By Peter Galuszka

Reading the Bacon’s Rebellion Blog always displays breathtaking contradictions. Chief among them is the huge contradiction between pushing “smart growth” and shunning any form of increasing gasoline taxation.

The crux is that we have lots of horrendous sprawl in the state such as all of Northern Virginia, Route 3 in Fredericksburg and U.S. 29 in Charlottesville. We have underfunded and under-maintained roads. That all adds up to a death spiral of bad planning and a slavish adherence to el-cheapo ways of doing things – all in the name of the Cato Institute.

In Virginia, for instance, the state gasoline tax is 17.5 cents a gallon. It hasn’t been raised in 25 years. It hasn’t even been made to adjust for inflation. By contrast, North Carolina’s gas tax is 38.9 cents per gallon.

As politicians, especially Republicans such as Gov. Robert F. McDonnell stubbornly refuse to consider the obvious solution to their many road issues, they have the rest of us jumping through one convoluted hoop after the other trying complicated ways to get funds without taxation. It’s a bit like trying to breathe without air.

That brings up another point – the insane accusations that Barack Obama is responsible for $4 a gallon gasoline. GOPers like Mitt Romney and Bobby Jindal (oil state guy) claim that gasoline prices have doubled under Obama and his energy policies are now creating havoc at the pump. The reality is that setting gasoline prices has a lot more to do with Asian demand the Iranian nuclear facilities than the policies of one U.S. president, who, by the way, has made big progress in weaning the country away from foreign oil.

Yet the biggest irony is spelled out in the latest issue of The New Yorker and comes, surprise, from Romney’s own economics adviser, Greg Mankiw. The Harvard professor recently wrote: “Economists who have added up all the externalities associated with driving conclude that a tax exceeding $2 a gallon makes sense…By taxing bad things more, we could tax good things less.”

Now, if you happen to read Bacon’s Rebellion’s most prominent blogger, we get an education how smart growth could make our lives better. We need to build more housing in more densely-packed areas, go for green zones, reduce wasteful and polluting gasoline use and try mass transit (all dipped in a libertarian flavor of course!)

The unspoken part is what Mankiw brings up. Federal gas tax is a puny 18.4 cents a gallon. If you raise  it to $2 a gallon, as Mankiw suggests, you’d suddenly have smart growth – presto! You’d have a lot of other things, too, such as much higher mileage cars, a fatter federal checkbook and less stupidity when it comes to highway and housing planning.

Are we going to get this? Of course not. The status quo politicians are hardly going to pretend the gas hike issue exists while blaming Obama for something not of his making. Meanwhile, readers of Bacon’s Rebellion will be treated to the increasingly amusing acts of contortionists stretching and folding any way they can to avoid discussing tax hikes. As a former altar boy I can appreciate trying to keep the dogma pure.

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  1. Peter, the only contortions that Bacon’s Rebellion readers will endure on the matter of gas taxes will come from trying to follow your stretching and bending the truth! Please provide a single citation of my “stretching and folding any way [I] can to discussing tax hikes.” Just one. If you find one, I’ll crawl back into my hole.

    Here’s what I have said about the gas tax:

    (1) If you’re going to increase funding for roads and highways, it makes far more sense to raise it from the motor fuels tax than from any other currently available source. (I would go so far as to suggest that all other forms of transportation revenue should be scrapped and replaced by a motor fuels tax.) Why? Because the tax most closely approximates a user fee in which those who benefit from transportation improvements are the ones who pay for it.

    (2) The motor fuels tax is living on borrowed time, due to the shift to hybrids, electric vehicles, compressed natural gas, etc., so it makes sense to start planning a transition to a Vehicle Miles Driven tax. The biggest drawback to a VMD tax is the legitimate concern that people would have over privacy issues arising from tracking how far a car has traveled. We need to start working through those issues now.

    (3) If the General Assembly increases the gas tax with no strings attached, the money will flow into a dysfunctional system. Therefore, any increase in the gas tax must be contingent upon reform of how the monies are spent. The main change I have called for is establishing a methodology for calculating social and economic Return On Investment for transportation projects, that takes into consideration congestion amelioration, improved safety and economic development.

