A Newer, Bigger, Shinier Command Bunker

Bacon’s Rebellion is moving its hidden underground command center to a new, undisclosed location today. This massive logistical effort will entail a temporary diminution of insurgent activity. But have no fear, the blogging of the rebellion will resume shortly.

Medicaid Can Cost Taxpayers Less than ACA Plans

Source: United Healthcare Group

One of the interesting tidbits gleaned from a presentation last week on the Medicaid expansion debate was that with expansion perhaps 60,000 Virginians now enrolled in Affordable Care Act Public Exchange plans will qualify for and switch over to Medicaid.

People who have low-enough incomes to qualify for Medicaid are also eligible for subsidies for an ACA exchange plan, so both programs are costing the taxpayers. A recent report indicated Medicaid is actually costing taxpayers less than ACA plans for that population.

UnitedHealthcare Group’s report noted – not a surprise – that Public Exchange coverage has proven to be more costly and less sustainable than envisioned (or promised). Since 2014 – the first year of Public Exchange coverage – the average annual unsubsidized premium for a benchmark silver plan has increased 88 percent for a 27-year-old and 76 percent for a 40-year-old.

The original projection was that it would reach 25 million persons by now, and in 2017 it was more like 10 million.  Recent actions at the federal level will keep that from rising much beyond 12 million.

Compare that to Medicaid, which has enrolled more than 16 million additional people nationally since 2013.  These figures are national, and Virginia would vary somewhat, but the estimated average cost for the newly eligible Medicaid enrollee has been $5,400 and the average total cost for Public Exchange coverage has been $9,400.   In the case of the Exchanges, of course, much of that is coming from the consumer’s pocket.

But the low-income Exchange adult enrollees – the persons who could switch with Medicaid expansion – pay only $2,400 out of pocket and their federal share is about $7,000. That is still higher than the cost of Medicaid, which is fully government funded (state and federal combined).

This may not matter much to the Virginia voters and legislators opposed to expansion.  The state taxpayer makes zero financial contribution to the ACA health plan subsidies, and is going to be paying a share of the cost for new Medicaid enrollees.  We should find out early this week if the state Senate has a consensus on the expansion issue.

UnitedHealthcare Group (UHG) is hardly a disinterested observer in this discussion. It provides managed care for Medicaid in various states, now including Virginia, and based on its website it participates in some ACA marketplaces.  If the company has an economic incentive to prefer one approach over the other, it is unlikely to admit that in these presentations.

But it does argue the billions planned for ACA subsidies would be better spent on Medicaid.  It is unsaid but true that the future of the ACA Public Exchanges is cloudy at best, while Medicaid isn’t going anywhere, with or without expansion.

Absent from this is any discussion of quality outcomes when comparing the ACA Public Exchange plans with Medicaid, although UHG does advocate for managed care in general as providing higher quality for lower cost.  And the cost of Medicaid is hardly expected to remain stagnant.  Also absent is any discussion of which is preferred by the providers getting paid under the two approaches.

A footnote in the UHG report takes you to the most recent (2016) actuarial report on Medicaid. It was projecting federal costs would grow almost 6 percent per year, but also reported that the costs for newly-eligible adults were dipping slightly and might dip below those already eligible.  As always the most expensive Medicaid populations were the aged ($14,323 per enrollee in 2015) and disabled ($19,478).

The audit noted most states that had opted for expansion were using managed care contracts to lower the costs.  That will be the case in Virginia, and the 2017 Annual Report on Medallion 3.0, Virginia’s managed care approach, gives you a good idea of the services available.  If this is a choice open to them the lower-income ACA covered population will probably make the change.  It seems a very easy economic choice for them.

(Hat tip: Doug Gray)

Money Always Finds a Way

Every right-thinking person in America is concerned, if not downright appalled, by the role of money in politics. Citizens want their legislators to base their lawmaking decision on the merits of the case, not how much money corporations and special interest groups are shoveling into their campaign coffers. Some states deal with the problem by putting caps on campaign donations. Here in Virginia, there are no such limits in campaigns for state office, but the Commonwealth does require full transparency. Go to the Virginia Public Access Project to find out who’s donating money — and presumably has the ear of — your elected representatives.

