The Worst of All Conceivable Solutions

After studying transportation for more than a year, Virginia’s state Senate has passed one of the most atrocious pieces of legislation in recent history. The Senate transportation package, which passed 34 to 6 yesterday, did not have one redeeming virtue. Not one. It’s a transportation plan utterly so devoid of merit that only Virginia’s editorial writers could love it.

Let’s grant the Senate the charitable assumption that the solution to solving Virginia’s broken transportation system is to indiscriminately pour more money into it. Even by that standard, the legislation is a loser. According to Virginia Department of Transportation figures – the same figures used to justify a tax increase – the state will need $108 billion in new revenue to pursue a Business As Usual transportation policy over the next 20 years. That averages out to $5.4 billion yearly. By providing less than one-fifth that amount, the legislation falls far short. The Senate proposes no other solution for covering that gap.

But that’s only the first of the legislation’s many failings. The logical way to raise revenue would be to raise the retail gasoline tax, on the grounds that raising the cost of driving would have the salutary effect of encouraging people to drive less and reduce the stress on state roads. Instead, the Senate proposes collecting $210 million by increasing the tax on real estate transactions. Why the Senate chose not to raise taxes on, say, hair stylists or the sale of cucumbers as well, I can’t begin to imagine. The Senate also would raise the motor vehicle sales tax by three quarters of a percent, which would achieve the remarkable result of increasing the cost of car ownership without encouraging anyone to drive less!

Throw in a $10 registration fee and a tiny increase on the sale of diesel fuels, and there you have it. Oh, I nearly forgot the most ludicrous proposal of all: Raising $570 million a year by imposing a 5-percent wholesale tax on gasoline. Virginia’s esteemed Senators must think voters must be pretty stupid to see that as any less onerous than a tax on retail sales. But just in case motorists do see through the subterfuge, the Senate decided to “soften the blow,” in the words of Jeff Schapiro in the Richmond Times-Dispatch, by allowing them to file their gasoline receipts twice a year for a rebate.

Here’s a piece of unsolicited advice to the genius who came up with that idea: Those who think it’s too much trouble to file — half of all Virginians, according to your estimates — will curse you. Even those who do file their receipts will curse you — twice a year — for putting them through that nonsense in the first place!

But the thorough-going abdication of common sense does not stop there. Unless it plans to introduce companion legislation not mentioned in the press accounts, the Senate does absolutely nothing to address the transportation-land use connection. Gov. Timothy Kaine has advanced a proposal. So has the House. But the Senate has nothing to say on the subject.

Neither does the Senate consider any of the many alternative transportation strategies that have been articulated: telework, traffic-demand management, traffic-light synchronization, Bus Rapid Transit and many, many more. The philosophy of the Senate can be summarized thusly: Don’t reform land use. Don’t change VDOT. Don’t try anything new. Don’t change anything about transportation policy except the amount of money dumped into it. Tax, tax, pave, pave. Even the Road Builders lobby would be embarrassed to advance a legislative agenda so backward!

The Senate package is, arguably, the most reactionary legislation to come down the pike since the days of Massive Resistance. Indeed, massive resistance – as in, resistance to change – is an apt description of what the Senate has wrought. If Virginia voters had any sense, they would vote 34 senators out of office in two years — if they don’t laugh them out first.

But the senators do have one good thing going for them. If there’s anyone in Virginia more brain dead than the architects of this plan, it’s the Terri Schiavos in the tax-happy editorial departments of Virginia’s daily newspapers (excepting, in this case, the Richmond Times-Dispatch, which rightly lampooned the tax rebate idea as “hare brained” this morning). If the past is any guide, the pundits will be praising the solons in the Senate for their courage and urging the Governor and the House to see their wisdom.


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20 responses to “The Worst of All Conceivable Solutions”

  1. Anonymous Avatar

    “the Terri Schiavos in the tax-happy editorial departments of Virginia’s daily newspapers”

    Nothing but class in the blogosphere.