    Totally logical. Totally consistent with Smart Growth principles. I am not familiar with anyone at the Cato Institute who hews to this logic. Or even the Heritage Foundation, for that matter.

    In other words, your entire post is based on false premises and can be profitably ignored by all who read it!!

  2. “(3) If the General Assembly increases the gas tax with no strings attached, the money will flow into a dysfunctional system. Therefore, any increase in the gas tax must be contingent upon reform of how the monies are spent.”
    $200 million annual subsidy to overweight trucks. No adequate public facilities law. The CTB can be lobbied in secret. The CTB under represents metro areas. The existing law does not permit the recording and disclosure of how much gas tax is raised locally. Projects are funded and not funded without regard to the return on investment.

  3. Peter Galuszka Avatar
    Peter Galuszka

    Funny, I have never seen a blog posting from you stating “Why we need to raise the gasoline tax” or “motor fuels tax” or other euphemism.
    I also find it amusing that you state that the “motor fuels tax” is living on borrowed time. Au contraire. It has been basking in borrowed time for 25 years and doesn’t even have to answer for inflation like the rest of us and everything else.
    Of course, I could be wrong. Forgive me if there has been a post by you stating directly that the gasoline tax must go up. I’d love to see it!

  4. ” establishing a methodology for calculating social and economic Return On Investment for transportation projects”

    since more than a few projects seem to be justified because of their economic development benefits.. why not establish a revolving loan fund .. let localities borrow from it for the ED projects… put a transportation district around their ED projects and use the supplemental tax district to pay back the loan?

    The problem I have with localities and VDOT using a “process” is the same problem that we have now with VDOT and localities determining “need” for a project.

    there is too much wiggle room IMHO. we need some metrics and benchmarks that can be validated via independent means rather than let the foxes design the henhouse.

    we need to transition to a system where money over and above what the locality actually generates in revenues is a loan – to be paid back – not a ED “grant”.

  5. DJRippert Avatar

    Great post! In truth, Bacon has been generally open to a raise in the gas tax right up until a law to index the gas tax to inflation is up for a vote. Then, Jim “discovers” many new requirements that must be satisfied before the gas tax can be indexed to inflation.

    Jim uses a similar logic when discussing “smart growth”. There should be lots of mixed use, pedestrian friendly, high density housing. But nobody should ever pay to build the necessary infrastructure. Mass transit must be funded by the riders even before it is built. Presumably, people will buy tickets for years in advance of the rail system being built. That way, the pre-paid cash of the pre-paid tickets can be used to actually build the system. Same thing for ToD tax districts. Bill the landowners as soon as you conceive of the new rail system and use that money to build it.

    Of course, everybody should pay tolls to drive. Unless you live in Richmond. Or, pretty much anywhere except Tidewater and Northern Virginia.

    Endlessly complex and detailed studies should be prepared for years in advance of anything. Not even a pothole should be filled without a suspension damage assessment being completed, reviewed, voted on, debated on blogs and held up in court by the Southern Environmental Law Center.

    Peter – at the end of the day our man Bacon just doesn’t want to pay any taxes. None.

  6. I find lots of contradictions in a lot of the thinking about growth, development and transportation.

    For instance, we judge things like Smart Growth, if centrally-planned and taxed as a “bad” thing but we apparently just fine with centrally-planned roads…

    We rail against the clown-show in Richmond but at the local level, when it comes to land-use and transportation they put Richmond to shame sometimes.

    “keeping an eye” on local govt whilst they are approving more density and growth than they have the transportation network to support is not Richmond’s fault.

    In Tysons’s case, Fairfax was apparently ready to totally crap up the existing transportation infrastructure UNTIL VDOT stepped in and said whoa.

    DJ wants his beloved but slippery (slimy?) Fairfax BOS to stop be “bothered” by VDOT unless Richmond is going to cough up more money they do not have.

