillon rule is perceived… Virginia has a fairly long history of allowing “local option” taxes to be approved at the local level..

    This would include liquor and meal/hotel and sales taxes.. as well as a 2% gas tax for VRE.

    I think the rub comes with trying to get the localities in a region to act in concert with respect to taxation. You can’t really have a regional plan with regional roads in that plan if you’ve got some localities that refuse to contribute their share … and you can’t exactly stop the regional roads at their jurisdictional line.

    In THAT regard, I would say it would be hard to blame that on Richmond… Dillon rule or not.

    How would you get regional cooperation in a Home rule state like Maryland?

    IIRC.. Prince Georges county could not agree with Montgomery over the ICC.

  8. Here’s a newsflash: many goods transported to southern VA travel through NOVA on roads. Quicker and better shipping routes help everyone. This was part of the genius behind the interstate FREEWAY system. What’s good for NOVA is good for the state. And it’s not like NOVA isn’t going to generate a whole lot more in gas tax revenue than southern VA.

    The answer is not creating more revenue for the ravenous state, it’s stop wasting money. Stopping the raid on motorist funding is the solution. See Del. Bob Marshall’s HJRes 18.

    “Congestion pricing tolls” are boondoggles that feed companies like Koch, Cintra, Macquarie, Transurban, etc all of whom helpfully funnel money to various PACs, campaign committees and think tanks. Tolls require wasting hundreds of millions of dollars to administer, create huge safety hazards (toll booths), require big brother surveillance (enforcement), and are an incentive to create new congestion on parallel free routes.

    Death to NIMBYs.

  9. One more point. This site makes the excellent suggestion of a economic model for the state. How’s this model sound?

    The gas tax
    For each $1 the state takes out of a motorist’s pocket, VDOT collects about 96 cents.

    Toll roads
    For each $1 the state takes out of a motorist’s pocket, VDOT collects about 45 cents. Some generalized numbers: it costs about 11c/transaction for electronic tolls and 25c for cash. It costs significantly more to buy extra right-of-way needed for the tolling infrastructure. The private companies demand a 13% annual profit on their investment.

    Add all that up, and it’s a huge waste of money. 45c is a guess, by the way.

  10. Larry Gross Avatar
    Larry Gross

    electronic tolling infrastructure, as a percentage cost is no more than using credit cards at a store… and just imagine what standing in line at the stores would look like if everyone continued to use checks.

    and here’s a good comparison.

    If only checks were used, each store would require more check-outs.. more clerks.. higher costs – paid for by everyone whether they wanted to use credit cards or not.

    and that is the same choice on roads.

    the comparison should be between the cost of manual toll collection facilities and electronic facilities.

    The interstate system was originally conceived to be entirely “user pays” – tolls – but that idea was trashed when it was determined that the cost of the manual toll facilities and salaries would exceed what they would bring in.

    And that’s the way that the concept of tolling stayed.. until high-speed open-road tolling became a reality.

    On recent trips that I made, I maintained 55 mph while I cruised under the tolling gantries while off to my right was a line of hard-headed folks .. who wanted to pay manually.

    And I would point out.. I was using infrastructure in another State and I was glad to pay it… and that state – Illinois was glad to get it because otherwise.. I would have been stuck in traffic and they would have gotten no money from me to help pay for the infrastructure.

    If we can build, maintain and operate the Chesapeake Bay Bridge tunnel on tolls and North Carolina can build new road infrastructure for folks going to THEIR beaches with toll revenue then why should Virginia or North Carolina charge taxpayers statewide instead?

    If we can build toll roads 20 years sooner than taxpayer-funded roads – that also allow folks to NOT have to stop at toll booths.. then what is the problem?

    I think it’s time to stop yammering about this.. and move on to solutions.

    Roads cost money.

    Roads cost a LOT more money when you have process that allows any road, regardless of true need to be put on a list for funding…

    When you do business that way – you end up with bigger and bigger lists of roads to build and are guaranteed to run out of money before they get built.

    and then you come right back and claim that a tax increase is the only way to build them….

    why not let people decide how many roads they really want by letting them pay as they go – user pays?

    If there is “real” demand for a road, then people are willing to pay for it….

    I would advocate that for ANY proposed new road that it be analyzed with respect to tolls and the roads that demonstrate that they could not be built as toll roads – be looked at seriously with respect to whether they are truly needed or not.

    That way – we end up with two lists – one that we know is needed.. and a second one that we know… will need tax money….

  11. Anonymous Avatar

    Why doesn’t Virginia want tolls? Part of the reason is the state religion — Developer Worship.

    Tolls send a stronger signal to consumers — doing X; going to Y; stopping at Z carries with it a direct cost. Our real estate friends happen to own X, Y & Z. If there is a cost to getting there, some people won’t and will go to A, B or C instead. Someone else owns A, B & C.

