Watch Out! Here Comes a Gas Tax Hike!

Shannon Valentine

by James A. Bacon

Bacon’s Rebellion predicted that the change of political power in the General Assembly from red to blue would bring a raft of proposals for tax increases and revenue enhancements.

Because the General Fund is expected to see healthy revenue growth in the next biennial budget, I speculated that the Northam administration and its legislative allies would be restrained in their quest for new money, most likely pushing for sources that were either too opaque to understand (such as changes to tax deductions in response to the federal tax law) or too fragmented and obscure for anyone to notice. But it looks like I was wrong (hardly for the first time). According to WTOP, Secretary of Transportation Shannon Valentine suggested yesterday that the state could raise gas taxes next year.

Without a change to increase the gas tax or some other transportation funding source, the administration projects a decline in funding for road construction and other projects. In a development that takes absolutely no one by surprise, it turns out that fuel-efficiency improvements in Virginia’s automobile fleet are cutting into gasoline tax revenues.

“Virginia’s transportation [funding] system is simply not sustainable the way we are going,” Valentine told a Springfield gathering of Northern Virginia local and state elected officials.

The gas tax in Northern Virginia is around 22 cents, the 12th lowest of any state. State transportation officials have been examining funding options for more than a year. The funding issue is particularly acute in Northern Virginia, where the state diverted $100 million from road projects to the decrepit and mal-administered Washington Metro system.

The good news here is that transportation officials are finally giving serious thought to a mileage-based tax — something that Bacon’s Rebellion has been advocating for more than a decade.

“The consensus seems to be that over the next 10-15 years, there will most likely be a different way of raising major transportation revenues, whether it’s from a mileage based user fee, vehicle miles traveled, there will be some different form. That is a longer term perspective,” Valentine said.

At the behest of the McDonnell administration several years back, the General Assembly enacted a restructuring of transportation taxes designed to diversify funding sources and increase revenue. I predicted then that legislators would be back in a few years for more.

The fundamental flaw of Virginia’s transportation funding system, which relies heavily on the sales tax and vehicle-sales taxes, is that it is no longer a user-pays system. There is only a partial relationship between how much people drive and how much they pay in taxes for the maintenance of roads, highways, bridges, and transit systems. In other words, the tax system subsidizes people to drive more. There is a widespread sentiment that “someone else” should pay for peoples’ transportation choices, so taxes are based not on rational economic principles but whatever jury-rigged patchwork of taxes politicians think they can cobble into place.

Getting the transportation tax structure right won’t magically solve Northern Virginia’s (or anyone else’s) traffic congestion, which has many causes ranging from dysfunctional land use patterns to an increase in vehicle miles traveled due to economic prosperity. But transportation tax reform would constitute a critical step in the right direction. Rather than expend its political capital on a stopgap gas increase, the Northam administration needs to undertake a top-to-bottom overhaul of the transportation funding system that includes mileage-based taxes and other user-pays mechanisms.

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44 responses to “Watch Out! Here Comes a Gas Tax Hike!”

  1. Dick Hall-Sizemore Avatar
    Dick Hall-Sizemore

    You are absolutely correct. In this age of efficient mileage vehicles (except for my 20-year old truck and car!) and the advent of electric vehicles, it is time to undertake a top-to-bottom overhaul of the transportation system. If it had been forward-looking, the Northam administration would have undertaken such an effort, with the collaboration of the General Assembly, this year and been able to present well-thought proposals to the upcoming session.

    The concept of a mileage-based tax sounds attractive. But, and these questions reflect my ignorance, how would it be implemented? Would we each have little transponders attached to our vehicles (like my insurance company let me do in order to get the best rate)? How we would get out-of-state drivers to pay their share? (If they have a full tank when they cross the border, they may not have to do it now, but most probably stop for gas somewhere in the state.)

  2. Steve Haner Avatar
    Steve Haner

    Don’t forget. There will be another fuel tax to implement the Transportation Climate Initiative…..

