Uh, oh, it looks like the Northern Virginia Transportation Authority won’t have as much money as it hoped to finance its transportation improvements. The NVTA, reports Dan Genz with the Washington Examiner, is expected to slash its revenue estimates for seven new taxes and fees because of the region’s economic downturn.
More than half of the $336 million slated for road and rail projects was expected to come from a tax on property sales — the so-called “grantor’s tax.” But home sales have plummeted 50 percent in Fairfax and Loudoun Counties, and have declined elsewhere across the region. NVTA officials, Genz says, expect revenues to drop below $300 million.
Once again, I nod my head in wonder: How did legislators ever devise such an abomination of a transportation scheme? As Hans Bader, a staffer with the Competitive Enterprise Institute, points out:
It’s an odd source of funding for transportation, since a homeowner’s sale of her home contributes nothing to transportation costs. And the tax is anything but fair. It is paid only by Virginians, not the out-of-state motorists who make up much of the traffic on Northern Virginia’s roads.
And, of course, it is a notoriously volatile revenue source that varies with the business cycle. Bader has had more to say about the grantor’s tax in the Examiner, the Times-Dispatch, and Openmarket.org, the staff blog of the CEI.
Bacon’s bottom line: A rational system, as opposed to the Rube Goldberg contraption we have, would scrap all miscellaneous revenue sources like the grantor’s tax and raise the gas tax by a like amount. The gas tax is relatively stable, so transportation planners can actually plan. It is also transparent. That means drivers know what they’re paying, and they can adjust their driving behavior if they don’t like paying it. Once we’ve shifted to the gas tax, then we need to start planning for the inevitable demise of the gas tax (when people shift to hybrids, electric cars, fuel cells, etc.) by beginning the spadework for a Vehicle Miles Driven tax.
The transportation-financing system we have now defies all reason, is counter productive, and is something that only politicians could love.