    Making Tysons Corner work will require strong traffic demand management efforts that will include substantial increases in parking fees. Those fees will decrease the attractiveness of Tysons Corner. I’ve already heard some real estate people revolt.

    Using sale, gas or income taxes defuses the costs of going to X, Y or Z. That makes the properties more valuable.

    Virginia is still mired in feudalism. The King (Kaine and the GA) is controlled by the lords of the manor — the real estate industry. The rest of us are the serfs. Rebellion, anyone?


  12. In response to Larry Gross,
    “electronic tolling infrastructure, as a percentage cost is no more than using credit cards at a store”

    Sorry, that’s flat-out wrong. This is from a transcript of a Texas Department of Transportation meeting in 2004:

    “I’m David Powell, director of Information Technology and Operations for the Turnpike Authority Division. I don’t have an exact percentage as to what that is. I know on the total project budget there’s something like 5 percent for toll collection systems, and the operations the per transaction cost can be somewhere around a quarter apiece. A lot of that is labor to collect the transaction which people locally employed is a high component of that cost.”

    The numbers from TxDOT annual reports show the 11c collection figure for electronic tolls. You also neglect the cost of built-in profit margins and extra right-of-way, both of which add massively to the total cost. This is obviously a boondoggle for investment banks.

    The $5 billion proposed to be wasted on an idiotic train ride to Dulles could build thousands of lane miles of newly expanded highway capacity. That’s why stopping waste is the solution.

  13. Anonymous Avatar

    No one likes tax increases or new fees. However, in most instances, people will support paying a little more or, sometimes, even a lot more if and when they believe that the benefits will outweigh the costs.

    Even with bloated, non-teaching staffs, many people would be willing to pay a bit more each year to operate good schools. This generally includes many who do not have children in their local public schools.

    Why is it that no one (except for Al Qeada and their hired politicians) are willing to pay a little more for transportation? Is it because most people know the benefits flow to Al Qeada and not the general public?

    Transportation in Virginia has nothing to do with the safe and efficient movement of people and goods. It’s all about enabling some developer here or there to build something that will overwhelm the local infrastructure.


  14. Anonymous Avatar

    “why not let people decide how many roads they really want by letting them pay as they go – user pays?”

    As long as the user pays for roads they are using, fine. If they are paying for someoneelse’s transit ride, not fine.

    And, when the road is paid for, reduce the tolls to that required for maintenance.


    Bob is right. Setting up an entirely new toll infrastructure is an inefficient way to collect money. It is a new tax. It is an expansion of government. It has risk of creating privacy issues. Any conservative ought to be opposed to this idea.


  15. Anonymous Avatar

    “But since the beginning of the year, analysts have noticed an upswing in one unlikely area: housing.

    Shares of U.S. home builders rose 18.5 percent in the first quarter, according to Capital IQ, a division of Standard & Poor’s. Residential REITs, essentially real estate mutual funds, were up 12 percent. Land subdividers and developers jumped 17 percent. By comparison, the S&P 500-stock index was down 9.9 percent. “


    Al quaida insurgency?

    Anyone out there who hates developers have any mutual funds?


  16. Anonymous Avatar

    Ray – the problem with real estate development in Virginia is that it makes the lives and finances of exiting residents worse off. For example, data for Tysons Corner suggests that the current cost of building and expanding public schools to educate children living in a urban Tysons will be more than $125 M. The current formula would obtain less than $3.5 M in cash proffers from the developers and landowners.

    Where does the other $121.5 M come from? Tell me why it is in any current resident of Fairfax County to see more development at Tysons Corner under these conditions?


  17. Larry Gross Avatar
    Larry Gross

    “Sorry, that’s flat-out wrong. This is from a transcript of a Texas Department of Transportation meeting in 2004:”

    well .. first.. you need to provide the reference link…

    second, is this an assertion or it is fact-based data?

    third – perhaps you’d like to show that when Powhite Parkway started using electronic tolls that the cost of doing so exceeded that of using manual means of toll collection.

    Using your ideas – the use of scanners at stores is more costly than manually adding up the purchases.

    and using your idea – companies like WalMart have seriously erred in using electronic technology to replace manual processes…

    Why in the world would hundreds of toll authorities which includes non-profit toll authorities be converting to electronic tolls if it was more costly?

    You’re basically arguing that electronic transactions are more costly than manual transactions.

    I don’t think the cost of the electronic tolling is “free” by any stretch of the imagination… but show me a study that clearly demonstrates your claim…

    but.. for the moment..let’s pretend your claim is true… but you gave a choice to drivers to have to stop and pay manually or to pay electronically and that it actually did cost more for the electronic toll.. do you think more than a few folks would sign up rather than sit in line?