  3. LarrytheG Avatar

    re: ” The funding issue is particularly acute in Northern Virginia, where the state diverted $100 million from road projects to the decrepit and mal-administered Washington Metro system.”

    “divert” is a wrong characterization if you look at the fact that a trillion dollars a year in transportation money comes from the general sales tax of which a substantial amount emanates from Northern Virginia.

    Second, the cost of a SINGLE interstate interchange in an urban area like NoVa can cost 100 million dollars.

    With respect to mileage-based taxing – you can do that right now with electronic tolling and at the same time use that tolling to “shape” congestion – which extends the longevity of infrastructure by keeping traffic to the design capacity.

    I’d like to see a specific proposal for how mileage based would be implemented and whether it would essentially be structured in a way such that a “free” starting dollop for all and no additional taxes on those who keep their mileage to the minimum standard and perhaps increased tax rates for those who drive a lot.

    You need a way to not penalize lower income folks who use their car to/from their low wage job and to properly and fairly charge those who are heavy users of the roads.

    I LIKE the regional taxes that allows each region to decide if they think they need higher taxes for their regional priorities – as opposed to a statewide tax that the rural areas will be convinced will be diverted to the urban areas. The rural areas would also be the very areas where lower wage folks need their cars to work and you can bet that the elected in those areas are not going to support higher taxes if it essentially lowers the wages of their constituents.

    1. Dick Hall-Sizemore Avatar
      Dick Hall-Sizemore

      The idea of a minimum “free” amount of mileage is one example of the complex of issues that would need to be sorted out. I understand the concept of electronic tolling, of course, (I have an EZ Pass), but are we going to put those electronic sensors all down Rt. 360 from Richmond to South Boston ( a route I take a couple of times a year) or all along Rt. 58 from Virginia Beach to Big Stone Gap? How do we implement mileage-based taxing in those rural areas? Do we put sensors on every secondary road?

      As for regional taxes, that’s OK for taxes on top of a statewide tax. If we restricted taxes to regional taxes, some regions in the state would have to wait many years before they would be able to raise sufficient revenue to make any improvements at all. There is just not enough traffic or drivers.

  4. TooManyTaxes Avatar

    Not an extra dime should be raised unless and until the State repeals the law that prohibits public disclosure of how much revenue is generated in each county or city by fuel and transportation-related taxes. Let’s see whether the Democrats really believe in transparent government.

  5. Jane Twitmyer Avatar
    Jane Twitmyer

    This is not just a state issue … it is a federal issue as well and it looks like only a few, like Jim, are really thinking about the electrification of vehicles and how fast some say they will take over the roads.

    From Bloomberg New Energy Finance … Over 2 million EVs were sold in 2018. By the mid 20’s EVs will be price competitive with ICE vehicles and by 2040 EVs will represent 30% of global passenger vehicles and almost 60% of all passenger vehicle sales. So …. the gas tax just won’t cut it anymore.

    Thinking mostly of revenue sources … vehicle mileage taxes could be one solution, continuing the effect of a highway user fee. Some suggest that mileage tax is the only scheme that could generate enough funds to replace the old gas tax. It would, however, be much more complicated, as I see Dick brings up, than just a tax included in the purchase price and the annual inspection fees, which could be scaled for vehicle weight etc.

    How about just more tolls for federal and state highways? I have an EasyPass and it creates a quick drive through at the toll booth. There are a lot of pretty complicated shared federal/state highway revenue revisions that would have to take place to allow this to work, but those law changes would be a bit like the current Virginia efforts to clear away the leftovers from the Jim Crow era.

    Ideas that have been out there for a decade or more include “Hot” lanes and “Fast” lanes, some with time of day pricing. Most are in urban areas and are also designed to relieve congestion too. If the tax is on both the vehicle itself and also on an electronic toll charge for major roads instead of the straight mileage tax, the effect would be similar to the user fee that the gas tax represented. Heavier vehicles would be charged more, congestion would be relieved and charges would be simpler that a straight mileage fee collection.
    KISS … Can we Keep It Simple Stupid?