  2. Anonymous Avatar

    Take your meds, give it an hour, and try again. Hysteria is of limited value.

  3. 1) The purpose of the taxing the wholesale value of gasoline is to capture future price hikes — something a flat cents per gallon does not do. It is also possible — and Senator Saslaw believes this based on his own time in that business — that the oil companies will cut their wholesale costs in Virginia and in effect absorb some of that. It may or may not all show up at the pump.

    2) The refund gimmick is just that but it helped get the vote up to 34-6. If they are serious a refundable credit on your annual income tax return is the better and easier way to go.

    3) The Senate has several pieces of legislation related to land use and VDOT reform and is likely to approve just about all of the measures coming over from the House. Your refusal to acknowledge this is starting to border on intentional disinformation.

    4) Are you really attacking this because it isn’t big enough? You want more taxes?

    5) The Senate plan makes much greater investments than the House in local revenue sharing, rail funding, mass transit funding — all things which are not “business as usual.” The House is almost all roads.

    6) I just drove up and back to Tysons last week and the amount of construction I saw was impressive and cleary demonstrated the link between real estate and transportation. Why not tax that? The House is using proffers, the Senate a recordation tax and I swear I can’t see any real difference.

    Debating this is losing its joy. You aren’t making much sense.

  4. Intentional disinformation? Here? Surely you jest.

  5. E M Risse Avatar

    Anon 12:00:

    You should be ashamed of yourself suggesting Jim’s well documented and fully justified post is induced by hysteria and that Jim needs to take his meds implying he is mentally unbalanced.

    You are also wrong on the substance:

    Hysteria seems to be the winning strategy these days vis a vis Business-As-Usual. Consider Palestine, Haiti and the nation-states with majority Muslim populations rioting over cartoons.

    Jim:

    What happened to two important parts of the Senate pro-congestion package: A special pot of money for the road gang in the northern part of Virginia (SB 701) and a road corridors bill (SB 686)?

    Steve (sdh4vbt):

    This discussion never was a joy.

    If the Senate passes the House side land use measures, Jim’s head line will be out of date. The new package will be “the worst of all possible congestion solutions.”

    We repeat here with an update our note on the House package from “The House Seizes the Initiative…” of 16 Feb 2006.

    “The House, Governor and Senate “solutions” do nothing to tie settlement patterns to transportation.

    “We all know by this time that any increase in funding without Fundamental Change in human settlement patterns only makes matterns worse.

    “All three “plans” now on the table have both of these fatal flaws.

    “That is why we call the current legislative process a dance with the Devil.

    “The only hope is for a deadlock until informed voters can put new people with new ideas in all the chairs in both houses.”

    EMR

  6. Jim, I have to agree with sdh4bt on the cost issue. In Bacon’s Rebellion you made a very good argument that the number ought to be something like 10 billion not 20. Your comment that they didn’t raise nearly enough is correct, but based on your own arguments they came up with 40% of what is needed, not 20%.

    The ten dollar registration fee hurts me because I have a number of special purpose vehicles that are seldom driven. Registration fees ought not to be used for taxes, anyway VDOT expenses are sure to eat that up and it will never get to the roads. User fees ought to be user fees and not taxes.

    It does make sense to tax the price of gas and not the gallon of gas. Had we done that in 1986 we might not need 10 billion today, or 20, whatever. I doubt whether it is retail or wholesale makes much difference. You can count on me saving my receipts.

    If you realy want to consider throwing good money after bad, just look at the rail and transit funds. Across the US dozens of cities have spent billions on these items and ridership is still down, as a percentage. Winston and Shirley are right. We should put them on the same pay asyou go footing as autos and let the service decline to only the areas where it is most profitable and most useful. And by the way, this is an area that is ripe for privatization.

    I’m not even conviced that it is necessarily a salutary effect to coerce people into driving less. If transportation is 15% of the family budget and you cut that in half, you would wipe out 7% of consumer spendingn ot counting the ehings they didn’t buy because they didn’t make the trip. Talk about creating a tax revenue shortfall.