  18. Larry Gross Avatar
    Larry Gross

    re: development and toll roads.

    TMT is dead on.

    Propose the Western Transportation Corridor as a toll road and see the ardor for it .. evaporate…

    Folks who develop land LOVE “free” transportation infrastructure because it is like “free money” for land development.

    I have yet to see developers.. support toll roads.. I wonder why.

  19. Anonymous Avatar

    Developers proposed and supported both the Dulles Toll Road and the Dulles Greenway, as well as a tax district along Route 28 on their own properties to fund interchanges.

    The real problem is the anti-road mentality of the force “fundamental change” on them elites.

    A toll financed outer beltway would be enormously beneficial to this region of 5.5 million people.

    Politicians like Frank Wolf and Tim Kaine would rather waste billions on building and subsidizing forever a Metro extension through Tysons.

    Why? They get both the WaPo’s editorial support and big donor dollars from the Tysons and Piedmont aristocracies.

    The next election cycle, not long term infrastructure, is their highest priority.

  20. Larry Gross Avatar
    Larry Gross

    “A toll financed outer beltway would be enormously beneficial to this region of 5.5 million people.”

    I’d actually support ANY road proposal that is proposed as a stand-alone toll road as long as the funding and financing was not based at all on taxpayers – and I would suggest – to not have entities like VDOT involved until they demonstrate a better track record of estimating the viability of toll roads – aka Route 288 in Richmond.

    so.. yes.. private investors proposals.. why not?

    If that Outer Belt is such a tremendous benefit than it wll do quite nicely built and maintained with tolls.

    and the PPTA law .. allows ANY investor to make such a proposal…

    where are those proposals?

  21. To Larry Gross,

    There appears to be a misunderstanding. I said above that electronic tolls cost 11 cents/transaction to collect and cash tolls 25 cents/transaction — so electronic is obviously cheaper.
    Link to TxDOT quote

    But the important point is that even using electronic tolling, the whole monstrous infrastructure makes the enterprise raise one-half the bounty for the ravenous state as compared to the gas tax. This cannot be compared in any way to the use of a supermarket scanner or credit card. Tolling infrastructure requires a 5% overhead for equipment (see TxDOT link), 13% overhead for profit margin (this is in the 495 HOT contract), big brother enforcement cameras — which require local staff ($$), customer service personnel ($$) and millions more to purchase and grab via Kelo eminent domain the extra right-of-way needed to install all the required onramps, gantries, scanners and cameras, etc.

    Are there cases where the cost of electronic collection exceeds the amount collected from the tolls? Yup. London’s congestion tax. The profit there comes from the “You forgot to pay” tickets sent in the mail. link to early no-profit report.

    P.S. It should tell you something that the world’s biggest fan of “demand based pricing” is the Hugo Chavez loving socialist mayor of London.

  22. Larry Gross Avatar
    Larry Gross

    Actually, one of the biggest proponents is Mary Peters, USDOT and ex Arizona DOT who also thinks transit is a loser.

    One of her biggest points is that when you collect taxes from everyone with the intent to reallocate that instead you create a huge slush-fund that is then abused for all manner of unintended purposes to include what some view as transit boondoggles.

    For instance, we are told that METRO expansion cannot proceed without 900 million dollars of taxes NOT paid for by NoVa.

    Portsmouth/Norfolks light rail is NOT paid for by HR/TW or even Va taxpayers but instead taxpayers who don’t live in Virginia.

    and you cite Hugo’s “socialism”.

    Is this not worse?

    The same thing happens with highways – advocated by the same development folks.

    Across Virginia, we have pro-growth folks whose pro-growth ardor is founded on the premise that if they can get a highway built somewhere.. then they’ll get rich from land-development.

    All it takes is to get politically “connected” so that your favorite road project gets “on the list”.

    You cite Kelo type abuses, which I also find interesting.

    How do you feel about VDOT taking property essentially by force instead of willing buyer/willing seller?

    How would you feel about making a rule for PPTA AND VDOT that ALL land be acquired ONLY by willing seller/willing buyer?

    Don’t you think that giving VDOT the power of ED is fundamentally socialist also?

    Can you have it both ways? Do we cite Kelo abuses for PPTA while giving VDOT the same capability but not call it Kelo abuse?

    The way we “do” transportation invites abuse of taxpayers AND landowners AND emboldens bureaucracy and politics that wastes money on politically-favored projects – at the expense of truly needed projects.

    Then we say we need to raise taxes on everyone – to provide more money -of course.

    We have created an “entitlement” mindset where folks think roads are free AND that they are entitled to wherever and whenever new roads are needed..

    You seem to be more concerned with potential TOLL road abuses than the massive abuses that occur with the current system.