But the debate over money in politics rages unabated. Not without some queasiness, I hew to the view that Virginia does it right. I could cite reasons of lofty principle, such as the argument that campaign contributions constitute a form of free speech that should not be abridged. And I could cite reasons of base practicality: Restrictions on campaign contributions will just drive influence seeking into the shadows where it cannot be tracked.

Now comes research by four economists (lead author Marianne Bertrand with the University of Chicago), “Tax-Exempt Lobbying: Corporate Philanthropy as a Tool for Political Influence,” which illuminates a surprisingly common means of subterranean influence — corporate philanthropy.

The authors examined where philanthropic foundations of Fortune 500 and S&P 500 corporations donated their money. Lo and behold, a significant percentage went to charities in the districts of congresspersons sitting on committees that oversee the industries of the donating firms.

Our analysis suggests that firms deploy their charitable foundations as a form of tax-exempt influence seeking. Based on a straightforward model of political influence our estimates imply that 7.1 percent of total U.S. corporate charitable giving is politically motivated, an amount that is economically significant: it is 280 percent larger than annual PAC contributions and about 40 percent of total federal lobbying expenditures. … Charitable giving may be a form of political influence that goes mostly undetected by voters and shareholders, and which is directly subsidized by taxpayers.

It would be naive to think that corporations are the only players in the philanthropy-for-influence game. Corporate motives might be easier to discern, but individual philanthropists often back causes and crusades of an ideological nature — the environment, social justice, free markets — that intersect with political controversies. Are billionaires and centi-millionaires any less likely than corporations to curry favor with elected officials than corporate executives?

Bertrand et al. posit a mechanism by which charitable contributions translate into influence.

To understand how charitable contributions directed to a congressional district may serve as a channel of political influence, one can build on the notion of credit-claiming by self-motivated politicians, an idea in political economy and political science that dates back at least to Mayhew’s observation that “Credit claiming is highly important to congressmen, with the consequence that much of congressional life is a relentless search for opportunities to engage in it.”

Although it is typically discussed in the context of federal grants and earmarks, political credit-claiming of local charities is a natural means of appealing to voters, given the visibility of many charities to politicians’ constituencies.

As a concrete example, the authors point to Washington Senator Patricia Murray, whose official webpage describes her work on housing, stating, “I was proud to establish the Washington State Farmworkers Housing Trust to help families who work hard to keep one of our state’s most important industries strong.” The charity’s donors include the foundations of JPMorgan Chase, Bank of America, and Wells Fargo. (The authors would have made a stronger case if Murray served on a committee regulating the banking or housing industries, but it doesn’t appear that she does.)

There’s an old saying that water seeks its own level. So does money in politics. We live in a political system that intrudes into every corner of the economy. No business activity is beyond the reach of taxation and regulation. As long as politicians have the power to reward and punish, businesses will have an incentive to influence the political process. If they don’t do it one way, they will do it another. As we’ve seen vividly with the machinations of the Clinton Foundation, politicians and corporations are infinitely ingenious in finding ways to trade in influence. Two hundred and fifty thousand dollars for a speech? Outrageous. But what’s the solution? Prohibit former presidents from being paid to give speeches?

The question for citizens is this: Would we rather they conduct their influence peddling out in the open where we can see it, dissect it, and denounce it? Or would we rather have it go underground?

Grant Process Tightens at VEDP

Not His Best Day

Tomorrow Governor Ralph Northam travels to the coalfields for what is billed as a major economic development announcement, and steps have been taken so that four years from now he won’t cringe when shown the old photos.

For the past year the Virginia Economic Development Partnership (VEDP) has been doing additional due diligence on companies receiving discretionary incentives, and if there is a high enough level of perceived risk the incentives are paid only after performance.

The tighter policy was described by President and CEO Stephen Moret in a response to my earlier post about detailed performance measures on Virginia’s various incentive programs.  “With this new approach in place, Virginia may not win some projects that we previously would have won, but neither will we place taxpayer dollars at undue risk,” Moret wrote.

The agency and its practices were the subject of a scathing review by the Joint Legislative Audit and Review Commission after the embarrassing failure to launch of a major Chinese-owned project near Appomattox, announced with great fanfare by Governor Terrence McAuliffe.  The firm in that case had received $1.4 million from the state in advance, and two years later a newspaper reporter found obvious signs that should have warned the state it was possible fraud.   Apparently the same pitch was rejected by North Carolina.