    He wants Richmond to raise taxes on every Virginian statewide whether they have transportation needs or not in their area. More the better, because then NoVa can siphon off those monies for their own needs ….

    and the justification that NoVa is getting screwed on school money is a fictional farce. The 1% sales tax is a STATE sales tax and the STATE collects it and the STATE allocates it according to an equity policy that assures that each child receives equivalent education resources.

    DJ would simply do away with this… and give the 1% to Fairfax.

    So this is really about MORE money for Fairfax at the expense of State services when Fairfax itself refuses to take responsibility for it’s transportation decisions and lacks the intestinal fortitude to raise taxes on it’s own for transportation needs.

    I can find lots to be unhappy about with regard to the State and VDOT but I can find much more to be unhappy about with localities that refuse to integrate land-use with transportation and then blame others for their mess.

  7. Oh ..and don’t forget the $85 million direct subsidy to NoVa from all taxpayers in Va to help them pay the “cost to compete”.

    think about that phrase and what it means to a poor smuck driving a coal truck for a living in SW Va……or some lady making 10K a year at a hair salon so she can buy food… and she and the guy are paying income taxes that go to NoVa so NoVa can pay employers even higher salaries…

    why? Isn’t this “cost to compete” essentially a subsidy to give employees more money so they can afford to live where their job is?

    How is that a BENEFIT to other Virginians?

    1. DJRippert Avatar

      A parable for LarryG

      If I gave you a dollar on Tuesday and you gave me back 65 cents later that day, I have given you a 35 cent subsidy.

      If I gave you a dollar on Wednesday and you gave me back 75 cents later that day, did you give me a 10 cent subsidy? Or, did I give you a 25 cent subsidy?

      The answer, of course, is easy – no region subsidizes any other region for anything. Each region raises as much in taxes as the region thinks prudent. Then, each region spends their own tax money providing whatever level of service they can afford given the taxes that were raised.

      98% of the people in Northern Virginia would vote for that deal today.

      How do you think the rest of the state would vote?

      Your babbling about subsidies to Northern Virginia and BENEFIT of other Virginians is embarassing. You know it’s crap but you blather it anyway.

      Oherwise, take the pledge LarryG – no more subsidies from any region to any other region.

      Youi ready to sign up, LarryG? Or, are sufficient self-aware to know when you are telling ridiculous lies?

  8. The gas tax issue is more complex than indicated by our discussion. I submit that, in most parts of the state, there is no traffic problem. The existing road system is adequate to handle traffic. Why would a senator or delegate whose constituents have a ten-minute trip to work, including a stop at the 7-11 for coffee, want to raise gas taxes?
    Most of the traffic congestion is in a couple of geographic areas, which suggest to me the need for local revenue. And a key component of that needs to be money from long-distance commuters driving to and from metro areas from work. Network management theory teaches one to price peak period usage at a level to discourage use at the peaks. That might suggest a region-wide parking tax, applicable during weekday peaks.

    1. DJRippert Avatar

      The gas tax isn’t complex at all. It has been reduced every year for the last 26 years – in real terms. 48 other states have raised their gas tax since Virginia last raised the gas tax. Those states have areas that are congested and uncongested. They just don’t have a pack of idiots in their state legislature.

      I am all for local taxes, local decisions, local governance, etc.

      Why should people living in locales where parents take care of their children pay for extra costs of areas where parents don’t take care of their children?

      Why should people in areas where smoking is rare pay for the additional health care costs incurred in areas where smoking is prevalent?

      Why should people living in areas where obesity is relatively low pay the extra health care costs associated with areas where obesity is relatively high?

      why should people living in well run areas with good economic prospects and low crime rates pay for law enforcement and incarceration in poorly run places where economic opportunity is weak and crime rates are high?

      All regions paying their own costs is music to my ears.

      Let’s just make it all the controllable costs. All of them.

  9. DJRippert Avatar

    Larry’s problem is facts. He has none. All Larry has is hyperbole.
    Let’s start with this – 48 states have raised their gas taxes since Virginia last raised theirs in 1986. The only more delinquent state is Alaska – which has no state income tax and funds itself mostly through taxes on oil exploration. So, absent the Alaska outlier, Virginia has gone the longest without linking its gas tax to inflation.