    Anytime you take money from everyone and send it off somewhere to have a group of unelected folks decide how to spend it.. guess what happens?

    We need to incorporate the cost of transportation into each person’s actual trip cost.

    Only when a rush hour solo trip costs each us of directly – the actual cost to provide that rush hour infrastructure will each of us start to make more responsible financial decisions about transportation.

    “free roads” that are not free and are funded by everyone are much more like socialism than demand pricing on those who actually use the roads, don’t you agree?

  23. Anonymous Avatar

    Since virtually everyone uses the roads which are fuded by everyone, where exactly is the socialism.

    Especially comapered with Metro which we are told cannot proceed without 900 million dollars of taxes NOT paid for by NoVa.


    Pithy Political Economy
    From Joseph Sobran via the Adam Smith Institute:

    “Need” now means wanting someone else’s money. “Greed” means wanting to keep your own. “Compassion” is when a politician arranges the transfer.


  24. Anonymous Avatar

    “Anytime you take money from everyone and send it off somewhere to have a group of unelected folks decide how to spend it.. guess what happens?”

    Would this be any different if majr VDOT positions were elected? Don’t we generally concede that all politicians are bought and sold?

    What procedure would you beleive is effective at making funding allocation decisions, and be immune to political considerations?

    If we had such a procedure, would it be un-American?


  25. Anonymous Avatar

    “We need to incorporate the cost of transportation into each person’s actual trip cost.”

    Not really, because this would ignore the value of real estate assessment increases provided by accessibility. Just for one example. Making roads entirely dependent on tolls of users would give realeste developers a free ride.

    There are many other beneficiaries of road provision besides those who actually use them. Among them are Metroo riders who depend on subsidies paid – by road users.


  26. “Just for one example. Making roads entirely dependent on tolls of users would give real estate developers a free ride.”

    RH, this is not really true. A structure does not per se generate traffic. Traffic, the consumer demand for roads, for mobility, is generated by consumer choices to live whatever distance from where they work or shop or whatever.

    The developer does not create the traffic. Housing consumers who commute create traffic. If tolls are charged, and consumers of housing who intend to commute know what that that tolled transportation cost will be, they will discount the value of housing choices that require tolled commutes. Housing is already worth less in outlying areas because of the cost of commuting in time and gasoline, etc. Tolls will reduce the value of housing substantial distances from employment even further. This takes the “free ride” out of the equation.

    Perhaps with tolling, particularly variable peak hour tolling, housing consumers will start to live significantly closer to their employment.

  27. To Larry Gross,

    Mary Peters isn’t the biggest proponent of congestion pricing since her Arizona efforts failed in the 90s, and it looks like the NYC effort is in jeopardy. (Good!) That makes Red Ken the king of tolls. The people pushing this junk at USDOT are just looking to cash out with investment bankers after the election.

    If slush funds are a problem, the slush doesn’t go away when toll roads are substituted as the cash generation mechanism. The only way to fix that problem is a constitutional amendment. Hey, guess what, Bob Marshall has just such an amendment. How about that instead of toll roads?

    Even in a perfect world with honest men running the toll roads, you’re still stuck with the problem that the public is paying 55% more to the government/Macquarie/Transurban than they would to raise the same amount of cash via the gas tax which nobody pays unless they’re driving in VA. Tolls are an inefficent way to deal with the problem that the central planners at VDOT have the wrong priorities.

    There are times when a statewide, rather than parochial, outlook is important. Could the counties in the south have funded on their own the portions of I-95 and I-81 that pass through them? Doubtful. Thankfully, the statewide and national vision built the roads for the good of all of us. Statewide solutions are hardly socialism, and head-in-the-sand parochialism is hardly conservatism. Otherwise, why not break VA up into separate states? What’s the point of having one Virginia?

    Do I like eminent domain used for expanding existing roads? Of course not. But it’s far worse to steal someone’s land to hand it to an Australian-Spanish consortium so they can make 13% profit off of it — and by the way, the landowner doesn’t share any of that profit. On top of that, the robbed landowner still has to pay the tolls.

    The roads aren’t free, but motorists pay enough already through fees, taxes, traffic tickets, etc. to pay for maintenance AND massive construction of new roads.

  28. Anonymous Avatar


    My point is that we frequently hear thet developers are not paying enough in proffers for public services like raod improvements.

    To put all the costs on tolls and user pays, would mean you would have no way to, or need to, tax the developers.

    True enough, the developers build to meet some demand, but they also build what they are allowed to build. Then, once that is on the market customers may decide to suboptimize for reasons of their own.

    I think the idea is not whetHer tolls are good or bad (even though I think its a lousy idea). The idea is to provide the needed seervices, and bill out the costs fairly to all those that benefit. I think the user pays paradigm doesn’t go far enough because it doesn’t carefully enough address who pays for what.

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