Then Moret came in from Louisiana and the General Assembly weighed in with 2017 legislation.  Now Moret reports all applications are vetted by a Project Review and Credit Committee (PRACC).  Prior to the revelations there was no VEDP person assigned full time to administering incentive programs and now there are four – with the potential for more and the inclusion of somebody with commercial credit experience.  Somebody is held to account for each project’s compliance.  

 

“During my first year at VEDP (2017), I asked PRACC to begin producing both company risk ratings and incentive risk ratings for every project, as well as to shift substantially all incentive payments associated with moderate- or high-risk companies to occur after the Commonwealth has received at least as much new state tax revenue as the amount of a given incentive,” he wrote in providing details.  He stressed he is fully on board with the new system.

The early tax money from these projects often comes to the locality, which imposes property taxes on any new building, equipment or business personal property as soon as they enter service.

The state tax revenue tracked is basically two sources slower to kick in, the same two sources that Secretary Aubrey Layne recently complained are too dominant in the state budget – personal income taxes and sales tax.  So for the state to have received an amount equal to the grant, the company has to be well underway in meeting its hiring goals.  The state does add in a multiplier on the assumption that the new employees are spending money generating indirect taxes.  And the state does recognize the substantial sales and use taxes paid on construction materials and other assets.

“Sometimes this means an incentive will be provided only after a project is fully completed; other times it means that incentives are provided in tranches as milestones are achieved. Notably, for low-risk companies (e.g., a large, well-capitalized Fortune 500 firm), we typically propose to provide incentive funds early in the development of a project, as otherwise the impact of the proposed incentive on the company’s decision process would be substantially diluted by the company’s net present value discount rate that often is in the range of 8-10%.”

Continue reading

The Logperch Veto

The Roanoke logperch

Virginia has its very own snail darter — the Roanoke logperch, a threatened species of fish, the existence of which could delay or even obstruct a multibillion-dollar infrastructure project.

The snail darter became a cause celebre for endangered species in 1973 when concerns arose that the habitat of the endangered fish would be obliterated by construction of the Tellico Dam on the Little Tennessee River. Although the dam ultimately was built, the controversy over the snail darter’s fate held up the project through years of legal appeals and eventually required a literal act of Congress to override a U.S. Supreme Court ruling.

The Roanoke logperch is one of six endangered or threatened species whose habitat will be crossed by the Atlantic Coast Pipeline (ACP), according to the Richmond Times-Dispatch. The ACP won’t obliterate the habitats of the logperch, the Indiana bat, the Northern long-eared bat, the Madison Cave isopod, the rusty patched bumblebee, or the clubshell mussel in the way that the Tellico Dam did the homeland of the snail darter. But the pipeline will cross these species’ habitats, subjecting them to additional stress, and perhaps killing some individuals. A federal appeals court ruled that the U.S. Fish and Wildlife Service had set unacceptably vague criteria for monitoring and complying with the Endangered Species Act. Pipeline foes regard the threat to the species as sufficient grounds to shut down construction.

A question unasked by the media in coverage of the ruling is just how threatened are these species? What impact might pipeline construction have on their habitat? Could the pipeline precipitate their extinction or will the effect be marginal? But alert reader D.J. Rippert raised the issue in a comment to an earlier article on the topic. According to the International Union for Conservation of Nature (IUCM) Red List, he wrote, “the Roanoke Logperch is one notch above endangered. The key question is whether the pipeline would push it from vulnerable to endangered.”

Good point, Don. Let’s see what IUCM has to say about the six species in question. But first some nomenclature: A “vulnerable” species is one that is likely to become endangered unless the circumstances threatening its survival and reproduction improve. The next steps up the ladder towards extinction are a “endangered” and then “critically endangered.” The term “threatened” applies to any species “likely to become an endangered species within the foreseeable future throughout all or a significant portion of its range.”