    You getting this, Larry? That is called a fact. It demonstrates that the Commonwealthof Virginia is living in a backwards world shunned by other states.

    Larry, do you have any facts that might demonstrate your shrilly repeated claim that Fairfax County is an outlier compared to other, similar American counties? You know LarryG, facts – numbers and things like that.

    Remember back in September, 2010 when McDonnell engaged the audit firm of Cherry, Bekaert and Holland to look at VDOT’s finances? Remember when they found $1B of unspent money in VDOT’s budget? Money found as highway rest rooms were being closed because “there wasn’t any more money”?

    Farifax County is about 12.5% of Virginia’s population. So, LarryG, do you have any evidence that Fairfax County lost track of $125M anytime recently? This is another fact LarryG – a fact of VDOT’s fiscal incompetence.

    Remember HB3202, LarryG. Remember how the Clown Show declared it was a shining example of how Virginia would solve its transportation crisis? Remember how it was written by a General Assembly full of lawyers? Signed by the governor (also a lawyer).

    What happened to that savior of Virginia’s transportation system, LarryG?

    It was immediately and unanimously held to be unconstitutional by the Virginia Supreme Court. Just another fact, Larry. A fact highlighting the Clown Show’s incompetence.

    Do you recall any major Fairfax County programs being immediately and unanimously held unconstitutional?

    Here’s the difference LarryG – I point out facts, figures and verifiable historical events. You blather. I can quantitatively demonstrate that the Clown Show is among the most inept state legislatures in the United States. You have no such documented argument against Fairfax County.

    In fact, in the two areas that are well measured and managed by Fairfax County – public safety and schools, the county does quite well.

    Ona quantitative basis, it seems clear to me that Fairfax County government is much more effective that the state government of Virginia.

  10. all of what you say DJ is true. I do not dispute any of it but what I said is true also.
    DJ, I agree with TMT. We do not need a statewide gas tax increase (although I do think it should be indexed).

    Each locality should talk to it’s own citizens about transportation needs and costs rather than expecting people in other counties to pay for their needs.

    DJ calls Richmond a clown show because they won’t tax the rest of Va to send to Fairfax. WTF?

    the “stranded” money was simply the fact that VDOT promised more projects than it could deliver (to places like Fairfax) so they allocated money to localities favorite projects to make them feel like their projects were real and would eventually received enough funding – even when VDOT knew that without more funding many/most of those projects would never get enough funding to finish.

    what McDonnell did – was unilaterally KILL a lot of those projects and re-directed the money to HIS priorities. The implication that VDOT was holding back money or hiding it is wrong. That was money that VDOT allocated to keep the localities happy and they did so in hopes that eventually more money would be available to finish some or all of the projects. It was a bad system but you know what.. they’re doing it all over again.

    We have a proposed interchange down in Stafford that is projected to cost about 135 million and right now..VDOT has allocated 35 million.. and there is no more money in sight.

    Fairfax is doing the same thing. How much is it estimated that will be needed when Tysons is built and how much has Fairfax dedicated to get it done?

    who benefits? who get’s screwed?

    DJ apparently supports screwing all those DTR folks so Fairfax can squander the money on more density that will in turn overwhelm the roads in the area …which they have no plans to improve.

    DJ blames the “clown show” for not generating enough “slush funding” for Fairfax to have it’s development essentially subsidized by others.

    3202 was an attempt to ALLOW NoVa to take control of it’s own gas tax destiny. It was flawed legislation but let me ask how many NoVa and Fairfax elected vowed to go back and get it done right?

    not too many… that tells me that perhaps they were not in favor to start with.

    Fairfax and DJ want Richmond to tax everyone in Va because Fairfax is afraid to put a tax referenda to it’s own citizens. What does that tell you about “local” governance?

    Fairfax’s own elected sell ya’ll out in the GA. You admit that, right?