    If driving is bad for the environment, then we should work on that problem and not go for a solution that wipes out the good with the bad. Increasing the cost of new cars just means that old clunkers will stay on the road longer. Is this good or bad? It probably takes more energy to manufacture a car than it uses in its lifetime, and the tax may keep some keep cars out of the dump. Since part of the tax increase is on auto repairs, the sales tax might be a good thing. No doubt Ford and GM will hate it, along with their (soon to be former) employees.

    I would not have picked up on SDH4VBT’s idea about taxing real estate transactions as a link to transportation. Sure, Why not?

    It is clear that many existing residents believe that they are getting a tax penalty because new construction doesn’t pay enough of the costs for new infrastructure. I’m not convinced that the picture is as dire as some claim, taxes generally go up anyway, it’s unfair to lay ALL of that on the developers. Existing residents get some other benefits from the new construction and new infrastructure, but we don’t know how much. Again it is a case where we don’t have the metricsto make policy that is fair.

    As for land use reform, some of the increase in appreciation existing owners get is due to higher prices paid by developers to obtain land, permits, time delays, etc. Some of it is due toprice increases caused by land that is caused to be held off the market. Since other people benefit from what amounts to rental of this land, some means needs to be found to channel part of the gains back to the landholders. It is another situation where those who benefit ought to pay for what they get.

    As it stands now, the only way to benefit from land is to develop it. Any attempt at land use reform is going to have to change that calculus, but so far, it is not a mattter that is even under discussion. The only methods being considered are various ways of punishing people for being landholders, which is hardly an encouragement to keep land, let alone keep it open.

    SDH4VBT says you are not making much sense, and I have to agree. We can chase our tails around circular arguments for ever. We can make a strong case for one position, only to see the same case attacked when applied to another condition. And as
    TMT has pointed out, we can’t even agree on a needs assessment or a set of priorities among the needs. Arguing about “the solution” is really meaningless. Take whatever you have and see if you can find some incremental value in it.

    Case in point is having transit pay its own way on the same basis as roads, and allowing roads the same credit for development as transit gets. We claim that housing cuases demand for more roads and then try to insist on housing near transit that causes demand for more transit: which is itself a proven money loser.

    Another case in point is all those other things you mention. Each of them has the exact same problem as roads: for every person the divert from the roads, someone else will come up with a new reason to use the vacant space.

    If you show up with bad arguments, all you can expect is bad results. Collect the numbers, and go back to the next legislature better prepared.

  7. NotGroverNorquist Avatar
    NotGroverNorquist

    I’m with SDH4VBT in his point #3. Intentional disinformation? Looks like it to me.

    Yesterday afternoon I received an e mail from Sen. Marty Williams. Sorry you apparently didn’t see it, Jim. Williams went to some length to explain that the single bill passed yesterday was not the “package,” only the financing portion. His news release cited a number of reform measures – design-build, privitization, etc. and land use reform.

    From what I remember about the e mail there was an explaination of why construction costs are going up so much and so fast so that temporizing can’t be afforded. He’s quoted to that effect in today’s Times Dispatch story.

    The House does have more reform pieces. I hope I’m wrong but I suspect that, given the small pot of money their plan has and the large amount of debt it generates, the House is not really serious. Their “reform first, build later” approach is unrealistic in my view. We can multitask and get both done.

    Jim, given your animus toward the Senate expressed on other occassions (and what is it about your weekend posts???)your credibility is in question with my. Why was there never a parallel criticism of the House plan?

  8. “The only hope is for a deadlock until informed voters can put new people with new ideas in all the chairs in both houses.”

    Now there’s a plan that shouldn’t take more than a hundred years, and look at all the progess and improvement it generates in the meantime.

    Why not just print bumperstikers “PEC for Government”?