Roanoke logperch. Precina Rex is listed as “vulnerable.” Its range extends through the upper Roanoke, upper Dan, and upper Chowan river systems. Eight populations are separated by wide river gaps or dams. The fish resides in riffles, runs, and pools with sandy to boulder-strewn bottoms. Despite the ongoing threats of urbanization, industrial development, flood control projects, and agricultural runoff, the population is believed to be increasing. However, siltation from agricultural “and other human activities” remains a concern.

Indiana bat. Myotis soldalis is listed as “near threatened.” The bat has an extensive range across the eastern United States but the range and population have shrunk in recent years.  The most significant threats to the species are habitat loss, forest fragmentation, winter disturbance and environmental contaminants. Half the bats are believed to hibernate in Indiana (hence the name); other major population centers are located in Kentucky and Missouri. Virginia is a minor and peripheral part of the bat’s range.

Madison cave isopod. Antrolana lira is classified as “vulnerable.” This tiny critter is an eyeless, unpigmented freshwater crustacean that lives in flooded limestone caves in the northern Shenandoah Valley, with documented population centers around Staunton and Harrisonburg. The ICUN database contains little information about the isopod. Contamination of underground water is the major threat to the creature’s habitat — definitely an issue in the karst terrain in Virginia mountain terrain.

Rusty patched bumble bee. IUCM does not have this species of bumble bee in its database. But Fish & Wildlife does refer to it as “endangered.” “Rusty patched bumble bees once occupied grasslands and tall grass prairies of the Upper Midwest and Northeast, but most grasslands and prairies have been lost, degraded, or fragmented by conversion to other uses,” states the endangered species website. The range has constricted to 13 states, of which Virginia is one, plus one Canadian province. The biggest threat comes from intensive farming and the use of pesticides.

Clubshell mussel. Also not included in the IUCM database, the clubshell mussel is described by Fish & Wildlife as an “endangered” species. The bivalve, which lives in small to medium rivers and streams, once was found from Michigan to Alabama, Illinois to West Virginia — Virginia does not warrant mention as part of its range — and now is relegated to “portions of only 13 streams.” The major threats listed are pollution from agricultural run-off, industrial wastes, and extensive impoundments for navigation, all compounded by competition with the Zebra mussel.

Northern long-eared bat. The Northern long-eared bat does not appear in the IUCN’s red list but it is listed as “threatened” by Fish & Wildlife. The bat’s range extends throughout most of the Eastern U.S. and parts of Canada. Its population decline has been caused by the “white-nosed syndrome,” a fungal disease. The disease has spread to bats in Virginia.

Bacon’s bottom line: This is a superficial survey, and I welcome the input of anyone who has more detailed and authoritative knowledge. But it seems reasonable to draw several conclusions.

First, none of these species are “critically endangered.” Only two are listed as “endangered.” The other four are classified as “threatened” or “vulnerable.” Continue reading

Faculties, Not Donors, Drive University Hires

Steven Pearlstein

Steven Pearlstein, a Washington Post business and economics columnist, teaches economics at George Mason University. While he applauds making visible contractual terms between the libertarian, loathed-by-the-left Koch Brothers and GMU’s Mercatus Center, he doesn’t see a big threat to academic freedom. (Get the background to this controversy here.)

Any time a philanthropist makes a donation to a university, writes Pearlstein, he or she influences the priorities of that institution.

When someone gives $10 million to an engineering school rather than the college of humanities, it changes the university’s priorities. When someone endows a center to study the causes and consequences of climate change, it affects who is hired and what is taught and researched. When someone gives enough to name a school after a public figure, it shapes a school’s ideological profile. It would be great if all donations were unrestricted, but they aren’t. Many donors have agendas; the Kochs are just an extreme example.

In the case of Mason’s economics department, the faculty have driven the donor relationships. In most instances, it was the faculty who approached and solicited Koch and other donors with specific projects in mind, not the other way around. Faculty also recruited and hired for the newly funded professors’ positions, decided which courses would be taught, chose which topics to research and selected the students who would attend its graduate programs. Our economics department is not libertarian and conservative because it is funded by Koch and his friends; they fund our economics department because its faculty is — and always has been — overwhelmingly conservative and libertarian.

The underlying problem, suggests Pearlstein, is that “the rules and norms of university governance give faculty the power to hire people who think like they do. … There is ample evidence that feminists prefer to hire other feminists, behaviorists like to hire other behaviorists, ‘crit lit’ scholars hire other ‘crit lit’ scholars. Sorting by political or academic ideology is a naturally occurring phenomenon at universities.”