  6. LarrytheG Avatar

    See, one of the things I agree with Jim on taxes is a nexus between the tax and what it pays for.

    but then things go KAFLOOEY with the “gas tax” and the various kinds of vehicles and modes of transportation.

    So, Here’s what transportation revenues really look like right now:

    Motor Fuel Taxes $934,100
    Motor Vehicle Sales and Use Tax 964,800
    State Sales and Use Tax 1,115,500

    (there are 4 more that are much less in money)

    so the three major sources of transportation funding in Virginia
    1/3 fuel taxes,
    1/3 general sales tax, and
    1/3 sales tax on new vehicles.

    So the current nexus is much weaker than before.

    and so the question is – do you want to continue to keep it diversified or
    do you want to have a stronger – more direct based vehicle nexus?

    It’s certainly possible, for instance, to charge electric vehicles more for their annual plates rather than some new and complicated “road use” tax. This is easy to do because all vehicles are now identified with VINs.

    So is there really a “need” to have a mileage-based tax? (devils advocate question)?

    1. Steve Haner Avatar
      Steve Haner

      Missing some zeros on those figures, Larry….

      You people must have thought I was kidding. In other states where the green activists have gone after carbon from motor fuels (think CA), they do it with a tax at the pump. If the Northam administration is moving toward a per-mileage fee for road costs, that could mean they are laying the ground work to have the pump tax be the method to execute the cap and trade process… and use that revenue to fund their GND agenda, just like the RGGI funds are to be used.

      1. LarrytheG Avatar

        I did miss zeros… each of those categories are millions and the total
        budget is about $5.4 billion.

        But you STILL MISS THE MAIN POINT – Only 1/3 of transportation taxes comes from the pump!

        and the MORE that gasoline costs at the pump – the more people will buy more fuel-efficient vehicles and reduce the revenues even more.

        I do not understand why this aspect does not sink in to folks.

        1. Steve Haner Avatar
          Steve Haner

          Oh, I once had a great grasp of these numbers, and need to refresh. I think (not sure) that sales tax category includes the sales tax on fuels, now part of the mix along with the excise (per gallon) tax. But yes, fuel stopped being the sole source with the 1986 Balilies package.

  7. djrippert Avatar

    Good column. I don’t agree with the “diversion” of transportation funds to Metro. Metro is transportation. In fact, every major city that eventually gets control of its congestion problem does so via subways – from London to Tokyo to Manhattan.

    TMT is right in his call for transparency. Under the Republican junta that has been running Virginia any opacity in taxation should be considered a drain on NoVa for distribution in rural and small town Virginia. That was always the Republicans’ game. The Dems could cement their base in the suburbs for the next 20 years by exposing what the Republicans have done with transportation funding. At least, that’s my bet.

    Smart VMT is the answer. Yes, tracking devices in cars that record where and when a driver drove. Charging based on time and place of driving. All funds directed right back to the maintenance and expansion of the road where the toll was collected. All major highways are tolled. All of them. The tracking devices would use the tolled amount as what to charge. Out-of-staters would pay the tolls directly. There could still be a gas tax. Gas pumps would try to communicate with the tracking devices. If there is a tracking device – you’re a Virginia citizen and no toll is charged. Alternately, cameras could record license plates and decide whether or not to charge the gas tax based on that.

    1. Dick Hall-Sizemore Avatar
      Dick Hall-Sizemore

      I am not happy with the idea of the government knowing when I drive and where I drive.

      What happens to those secondary roads in Bath County, Floyd County, etc.? Not a lot of traffic there to generate the funds needed to maintain those roads. Using a VMT approach will make it even harder for those jurisdictions to attract any economic development. That was one of the attractions of Harry Byrd’s governorship, helping the farm-t0-market roads.

