Guest Column

Steve Haner

Courage - or Commonsense?

It's time to increase the gas tax enough to catch up with 17 years of inflation. The fee for using state roads still would amount to only a penny per mile.

Courageous.

The word gives me pause ever since reading and then viewing the British comedy series “Yes, Minister” and “Yes, Prime Minister.” The television series was converted into two of the funniest and wisest books about political philosophy and the bureaucratic impulse. Whenever Sir Humphrey Appleby, the consummate Whitehall civil servant, wanted to stop Cabinet (and later Prime) Minister Jim Hacker dead in his tracks, he would call him courageous.

To Hacker, that meant he was putting the good of the nation ahead of personal or party gain. In other words, he must be screwing up, so he reconsidered.

Last week at the Virginia Association of Counties meeting, a county supervisor applied that word to a recent position adopted by the Virginia Chamber of Commerce. After I spent a few minutes advocating a significant increase in the motor fuels tax, which would be the first adjustment in 17 years, the county supervisor came up and threw that word at me. 

Courageous is not the right word. Foolhardy or self-deluding, maybe, but we’re not being courageous. It is the Chamber’s business to think about Virginia’s economic future. We are acting out of economic self-interest. The trick is to persuade 51 in the House and 21 in the Senate that they don’t need to be courageous either. 

The Chamber’s position is simple – the way to address the transportation problem is to increase the principal revenue source, the motor fuels tax, for the first time in 17 years. The change need only reflect 17 years of inflation, and in economic terms is not a “real” increase. The guy at the pump realizes most things cost a whole lot more than they did 17 years ago. That is certainly true of the labor, materials and land it takes to build and maintain a system of highways, ports, airports and mass transit. 

The effect of flat revenue, rising maintenance and increasing debt costs on the construction budget is clearly visible in VDOT’s projections (see table). That $750 million annual construction figure works out to about $100 per year per Virginian and has to cover everything, from interstate projects down to paving county dirt roads. A hundred buck road project is measured in inches.

I submit the guy at the pump understands the 17.5 cents per gallon is a user fee. The more we drive, the more we pay. Big trucks and commercial vehicles on the road all day pay far more than the family sedan. The gas tax is so fair and efficient economics that teachers cite it as an example. President Reagan increased the federal gas tax and lost zero brownie points with the true blue conservatives.

Use the example of my daytrip to the Homestead (which is where the Virginia Association of Counties always meets, much to the chagrin of reporters who can’t afford it). To travel about 350 miles round trip used about 12 gallons of gas. The state gas tax cost me $2.10, the same $2.10 it had cost me since 1987 (and I probably drove a less efficient car then and it cost me more.) I paid my “toll” at the pumps in Staunton. 

Is that $2.10 really any different than the tolls I pay on work days on the Powhite Parkway? I pay $3.30 round trip, which probably works out to at least a dime a mile. The toll we pay the state for using the “free” highway system, collected at the gas pump, is now well less than a penny a mile for motorists with a newer car, and under our proposal would stay near one cent per mile for all but the largest or oldest vehicles.

What is the difference between the ten cents we pay on the toll road and the one cent we pay on the open road? The extra money is for lawyers, bankers, interest payments to the bond holders, an extra layer of administration at the Richmond Metropolitan Authority and all those toll takers. (There is a place for toll roads, bridges and tunnels, but don’t kid yourself the money is all going to concrete, steel and construction workers.)

Discussing the idea in front of the Virginia Association of Counties was preaching to the choir, of course. Or so I thought. Then one supervisor said the whole plan was doomed unless the formula was revised and an even higher percentage of the revenue went to mass transit. Another started talking about how impact fees were the real answer (tax housing to build roads? How is that more logical?) In response to this column, I’m sure I will hear once again from the land use utopians with their Vision of the Perfect Urban Milieu or some such that always has me looking around for Big Brother.

This doesn’t need to be that complicated. The transportation funding structure that has been in place since 1986 is sound. We don’t need to restructure a thing. The problem is that the main source of revenue, the gas tax, is fixed in place and its value has been deeply eroded by inflation. According to an inflation calculator I found on the internet, something that cost $17.50 in 1986 would cost more than $29 now. A gas tax of 29 cents would put us too far ahead our neighbors, but each penny would raise almost $50 million annually for the construction program.

If we kept the existing formulas, all regions of the state would benefit and all modes of transportation would get a share. 

The state has other pressing financial needs, but those problems have built-in solutions. When the state squeezes higher education, tuition rises (another user fee). When the state issues unfunded mandates for K-12, the local property taxpayer picks up the tab. When hospitals and doctors lose money on Medicaid patients, they hike their bills on paying patients (a hidden health care tax.) One way or another, those programs get funded.

With transportation, it’s different. There is no way to directly shift the cost and still raise the needed funds. The price we pay for the state’s benign neglect is measured in something far more valuable than money – lost time. And as the problems accumulate, we start losing jobs. No more referendum votes. On this one, the General Assembly and the governor need to just do it. 

-- November 17, 2003

Stephen D. Haner is vice president for public policy with the Virginia Chamber of Commerce. You can can e-mail him at s.haner@vachamber.com