Bacon's Rebellion

Democracy Thrives in Sunlight

Living in Bizarro World

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by

James A. Bacon
in

The only thing worse than the GOP transportation package is the main argument being used against it: that using one percent of the General Fund budget to pay off the transportation bonds somehow endangers spending for schools, health care, law enforcement, etc.

According to numbers released today by the House Speaker’s Office, the latest budget amendments would bring spending increases for the 2006-2008 budget to these levels:

– K-12 education funding: 17 percent
– Higher education funding: 27 percent
– Chesapeake Bay funding: 52 percent
– Health care funding: 19 percent

When Republican lawmakers can enact those kinds of spending increases and their opponents tell us that it’s not enough, that says a lot about the political climate in Virginia today. Folks, I’m beginning to think we live in Bizarro World where all laws of logic and proportion have been suspended.

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19 responses to “Living in Bizarro World”

  1. James Atticus Bowden Avatar
    James Atticus Bowden

    Maybe a Hazmat team should go cover the GA with a big plastic baggy and do the search – something is making them all mad.

  2. Phil Rodokanakis Avatar
    Phil Rodokanakis

    “Don’t you see that the whole aim of Newspeak is to narrow the range of thought?… Has it ever occurred to your, Winston, that by the year 2050, at the very latest, not a single human being will be alive who could understand such a conversation as we are having now?…The whole climate of thought will be different. In fact, there will be no thought, as we understand it now. Orthodoxy means not thinking—not needing to think. Orthodoxy is unconsciousness.”

    George Orwell, “1984”

  3. Larry Gross Avatar
    Larry Gross

    Apparently there is some level of agreement between the GA R’s and the R’s in this Blog with respect to the General Fund.

    I’m trying to understand if, essentially, both favor abandonment of the TTF conceptually both in terms of dedicated revenues and dedicated expenditures.

    What is the conceptual framework with regard to using General Fund dollars for Transportation – in the context of the TTF?

    Hopefully there are more specifics than a general idea that it is okay to use General Funds for transportations .. “sometimes” for “some dollars”.

    Are we essentially seeing the demise and abandonment of the TTF concept?

    What is the game plan with regard to the longer-term transportation funding philosophy?

    Is there a clear answer here or is it still evolving?

  4. Anonymous Avatar
    Anonymous

    Folks,
    Ok, Ok, enough disgust over the transportation bill. You guys are really repeating yourselves. Can we move on?

  5. Jim Bacon Avatar
    Jim Bacon

    Larry, Here’s out *I* would articulate the issue. We still need to pass a constitutional amendment preventing raids on the Transportation Trust Fund. It makes perfect sense to supplement the TTF through borrowed money paid off with General Fund revenues.

    I don’t have any objections in principle with issuing debt to finance a long-term asset like roads. I just have a problem doing it in the absence of Fundamental Change.)

  6. Larry Gross Avatar
    Larry Gross

    “It makes perfect sense to supplement the TTF through borrowed money paid off with General Fund revenues.”

    Is this answer dependent on whether the amount of the bonds will be a little or a LOT?

    Does the word “supplement” not rule out .. say a 70% share of future transportation spending that would be done with bonds paid back from the GF revenues?

    How would we keep the percentage of GF funds for bonds from rising every year to higher and higher levels?

    Is this approach consistent with the “user pays” philosophy?

    It appears to me that using GFs has everyone in Va paying taxes for transportation no matter how much they themselves use transportation.

    A teacher who drives 5 miles a day in Farmville will pay just as much as a person who commutes 100 miles a day on congested commuter roads.

    Then the money.. will be spent on the commuter roads so we have the teacher in Farmville… paying for commuter roads in NoVa.

    Have I got this wrong?

    So the useage of GF seems to be acceptable to BOTH the GA R’s and even the R’s who don’t like the GA R’s other taxes…. right?

    You know.. if I were a GA guy attempting to get a “read” from the public on what things to do or not do.. and I read the blogs to help figure it out.. would I then know what the “right” direction was? ( warning this might be a trick question)… 😉

  7. Ray Hyde Avatar
    Ray Hyde

    We live in Bizarro World where all laws of logic and proportion have been suspended.

  8. Roll Tide Avatar
    Roll Tide

    Mr. Bacon, I think one of the concerns is that the General Fund money is to be used to pay the bonds and so that amount comes off the top, so to speak. Thus, even in years when there is a recession and General Fund revenues decline, the transportation part would come in line before anything else.

  9. Larry Gross Avatar
    Larry Gross

    re: “off the top”.

    That’s why I asked the question about how many bonds would be “too many”?

    As a concept – this does not sound like a sustainable approach.

    It will take us about as far as people are willing to go without getting squeamish about the outstanding debt .. and then what?