      1. If there’s not a lot of traffic to generate transportation funds, then, presumably, localities like Bath County don’t need more money for road construction. All they need is money to maintain their roads.

        If there is a public purpose in building a road for economic development reasons, then the General Assembly should justify that expenditure as an earmark in the General Fund budget where it can be weighed against all other competing priorities.

        1. Dick Hall-Sizemore Avatar
          Dick Hall-Sizemore

          Snow removal is one of the expenses included in road maintenance. Some of those counties in western and southwest Virginia get a lot of snow and ice. Is Bland County going to be responsible for funding the removal of snow from its section of I-77? Would Warren County be responsible for maintaining that portion of I-66 in its boundaries? What if one county elects to fix the potholes on Rt. 58 and some others do not?

          Highway earmarks in the budget? I thought we developed the Smart Scale to get rid of earmarks by the Board of Transportation. Do you really want to let the General Assembly get into the business of choosing roads to fund?

          1. A proper allocation of costs would take into account the fact that Interstates and state highways, which link cities, towns, and metro areas, serve a different purpose than local access roads and should be funded with a different pot of dollars. That would include snow removal costs.

            If we restructured transportation funding, yes, we would have to re-think Smart Scale. I see the VMT (vehicle miles traveled) tax raising money for one purpose only: the maintenance and operations of existing roads (excluding tolled roads and bridges with their own revenue sources). New construction would have to be funded by other means.

            I explored these topics in depth back during the debate over the McDonnell transportation tax increases. Depending on how the gas tax debate unfolds in 2020, I might get back into the subject.

      2. LarrytheG Avatar

        farm-to-market and rural electrification…….. DJ think those were wrong!

    2. LarrytheG Avatar

      Tell me WHAT Country is doing this? Where do the gas pumps talk to cars right now in the world?

  8. Gotta love the Dems.

    On the one hand accusing Trump of rolling back car MPG requirements to the dark ages and that will kill us all of acute CO2 toxicity.

    Then they say we gotta increase gaso taxes because MPG is going up. Where is the truth here?

    The truth is that MPG is going up slowly and cars are very low emission these days, but it’s irrelevant. We are using about the same amount gasoline because miles-driven goes up with population.

    We do need tax dollars, so let’s up the fuel taxes. we are about the lowest in the nation. I am OK with per gallon.

    1. Jane Twitmyer Avatar
      Jane Twitmyer

      OMG … “Where is the truth here?”
      You must believe the dismissal of the threat from EVs that the oil and gas industry has put out:
      • That the size of oil demand displaced by EVs will not be large enough to disrupt industry business models …
      • Even a peak oil demand is not a concern for investors because oil demand will still be sizable
      Or you couldn’t say …. “We are using about the amount gasoline because miles-driven goes up with population. “

      Miles driven will not be the prime driver of gasoline use. It is the continued use of ICE vehicles which is being projected very differently by the oil companies and the car companies.

      OR you couldn’t say …. “We do need tax dollars, so let’s up the fuel taxes.”
      Peak oil demand will come the mid 2020’s with the cost competitiveness and adoption of EVs. We will save money because there won’t be the billions of offloaded costs the fossils continue to leave us with .
      And here’s another thought. How about changing the tax code to eliminate that $20billion in tax expenditure support for the fossil companies? We could use that money to both move money into the road system maintenance and a Green Bank to make building retrofit loans.

      1. Steve Haner Avatar
        Steve Haner

        How many predictions of a “peak oil” date have I seen in my lifetime? A dozen at least…and we’ve blown past them all. My grandkids children will drive fossil fuel vehicles. Very efficient, I hope, with alternatives, but they will still be around. The energy content in a gallon of gas is amazing.