  11. the answer for Fairfax is super simple. To keep the state from siphoning off gas tax revenues.. don’t support a proposal that will allow it.

    Instead make sure that every penny that Fairfax pays in taxes – stays in Fairfax.

    why not? the answer is simple. DJ and Fairfax talk a good line but in the end.. they are endlessly hopeful that if the state increases taxes that Fairfax will get MORE than it’s proportional share rather than less.. but history show otherwise.

    so what exactly is DJ really after?

  12. The Fairfax County Board of Supervisors created the traffic problems in Fairfax County. They are the ones who approved increases in density without obtaining sufficient proffers to address the added traffic. Virginia law does not require a county to approve all requested changes to Comp Plans. It does not require rezonings that stress local resources. The state supreme court has even ruled counties can down-plan as part of a Comp Plan review. Virginia law allows a county to negotiate sufficient proffers in cash or in kind that address the added traffic burden.
    But Fairfax County has not done this. Supervisors have drunk the Kool-Aid. They have not aggressively negotiated proffers. They have approved Plan amendments and rezonings that have overwhelmed the roads. They have pointed the finger at VDOT. Some claim their constituents should pay higher taxes so that the supervisors can keep approving land use changes that benefit the landowners and not the taxpayers.
    Fairfax County’s government is largely well-managed. I think most people like their government. But the same people do not trust local government on land use decisions. Supervisors regularly claim the added growth will keep real estate taxes low (which has not happened) and that the Dillon Rule requires them to adopt the requested land use changes. If the root cause of the problem is the decisions made by Fairfax County elected officials, how does raising the gas tax for people who liven Lynchburg, for example, constitute a fair solution?
    Pass the toughest adequate public facilities law in the nation, one that would allow citizens to go to court and stop approvals that were made in the face of inadequate public facilities and then index the gas tax. Or allow each county to keep one-half of one percent of the individual income taxes earned in the county/city. Combine this with devolution of local roads to the counties.

  13. In fairness, Fairfax is not that different from most counties in Va. They have just grown accustomed to not having to plan for transportation infrastructure because VDOT has functioned as their de-facto financial wet nurse.

    Imagine what would happen if Fairfax did water/sewer or even schools like they have done roads.

    Both the State and Wall Street require a fiscally responsible approach to localities approving growth that needs water/sewer.

    If Schools get too crowded or not enough diversity of courses are offered.. parents raise holy hell.

    But roads… Fairfax and other localities in Va have effectively evaded direct accountability and responsibility by blaming VDOT and the State for “not funding” their “needs”. Notice that they don’t make that argument with water/sewer. Nope, they charge water/sewer users significant fees to pay for that system – as they should and as they must.

    Of course VDOT is if nothing else a builder of roads. It’s what they do. How many bypasses has VDOT built after the locality crapped up their main thoroughfares ?

    Devolution is a fact of life in all but 3 other states in the country INCLUDING all those states that have increased their gas tax when Va did not.

    That gas tax money is used by the state to maintain state roads and the localities have to have their own tax levies to pay for local roads.

    When you have that kind of accountability – the locality has to consider each development not only on it’s merits in other areas but also in it’s impacts to their transportation system network – that they will have to deal with after the development if built and operating.

    Fairfax has for years and years made land use decisions without enough regard to the consequences nor have they collected the proffers – and the taxes needed to properly maintain a road network that is better than dysfunctional.

    Raising the state gas tax will not fix this. It will, instead, reward and further incentivize it.

    Look at what Va and VDOT have been forced to do … institute congestion tolls because virtually all other options are lost… there is just way too much traffic for the road network and because the local road network has not been upgraded and invested in enough – the de-facto means of mobility is the interstates – where people even drive from one exit to the next rather than trying to use the local surface streets.

    As an aside – I think that’s why MWAA thinks they can supercharge the tolls on DTR without really losing people. They simply are not any viable alternative routes.. they’re all already maxed and diverting from DTR at rush hour to save toll money is going to cost most …hours… sitting in traffic.

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