Pearlstein is absolutely right, but he doesn’t quite complete the loop. The phenomenon he describes is overwhelmingly a left-wing one — progressives systematically purging liberals and conservatives from among their ranks. GMU’s economics department and law school are oases of alternative thinking in a vast, desiccated Sahara of the nation’s overwhelmingly left-leaning schools, centers, institutes and academic departments.

The demand for Koch Brothers transparency, while justified at one level (I totally believe that higher ed should be more transparent), is not uniformly applied. At Virginia Commonwealth University a few years ago, Philip Morris USA contracts with university researchers created a huge controversy that ended with the retirement of President Eugene Trani. The controversy was justified. But no one is holding other donors to comparable levels of public scrutiny. When philanthropist Jane Batten donates $10 million to the University of Virginia’s Frank Batten School of Leadership and Public Policy, as was announced yesterday, does anyone ask if strings are attached? Does anyone demand to see the contract? No. No one asks because, I’ll wager, there are few high-profile libertarians or conservatives in the faculty to trigger progressives’ ire. (If I’m wrong, please let me know. I’d love to think that there is still some philosophical diversity at UVa.)

This controversy is all about power. Principles such as transparency and academic freedom are employed selectively and tactically to de-legitimize and expunge conservatives, libertarians and other bogeymen of the left like tobacco companies. Progressives never apply the principles against their own. It’s all about enforcing leftist ideological conformity.

(Hat tip: Steve Haner)

Wait, A Second Hospital Tax?

For years a Virginia business policy group, the Thomas Jefferson Institute, has been pushing a Virginia tax reform proposal that would impose the sales and use tax on services.  The sales and use tax covers tangible goods, not (with a few exceptions) services.   Looking at the group’s 2015 report on the idea, imposing the sales tax on the broad medical and nursing home industries could generate close to $2 billion per year.

My memory went back to this idea while reading in the Richmond Times-Dispatch this morning that the hospital industry is indeed pushing again for a second “provider assessment” (read:  hospital tax) as part of the ongoing budget debate over Medicaid expansion.   The House of Delegates has included one new tax on hospital revenue to provide the state share of the cost of expanding Medicaid, and the hospitals want to tack on a second tax to increase their reimbursement rate for services.

The idea resurfaced in the Senate staff presentation Monday and then Senate Finance Committee discussions Tuesday.  The committee’s work on the overdue budget has now gone sub rosa for a while so there is no indication this “has legs”, as they say at the Capitol.

The two taxes combined would approach $400 million in 2020. That would be one of the largest tax streams flowing into state coffers, almost half the annual take of the corporate income tax and comparable to the insurance premium and recordation taxes.  The House version of the first provider tax is in effect a sum sufficient provision, meaning the tax will adjust up automatically if required to cover the state’s share of expansion (and the federal share will be shrinking.)

The infusion of major new federal revenue from Medicaid expansion to the hospitals now providing uncompensated care to that population may make it possible for them to absorb any new tax.  In theory the rest of us will be covering for less of that uncompensated care.  And the Thomas Jefferson Institute also helpfully tracks Virginia hospital profits, which grew last year, giving reason to hope customer costs or insurance premiums won’t rise because of the new tax.  The hospitals can eat it, right?  Have any such assurances been made?

But if this is just like every other tax and eventually somebody, somehow has to pay it, why not spread the burden across the entire health care sector by ending the medical sales tax exemption?  The same 1.4 percent tax rate now being proposed might do the trick.  New Medicaid patients will be visiting doctors, out-patient clinics, nursing homes and pharmacies and sending tests to labs.  Many will be in managed care systems – and we want then taking that approach.  If reimbursement rates are to go up, will they go up only for hospitals?  Why should only private hospital revenues be taxed?

Or what if we just ended the non-profit status of so many medical facilities and practices and just taxed their property and profits like any other business?  What if we doubled Virginia’s famously low tobacco products taxes, raising another $170 million for dealing with the health-care consequences of that poisonous habit?