        1. Jane Twitmyer Avatar
          Jane Twitmyer

          Steve … there certainly have been a lot of predictions that we have blown past. Wiki has a fun history … with the first peak predicted for the 1920’s. Then came a 1970 prediction that actually proved true until in 2018 when US daily production exceeded 1970.

          “Evidently there were about 100,000 hard-core “peakists” in the United States. The popularity of this subculture started to diminish around 2013, as a dramatic peak did not arrive, and as “unconventional” fossil fuels (such as tar sands and natural gas via hydrofracking) seemed to pick up the slack in the context of declines in “conventional” petroleum.”

          Conventional crude oil production peaked in 2006, according to the International Energy Agency, and Alaska’s oil production has declined 70% since peaking in 1988. Although shale and other unconventional oil has filled in, several of us have written about the iffy calculations of shale reserves with its ‘sweet spots’ and rapid first years production declines. Production levels can only be maintained by drilling a multitude of new wells and that has created the wall of debt now acknowledged by investors.

          So … there are two kinds of ‘peakers’. Me, I am looking for peak demand, not peak production which has too many not very accurately measurable parts to it. Peak demand, on the other hand is a market prediction and Bloomberg has been pretty good at that. I can only hope that even you, let alone your children and on down, will be thoughtful enough to be done with ICE vehicles some day.

    2. LarrytheG Avatar

      re: ” Where is the truth here?” Well, that it’s not just the “libs” involved in these issues and LIbs themselves do not have one monolithic view either.

      Most current studies show that increasing the gas tax will not increase revenues and that’s why they’re talking about mileage-based alternatives.

  9. TooManyTaxes Avatar

    How about the GA repealing the “free” overweight permit statute (§ 46.2-1143) that allows some heavy trucks to damage our roads and bridges sans payment of the costs they impose.

    Subsection A reads: “A. The Commissioner upon written application by the owner or operator of vehicles used exclusively for hauling coal or coal byproducts from a mine or other place of production to a preparation plant, electricity-generation facility, loading dock, or railroad shall issue, without a fee, a permit authorizing those vehicles to operate with gross weights in excess of those established in § 46.2-1126 on the conditions set forth in this section.”

    And the permit fee for those that pay fees is set at $130. § 46.2-1140.1 Heaven forbid we recover the costs of road and bridge damage from those that cause it. Fees should be set to recover the incremental costs of repair based on axel weight.

    But that would be stamping out crony capitalism.

    1. Jane Twitmyer Avatar
      Jane Twitmyer

      Sounds good to me … I didn’t know of the exclusion. Kinda what I meant by annual fees attached to maintenance permits.

      1. TooManyTaxes Avatar

        Agreed. Any engineer will tell us that heavy trucks cause the overwhelming amount of damage to roads and bridges. And overweight vehicles are at the top. This should be an issue where principled liberals and conservatives can both agree.

        Twice I tried to get an op-ed making this point published in the WaPo, arguing that more than gas tax increases are required. But that’s heresy to the Goebbels Gang and they refused to publish it. Better nail someone who makes $35 K a year with higher gasoline bills than stamp out corporate welfare in the eyes of the Post editorial board.

        1. Dick Hall-Sizemore Avatar
          Dick Hall-Sizemore

          I couldn’t help smiling at these comments. They brought back 35-year old memories of a lone environmental lobbyist battling the trucking industry in the General Assembly with just these arguments. Old Judge Williams, the trucking industry lobbyist, (Steve remembers him, I’m sure), just sat back and smiled.

          Now that the Kilgores and other coal country legislators are in the minority, that exemption for the coal trucks may well get repealed.

        2. LarrytheG Avatar

          I just don’t see the damage. Is it a real issue that VDOT or others may a point of?

          And the trucks have nothing to do with most of the congestion that we see in NoVa…it’s basically a crapload of cars and the real issue
          is what do you want to do about THAT which is not the proximate cause of trucks.