  9. Vivian and Shirley Avatar
    Vivian and Shirley

    The transportation issue, in the legislature, and on this–and other–blogs, is a horse morphing into a camel. We all seem to demand two simultaneous things: long-term solutions and short-term fixes. They are mutually exclusive. The “rebate” proposal finding some vogue this time around is the clunkiest piece of transportation thinking expressed lately.

  10. Jim Bacon Avatar

    So much to respond to…

    First, Steve said: “The Senate has several pieces of legislation related to land use and VDOT reform and is likely to approve just about all of the measures coming over from the House. Your refusal to acknowledge this is starting to border on intentional disinformation.”

    I am delighted to hear that the Senate is considering land use legislation. We can debate the merits of that legislation at another time. However, I have not “refused to acknowledge” it, and I certainly have not engaged in “international disinformation.”

    I have stated on many occasions that I do not frequent the General Assembly and I do not know everything that goes on there. In this case, I was captive to my sources, articles in the Richmond Times-Dispatch and the Washington Post, which wrote about the Senate’s funding package without alluding to the existence of land-use legislation. Indeed, I specifically added this caveat in my account: “Unless it plans to introduce companion legislation not mentioned in the press accounts, the Senate….”

    Trust me, when the Senate passes that legislation, Steve, I will be delighted to highlight it and comment upon it… assuming, of course, that the MSM feeds me something to work with.

  11. Jim Bacon Avatar

    Second point…

    Steve (sdh4vbt) raises a semi-valid point regarding the decision to add a sales tax on the wholesale price of gasoline rather than a per-gallon tax at the retail level. “The purpose of the taxing the wholesale value of gasoline is to capture future price hikes — something a flat cents per gallon does not do.”

    That, at least, is logical… within limits. The Senate is betting that, over time, the price of gasoline will go up and that a sales tax will capture more revenue than a per-gallon tax.

    Of course, that logic also violates one of the dictums we’ve heard repeated over and over, that the Senate wants a stable, predictable, long-term funding source. In that regard, this measure is totally self defeating. The total number of gallons consumed in the state of Virginia may vary three to four percent year after year. The price of gasoline, by contrast, as we’ve seen in the past year, can fluctuate 50 percent or more. What the Senate proposes, then, is to increase VDOT’s dependence upon a highly variable source of revenue, subject to external events from hurricanes to terrorist strikes in foreign countries.

    Congratulations, guys. Good thinking!

  12. Jim Bacon Avatar

    Third point….

    Steve (SDH4VBT) says: “The Senate plan makes much greater investments than the House in local revenue sharing, rail funding, mass transit funding — all things which are not ‘business as usual.’ The House is almost all roads.”

    I beg to differ over the definition of what constitutes “Business as Usual.” I definie Business As Usual as thinking that Virginia can build its way out of traffic congestion without making fundamental changes to land use, the implementation of alternate strategies and the ranking of funding priorities on a Return on Investment basis.

    If the Senate’s idea of a bold break with the past is to shift billions of dollars in wasteful road construction into wasteful rail construction, I’m not impressed.

    As for the House legislative package, yes, you are correct, the emphasis is on roads. The House plan suffers from many of the same deficiencies as the Senate plan! When I praised that plan in my recent column, I noted my extensive reservations. But the House plan at least breaks from the failed policies of the past in important ways. Members of the House show signs of trying to re-think transportation policy in fundamental ways. I still see no evidence that the Senate has done so.

    Perhaps I will be pleasantly surprised when the Senate passes its land use package.

  13. Jim Bacon Avatar

    Final point… In reference to the top two comments on this page. You are absolutely right. Hysteria is of limited value. The allusion to Terri Schiavo was in bad taste. And I have entered a new post apologizing for my intemperate language. Insults do not constitute an argument, and they have no place in this blog.

  14. I think the tax onfuel is OK. It causes those who use the most to pay the most, except as you say the tax on diesel is insufficient. Heavy trucs do more damage and they should pay more.

    While fuel may fluctuate in price, over time it is likely to go up. I dona’t think the variation in revenue is a big deal, it is surely more stable and less controversial than periodic raids on the general fund.