The “third rail” status of the whole idea among most Republicans – including most Republican legislators – has forced this discussion off a rational plane and into a perpetual posturing zone.   A serious tax policy discussion of how to pay for this and what the impact would be on customer costs might or might not end up with these “provider assessments” as the right choice, but there has been no debate.

It Works for Georgia, Why Not for Virginia?

North Carolina has Asheville… but Virginia has Abingdon.

When former New Yorker Marty Stefanelli and his wife moved from West Palm Beach, Fla. to Blue Ridge, Ga., they went from paying about $20,000 a year in real estate taxes to $3,000. The couple still maintains a residence in New York, where they pay about $30,000 a year in taxes, but Stefanelli plans to make Georgia their main residence within a few years. “I bought a pickup to fit in,” he quips.

Southern Appalachia is emerging as a growing retirement destination for northern transplants who find Florida too expensive, reports the Wall Street Journal today. The so-called “halfbacks,” who move to Florida and then halfway back north cite lower cost housing, lower taxes and lower cost of living.

Net migration to retirement destination Appalachian counties in Georgia, North Carolina and Tennessee has risen steadily from about 10,000 in 2011 to more than 46,000 in 2017, according to census data.

The trend appears to be gaining momentum as local developers and real estate agents build housing product geared to the halfback market, and as local businesses provide products and services suitable for more affluent retirees. The newcomers are generating new tax revenue, creating new business opportunities and supporting more jobs for locals. The response is not universally positive. Some locals complain that the immigrants are driving up the price of housing and bringing in their brusque, big-city mannerisms. But overall the impact seems mostly beneficial.

Bacon’s bottom line: Apparently, this mini-migration to Appalachia hasn’t reached Virginia. But there is no reason Southwest Virginia shouldn’t be able to cash in. The terrain is just as beautiful as it is in North Carolina, the property and taxes are just as inexpensive, and there are urban areas like Roanoke and Bristol-Kingsport where retirees can avail themselves of comprehensive medical care. Aside from supporting new jobs, affluent retirees would bolster the tax base of hard-pressed local governments and support quality-of-life amenities that the communities could not otherwise afford.

This is not traditional economic development, but traditional economic development doesn’t seem to be working very well. Someone should research this market to ascertain what it takes to lure some of these halfbacks to Virginia.

Pipeline Runs Afoul of Endangered Species

Atlantic Coast Pipeline foes won a significant legal victory yesterday when the Richmond-based U.S. Circuit Court of Appeals invalidated a Fish and Wildlife Service Review of pipeline construction. Limits set by the federal agency for the protection of endangered species were “so indeterminate” that they rendered enforcement of the Endangered Species Act meaningless.

“This puts a stop to any work that could threaten rare and endangered species and that’s much of the pipeline route,” the Richmond Times-Dispatch quoted D.J. Gerken, the Southern Environmental Law Center attorney who argued the case, as saying.

Dominion officials said they would push ahead with the project. “We will fully comply as required while we continue to construct the project,” said company spokesperson Jen Kostyniuk. “Although we disagree with the outcome of the court’s decisions, an are evaluating our options, we are committed to working with the agency to address the concerns raised by the court’s order.”

According to Gerken, the Fish and Wildlife Service’s review allowed for a “small percent” of endangered species to be killed during construction, but did not define what constituted a small percent. “A small percent would never get triggered because nobody knows what it is,” he said.

The project will cross the habitats of eight endangered or threatened species, including the Roanoke logperch, the Indiana and long-eared bats, the Madison Cave isopod, the rusty patched bumblebee, and the clubshell mussel.

Bacon’s bottom line: The ruling gives a moral victory to pipeline foes but I doubt it will be a significant blow to the project. Dominion Energy, the ACP’s managing partner, will argue with pipeline foes over how to define what constitutes a “small percent” of loss to the endangered species and what kind of protections are needed. The Fish and Wildlife Service will develop more specific criteria. Unless Dominion appeals the case, it will buckle under and spend whatever money it takes to comply. The company is so deeply committed to the project that it cannot afford to back out.

Update: Dominion issued a statement this morning: “”We remain confident in the project approvals and the Atlantic Coast Pipeline will continue to move forward with construction as scheduled. This decision only impacts activities directly covered by the Incidental Take Statement in certain defined areas along the route. We will fully comply as required while we continue to construct the project. Although we disagree with the outcome of the court’s decision, and are evaluating our options, we are committed to working with the agency to address the concerns raised by the court’s order.”