          1. Jane Twitmyer Avatar
            Jane Twitmyer

            Larry, Take a trip down 81 to Roanoke … or head out on 95. Trucks are huge and they barrel along at 70+. Thought I was going to get run over as my Jetta was passing a truck whose mirror did not show me right next to him. He decided to get into the passing lane. I am a good driver and not a scared one, but that felt like I was in my Austin Healy on the old route 40 a very long time ago, worrying about getting sucked under a truck.

            All that thru truck traffic is exacerbated by the shipping storage spots too, but 81 is a federal highway … I know nothing about the 3 way money share division for road maintenance but making all the well traveled roads and special lanes toll roads with Easy Passes sounds like a part of the solution to replace the gas tax.

          2. Dick Hall-Sizemore Avatar
            Dick Hall-Sizemore

            Here is a legislative document that summarizes numerous studies done by VDOT on damage inflicted on roads by big trucks. It also provides those sources for more detailed information. See the appendices.

  10. PS- On state gaso taxes:
    NoVA is among the lowest gaso tax states at 22 cents, but NoVA is higher than RoVA which is probably lowest gaso tax of all states, with possible exception of Alaska. New Jersey abandoned their low gaso tax policy. On average Va. is among the lowest of all states. It is defensive to say where NoVA stands vs. other states. Sounds like someone wants to avoid admitting Va. is among lowest of all states by using NoVA as the benchmark.

  11. LarrytheG Avatar

    I don’t think more taxes on big trucks will do much myself. I know TMT got a bee in his bonnet about it but it’s not a big issue.

    The issue in NoVa – and TMT can confirm this – is that there are too many cars driving too many miles for the capacity of the roads.

    And I do not think more money is going to fix it.

    You can do some widenings, fix some bottlenecks, etc but there is not enough land even if you had the money to add net capacity to the road network – not without tearing down businesses and neighborhoods.

    And heaven forbid that VDOT proposes another major north/south interstate to go from Richmond to NoVa!

  12. LarrytheG Avatar

    There is no good reason to do a mileage based tax. I know of nowhere in the world that does it and you can easily accomplish higher taxes on electric vehicles through existing tax structures.

    People are just not going to agree to have a govt “tax meter” in their cars. It’s a bridge too far in the era of conspiracy theories and mistrust of government AND a good example is the RGGI fear and loathing… put a meter in a car and people are going to say it’s to collect for RGGI! Steve’s head will explode!

    1. TooManyTaxes Avatar

      Larry, there are two different problems. One is overweight trucks that do most of the damage to our roads and bridges but are not paying the costs of repair. That sucks up millions of dollars that could otherwise be available for other projects. The second is that we have too many cars for our road network. And I agree that, while we need more road projects, we cannot build our way out of congestion.

    2. The main reason would be to compromise with Repubs who feel per gallon taxes are unfair, to rural drivers and those who have a need to drive lower MPG vehicles. That cohort feels something like a Prius at 50 MPG is cheating the system. Many red states have starting taxing hybrids extra, in the last several years, which is ridiculous if the hybrid is using only gasoline.

      But I guess we are just waiting for the first state to try per mile taxes. If there is trend, red states will follow. Electric vehicle advocates, with whom I spar with elsewhere, are incredibly angry and opposed to per mile taxes, because they feel that does not treat elec cars as favorably as they think they should be . So they will asking for exclusion from or tax rebates to that type of driver.

      And you have to say Virginia, with its strong rural lobby, is a possible candidate for per mile taxes. My guess is gaso cars would taxes based on miles, elec cars would get tax credits or exclusion form such tax. Hybrids are odd man out..nobody interested in protecting hybrids in the USA.

  13. LarrytheG Avatar

    just some practicalities.

    Can anyone imagine the logistics of cars in Virginia requiring an onboard “meter” and cars from other states -not? That every gas station in Virginia has to have a wi-fi and internet that automatically connects to only Virginia-registered cars but not others?