  15. We can’t build our way out of congestion, and if you could you wouldn’t want to because it would be inefficient to have all those unused roads during non peak hours.

    There probably ins’t any other method that will gt us out of congestion short of a serious recession.

    But saying you can’t build your way out of congestion misses the point: if a wider or better road is still congested after construction, then the extra use shows how popular the road is. It is serving more people and therefore it is doing the job intended.

    The question is whether the additional service generates enough revenue elsewhere in the system to justify the costs. The same argument holds for Metro and other transit. It does not alleviate congestion, so the question is whether the additional riders it allows represent a cost effective bargain. Since transit is slow and expensive, it is hard to justify except onthe very best routes.

  16. If you think metro is the answer to congestion here is a copy of a letter to the Post…

    I ride Metro regularly from Court House to Metro Center and have seen the shortcomings of Metro’s experiment with eight-car trains [Metro, Jan. 31]. At Court House I have experienced long waits, crowded stations and even more crowded trains. Any benefit from reduced Orange Line congestion is lost when riders must endure longer waits between trains, when people must trudge the length of the platform to find a car with space and when operators must stop longer at each station to allow passengers to exit packed trains.

    GUS SANDSTROM
    Arlington

    Despite the overwhelming evidence, we are going to spend more money on transit in the wrong places.

  17. E Joseph West Avatar
    E Joseph West

    Maybe hysteria does not have a place in this blog and Jim was correct in offering an apology, but from my perspective some of the Senators are “brain-dead”, especially the one who offered the rebate of the wholesale gas tax; that was Ken Stolle, so let us please identify people to whom we are referring.

  18. Rtwng Extrmst Avatar
    Rtwng Extrmst

    Bottom line on all this to me: The Senate plan does nothing to ensure these funds remain in transportation. The motivation? Simple, as has been proven without doubt over time, the Senate (Democrats as a whole and a certain number of Republicans) just want more revenue sources for their own political power base. It will go to transportation for a little while, but eventually will be cyphoned off for other things. Meanwhile the huge budget surplus will be available for them to buy votes elsewhere.

  19. criticallythinking Avatar
    criticallythinking

    Well, first of all this doesn’t matter right, because there is no mechanism to lock this money into transportation, so Kaine has promised to Veto these tax increases….

    OK, now that we all stopped laughing:

    Saslaw says that the 5% wholesale tax increase won’t be passed on to consumers. But then he votes to give consumers a 5% rebate on gas purchases. If he was correct on the first point, this plan doesn’t put a penny into roads, it just takes money from the gas companies and gives it back to the consumers (the ones willing to fill out the rebate forms).

    Oh wait, businesses can’t file for rebates. So if Saslaw is WRONG, and the taxes get passed through, this will just be a tax on business, which will pass THIER increased costs onto consumers, driving up inflation rates and all the government spending that goes with it.

    And since many of these new taxes are not directly related to transportation, it will be easy for the NEA to come along next year and talk the legislature into taking the money back out of transportation and into education. Precisely why Kaine promised in the election to veto any tax increase before he had a constitutional amendment to lock up the transportation trust fund.

    Meanwhile, we ALL benefit from the roads, even those of us to don’t use them. So why shouldn’t general revenues pay for some of the roads? We don’t make parents pay all the taxes to educate their kids, or medicare families pay for all the medicare expenses, or any of the other recipients of public expenditures pay all the taxes for those programs — so why should drivers be the only ones to pay for roads?

    But if we want to stop this silly tax increase, we need to somehow get the public outraged over it — and right now, the public doesn’t seem to care at all about taxes.

    It’s hard to argue against raising people’s taxes when they seem to want you to do so.

  20. Rtwng Extrmst Avatar
    Rtwng Extrmst

    CT,

    Good post. I’d be interested in seeing a quote from Kaine on his promise to veto any tax increase until the TTF is locked constitutionally. I’ve seen some on other blogs saying he never promised not to raise taxes.

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