Taking Another Look at Tolls on I-81

Interstate 81, which slices through western Virginia, is one of the most heavily trafficked highways in the Old Dominion. Nearly 12 million trucks travel the Interstate, accounting for 42% of all interstate truck traffic in the state and transporting more than $300 billion in goods per year. The tractor-trailers make other drivers miserable by hogging lanes as they pass one another on steep mountain inclines. Typically, trucks are involved in the 30 or so crashes a year that take six hours or longer to clear and generate miles-long backups.

Tractor-trailers have been a nagging headache for decades because the situation has defied an economically and politically viable remedy. There was serious talk some twenty years ago about imposing tolls to finance a multibillion-dollar upgrade from Winchester to Bristol, but the idea provoked fierce local resistance. The Virginia Department of Transportation opted instead for a less ambitious — and far less expensive — program of making spot improvements to alleviate the worst bottlenecks.

Now the talk of tolls is back. Legislation enacted this year orders the Commonwealth Transportation Board (CTB) to complete a study of tolling options by the end of 2018. The law restricts the parameters of the study, however, in a way that presupposes the outcome. The CTB, states SB 871, “shall not consider options that toll all users of Interstate 81” nor “commuters” but may consider “high occupancy toll lanes” and “tolls on heavy commercial vehicles.”

Reports the Bristol Herald Courier of the legislation:

“It is very specific in tolling either hot lanes, express lanes or a heavy commercial vehicle toll. The objective is to not toll commuters,” said Ben Mannell, VDOT’s deputy director of planning. “They’ve also asked us to look at minimizing the impact to heavy commercial vehicles, if we did have a tolling scenario.”

Part of the study will focus on the latest crash data, areas that have a high number of crashes, congestion, delays and the potential for operational improvements for incident response in case of a major crash, Mannell said.

The Virginia Department of Transportation (VDOT) will hold a dozen public hearings this summer.

Bacon’s bottom line. Take note: Commuters (i.e. voters) are not to be inconvenienced. By exempting commuters from tolls, the legislation envisions co-opting I-81, which was built for inter-city and interstate traffic, for the purpose of local travel. Virginia seems destined to repeat the error that turned Interstates 95, 395, and 495 in the Washington metropolitan area into traffic hell-holes that disrupt the flow of interstate traffic up and down the Atlantic Coast.

Conceptually speaking, there are two reasons for worsening congestion and traffic accidents on I-81: increased interstate traffic (mostly trucks) and increased local traffic. Local commuter traffic on the interstate hasn’t gotten as bad as in Northern Virginia because the metropolitan areas along the route — Winchester, Harrisonburg, Staunton, Roanoke, Blacksburg, Bristol — have experienced much slower rates of population and economic growth. But the dynamics are the same: New commercial and residential development clusters around the interchanges and people come to treat I-81 like a local transportation artery. Over time the Interstate clogs up, and commuters come to resent all those annoying tractor-trailers.

There is no way to solve the congestion problem on I-81 without solving the land use problem in each locality. Localities must stop treating the Interstate as a local transportation corridor. Instead of widening I-81 and paying premium prices to build at Interstate-grade standards, VDOT needs to build parallel transportation corridors designed for local use at lower travel speeds and lower construction costs. Furthermore, localities must eliminate zoning barriers to higher-density, mixed-use development supporting travel patterns of fewer, shorter trips.

As for some of the ideas contemplated in the VDOT study… Singling out heavy commercial vehicles for tolls may make political sense — out-of-state truckers don’t vote in Virginia — but it violates the purpose of the interstate to create connective tissue between states and metros. However, it would be appropriate to increase user fees on trucks so they pay their proportionate share that their super-heavy loads cause on the highway.

Tolls are a useful tool for funding transportation improvements and rationing scarce highway capacity. But they cannot do the job alone. All vehicles must pay their proportionate share of interstate maintenance and operations, and proper land use/transportation planning must provide commuters with viable options for local travel. Let’s hope that the authors of the I-81 study understand these principles better than those who wrote the legislation.