    It’s just a totally unworkable idea unless it’s something that every car produced has – much like required pollution equipment and the like.

  14. LarrytheG Avatar

    Most of the 3 billion that is generated in tax revenues in Virginia goes entirely to fund maintenance and operations.

    Virginia uses the billion a year it gets from the Federal gas tax for new construction.

    There has been discussion over the last few years that the Federal gas tax is not generating sufficient revenues to pass to the states so it is currently subsidized from the general fund. The shortfall is blamed also on more efficient cars.

  15. LarrytheG Avatar

    re: ” Larry, Take a trip down 81 to Roanoke … or head out on 95. Trucks are huge and they barrel along at 70+. Thought I was going to get run over as my Jetta was passing a truck whose mirror did not show me right next to him. He decided to get into the passing lane. I am a good driver and not a scared one, but that felt like I was in my Austin Healy on the old route 40 a very long time ago, worrying about getting sucked under a truck.”

    Oh Jane, I have and I-81 is a MESS but it’s a congestion mess – not a highway torn up from big trucks. The road is good the congestion, not.

    They’re finally going to do something about it but they’re a little late but please note again – you’d think with that much truck traffic that if they were tearing up the roads that we’d see I-81 bad condition physically and it’s just not.

    “All that thru truck traffic is exacerbated by the shipping storage spots too, but 81 is a federal highway … I know nothing about the 3 way money share division for road maintenance but making all the well traveled roads and special lanes toll roads with Easy Passes sounds like a part of the solution to replace the gas tax.”

    It’s a Federal Highway but VDOT is responsible for managing it operationally and maintaining it. I agree with respect to the tolls but the localities along it do not.

    But as stated up thread – there is now an approved plan to upgrade I-81 – but it will take time:

    General Assembly approves Northam’s funding plan for I-81
    April 3, 2019

  16. LarrytheG Avatar

    2188, 578

    I think there may be more support for a tax increase this time than prior times because of Smart Scale and here’s why.

    All across Virginia, localities submitted 2188 projects to the 2020 Smartscale and the funding available only covered 578 projects and many of them were not major and expensive projects.

    So what SmartScale has done in addition to implementing a criteria-based process over the prior political process, it has also collected in one place all the projects that are said to be needed in the State AND shown how limited the available funding is and in turn, all the projects that cannot be funded.

    You can bet on VDOT making the case for a tax increase by using the Smart Scale data to show the need.

    But I also want to point out that there are now two Regional taxes for NoVa and Hampton Roads but they are largely NOT gasoline taxes but instead non-gasoline taxes and tolls.

    ” The Retail Sales and Use Tax (“RSUT”) is imposed at a total combined rate of 5.3 percent statewide. The tax consists of a 4.3 percent state tax and a 1.0 percent local option tax.
    In the Northern Virginia and Hampton Roads regions, an additional 0.7 percent regional state tax is imposed to fund transportation, resulting in a combined rate of 6.0 percent in localities in these two regions. ”

    So those that say that money is being “diverted” from fuel taxes to fund METRO are wrong. If the money comes from sales taxes – it’s coming from everyone regardless of whether they buy fuel or not. That’s fair game for METRO especially since that tax money can ONLY be spent for transportation.

    1. Dick Hall-Sizemore Avatar
      Dick Hall-Sizemore

      Some clarification: The 2013 legislation dealing with transportation funding was very complex. I will deal with only those aspects that are related to the issues brought up here.

      The $100 million for Metro does not come out of the revenue raised by the additional 0.7 percent sales tax imposed in the Northern Virginia Planning District. That revenue is to be used for transportation and the localities could decide to use it for Metro or other transportation purposes.

      The bill allocates an additional $100 million annually for Metro from the state Highway Maintenance and Operating Fund (HMOF). The funding for HMOF comes from several sources: diversion of a portion of the current GF sales tax revenue to HMOF; increase of 0.3 percent in sales tax; annual license tax; wholesale fuels tax; and motor vehicle sales tax.

