Only seven months ago, I posted on the topic, “Quality of Life, Human Settlement Patterns and $100 Oil.” Oil was then selling for $83 a barrel, but analysts feared that the price could hit $100. That was then. This is now, and oil is flirting with $120 per barrel. That price, which includes a lot of speculative froth, will settle back down. But it will settle at a new, higher plateau that is far higher than even I dreamed of some two ago when I was blogging about the impact of $50-per-barrel oil.
Higher oil prices affects transportation policy in two ways. Most directly, it boosts the cost of gasoline, which now runs above $3.50 a gallon in Virginia. When retail gasoline prices increase $1.00 a gallon, the giant sucking sound you hear is the whoosh of some $5 billion annually being vacuumed from the pockets of Virginia consumers. But there’s an indirect impact, too: Higher oil prices translate into higher asphalt prices, a critical material for road maintenance, which, along with China-driven inflation in the broader construction sector, explains why maintenance costs are gobbling up an ever-larger share of Virginia’s Transportation Trust Fund.
One would think that a tripling of oil prices over the past few years would prompt Virginia’s decision makers to re-think transportation policy in a fundamental way. But the only re-thinking that has taken place is a growing conviction that we must raise taxes, pay whatever it takes, so we can continue to do things exactly the same way we have for the past 50 years.
Gov. Timothy M. Kaine, whom I once thought knew better, now declares that he will call the General Assembly back into session this year to deal with transportation. He doesn’t expect anyone to reach a solution, he told the Associated Press. Rather, “We’re either going to solve this problem or Virginians are going to know who stood in the way of a solution.”
And what solution would that be? Reports the AP:
The governor wants a statewide levy to cover the overruns that the Virginia Department of Transportation estimates will approach $400 million next year and $600 million by 2014.
Among the ideas offered to cover the gap are boosts in the sales tax, the state’s 17 1/2-cents-per-gallon gasoline tax or the “titling tax” on car sales. Kaine prefers raising the titling tax from 3.5 percent to the rate applied to all other retail purchases, 5.5 percent, but won’t say what he will propose in the bill he sends to lawmakers within the next two weeks.
The final calculation, I can assure you, will be driven by politics, not economic reason. Any rational system for funding roads and highways in Virginia would be based on a user pays principle that would (a) make people feel the consequences of their transportation choices, (b) induce some people, on the economic margin, to shift to more energy-efficient transportation modes, and (c) encourage the marketplace to provide more transportation-efficient settlement patterns such as walkable, mixed-use neighborhoods in closer proximity to jobs.
If Gov. Kaine is entertaining the option of a statewide sales tax — which would load the burden of road funding indiscriminately not only upon those who moved 50 miles from their job so they could afford to buy a bigger house with a bigger yard, damn the consequences, but those who walk, bike or bus to work, ride the train to work, telecommute to work, or don’t work at all — he clearly does not embrace the principle of “user pays.” He’s also given up on land use reform, much to the dismay of the environmentalists who voted for him. The only change he still embraces is more funding for mass transit, even though the economics of that option are abysmal in the absence of land use reform — and his plan for funding the Rail-to-Dulles heavy rail project is teetering on the brink of collapse.
Kaine talks about decreasing CO2 emissions in Virginia’s part to combat Global Warming, but instead of encouraging Virginians to drive less, he’s strategizing about putting Republicans on the spot for their unwillingness to subsidize more driving. If GOP lawmakers had any brains, they would be hurling Kaine’s Global Warming rhetoric back at him, but they are too dull-witted to do so. While the GOP does deserve credit for cooking up unappreciated but meaningful land-use reform in the infamous HB 3202 passed last year, legislators remain clueless on how to handle the funding piece of the equation. One might think that Republicans, who putatively believe in free market principles, might embrace “user pays” as a way of breaking the legislative logjam — more mobility for those who are willing to pay for it. But, for the most part, they can’t evolve past their “no tax increase” rhetoric which, in its own way, is as devoid of principle as Kaine’s grab-money-wherever-you-can-find-it approach.
Virginians have been grappling with the transportation funding issue for several years now and appear as deadlocked as ever. The failure of leadership across the board is utterly dispiriting. The truckling to narrow business interests (the real estate and construction lobby) and demographic constituencies (middle class households living in scattered, disconnected, low density settlement patterns) is shameful. Among Virginia’s elected officials, no one is willing to tell voters the truth, the whole truth and nothing but the truth. But, then, voters are no better. We all want more roads — just as long as someone else pays for them. In the final analysis, we collectively get what we deserve.