      Whether the $100 million for Metro is a “diversion” is a matter of perspective. Because the total allocation to HMOF increased by more than $100 million each year, I would argue that the $100 million is “new money”; thus it is not being diverted, or transferred, from any other purpose. It could be the case that the tax rates set in the bill were chosen with that $100 million in mind. If the decision to provide the new funding to Metro had not been made, the new tax rates might have been lower.

      As to whether the $100 million comes from transportation-related revenue or from the general sales tax, that question is moot. Once the transportation revenue and the sales tax revenue are mixed together in the HMOF, the money is fungible.

      1. TooManyTaxes Avatar

        I believe that the $100 million for Metro is not a diversion. It’s transportation that every elected official in NoVA would agree is important. So why shouldn’t it be funded, most especially since NoVA supports state government and it programs?

        What happened was some officials and their crony capitalist masters believed they could steer more money to “favored” regional projects. I point out again that the private sector is always free to propose a PPP to fund a new transportation project. For example, many Loudoun, Prince William and Western Fairfax land speculators have been trying to get the Outer Beltway and an up-river crossing to Maryland built for decades. But they have never proposed to create a PPP and fund it to do construction as a toll road and toll bridge. So-called “free-market, corporate welfare recipients.” Disgusting!

        1. Dick Hall-Sizemore Avatar
          Dick Hall-Sizemore

          I have no problem with the Metro funding. I think it is important for Virginia, not just NoVa. I was just responding to Jim’s reference to the funds being “diverted”, which I feel is an incorrect characterization.

  17. LarrytheG Avatar

    The other thing that Smart Scale does is to reject the idea that each locality should get all of it’s gas taxes back each year.

    Instead, projects are selected state-wide based on the merit of individual proposed projects.

    If you think about it – some projects would cost more than a locality generated in taxes and would gobble up all their funding for several years, depriving other needed work.

    Before SmartScale, VDOT would use an opaque process where they would (in theory) … “round-robin” such projects so that one year, on locality got their big project and the next year it was another locality’s turn to get their big project. That was the theory. In reality, rampant politics became the way around that process and what VDOT told the losers was that their favorite projects would get on the 6yr build list.

    And that’s what VDOT did – but there was still not enough funding for all those projects and many sat unfunded for a decade or more and finally were removed en masse one year so that all the projects that remained on the list were “fundable”.

    That did not work either because many of the projects on the list wer not well defined in terms of costs and many projects that were on the list at one cost ended up costing alot more which essentially meant that they were once again not able to fund all projects on the list.

    It was at this point that VDOT started working to find a better way and that in turn led to Smart Scale where the money available explicitly determines how many projects are funded – AND the proposed projects as part of the Smart Scale process are VETTED to ensure that their scope and readiness and cost estimates are well defined AND Smart Scale will only provide the funding allocated – if the project goes up in cost – it could be removed if other funding cannot be found.

    For these reasons – no matter where future funding might come from -the Smart Scale process will not go away. They’re not going back to the prior method of prioritizing projects.

    What they WILL do is for tolls and other taxes and potentially mileage-based taxes – they will ALLOCATE those revenues to the locality that the fees/taxes are levied.

    So for instance, if a rural locality wants a new bridge – they can choose to have it compete against other state-wide projects but they can also put tolls in the bridge to help pay for it and boost it’s competitiveness against other projects.

  18. DB Cooper Avatar

    A mileage based tax is linear solution and is a regressive approach.
    Trucks do about 400 times the damage as a passenger car to our roadways and bridges and a mileage tax will not properly address the issue. Additionally, a mileage tax penalizes the lower income groups that have to commute further than the higher income groups who can afford to live inside the beltway.

  19. idiocracy Avatar

    Where is the money from the “personal property tax” going? Most states do not have such a tax, and it’s not an insignificant source of revenue for the state.

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