    So this approach .. seems to be sort of Ad HOc.. with an inevitable “what do we do now” encountered at some point.

    The TTF – concept was to dedicate specific revenue streams that were fairly predictable AND conceptually related to a user fee.

    The 1/2% sales tax violates the user fee angle but it is understood that this is a fixed dedication .. that can be counted on to bring in .. a reasonbly predictable amount (no more or less so than gas taxes).

    I think the R’s went funamentally wrong when they agreed to establish a nexus between the surplus and transportation.

    I actually agree that it is wrong to raise MORE taxes when there is an existing surplus but the answer was not the simple reallocation of the surplus – because the surplus is not a dedicated and reliable revenue stream.

    I’ll be honest – I always expected the R’s to have integrity in their fiscal concepts more so than the Dems.

    Dems have a reputation for fast and loose ideas about taxing and spending.

    That’s why it is such an odd thing for Kaine to be insisting on some kind of fiscal integrity with respect to separation of the GFs and the TTF – and now finds his Conservative opponents essentially adopting the fast and loose tactics of those to their left.

    I guess what I expected from the Conservative R’s was a real Plan that actually would work now and into the future… a permanent solution.. rather than something that will become an annual free-for-all… at budget time.

  10. Phil Rodokanakis Avatar
    Phil Rodokanakis

    To get a better understanding of the problems with the type of bond financing called for under the Transportation Compromise bill (AKA Bill Howell’s Tax Increase), you should all review the excellent column authored by Pat McSweeney on this subject, "Down The Wrong Road."

  11. Jim Bacon Avatar
    Jim Bacon

    Larry, good questions in your comment of 4:24. I would refine my statements regarding the acceptability of funding long-term bonds from the General Fund. Issuing such bonds would be an acceptable practice when the purpose of the transportation project is “economic development,” as Virginia did for the four-laning of U.S. 58, and proposes for the Coalfield Expressway and Third Crossing. (I’m not endorsing those projects, simply stating that they should compete with other General Fund priorities because their purpose is qualitatively different from road projects funded by the Transportation Trust Fund.)

    Unfortunately, that is not what the G.A. has in mind, so I guess I’ll have to back off defending it on this point.

    Roll Tide, you raise a good point that I hadn’t seen and hadn’t considered. But doesn’t the same logic apply to issuing long-term bonds for *any* purpose? I didn’t hear the “fiscal conservatives” in the Warner/Kaine administration raising that objection when Gov. Warner issued bonds to pay for parks and higher education facilities some four years ago.

  12. Roll Tide Avatar
    Roll Tide

    Mr. Bacon, the bonds issued by the Warner administration were approved by the voters, I believe and were able to be marketed at a lower interest rate because of the state’s sterling bond rating. They were backed by the “full faith and credit” of the Commonwealth. Think of them as a credit card with your father as a co-signer to the application.

    The bonds called for by the transportation plan are “moral obligation” bonds, not approved by the voters and will require a higher interest rate because of the “risk.” Think of these as a credit card that your college aged child applied for and received, but the bank will hold you ultimately responsible for the debt unless you want your child to have ruined credit for a long time. That is why the payback will come “off of the top” regardless of other needs.

  13. Ray Hyde Avatar
    Ray Hyde

    A teacher who drives 5 miles a day in Farmville will pay just as much as a person who commutes 100 miles a day on congested commuter roads.

    Then the money.. will be spent on the commuter roads so we have the teacher in Farmville… paying for commuter roads in NoVa.

    Have I got this wrong?

    Yes.

    It is too general a comment to make or support, let alone comment on. But, if you want to continue the generalization, then that guy coomuting a hundred miles probably live in a McMansion and makes a lot more money than the teacher.

    Consequently he pays more taxes, of all kinds: income taxes, real estate taxes, sales taxes. More of the taxes he pays go downstate and don’t come back than the other way around, which is one reason his commuter road is crowded.

    He is not only paying more than the teacher but he is getting less of his money’s worth. If it were to happen that his money stayed home, then sure enough, the Farmville teacher would have to pay more, but not to support the commuter, but to make up for what he had been paying on her behalf, lo these many years.

    He turns his cars over more often and pays tax on those. The old cars go to the auction and then to a dealer in Farmville, providing a steady supply of affordable cars. (Remember the analogy when we talk about affordable housing.)

    If he has any money left over, he may very well invest it in Virginia triple tax free bonds, which are used to buy things like schools in Farmville.

    Instead of rectifying the situation, which would mean that downstate WOULD have to pay more (but more of their own expenses, not NOVA’s) our commuter friend is asked to continue to send money downstate AND pay more for his own local roads.

    There are multiple questions here. Is the commuter paying enough to cover his own state expenses? Probably, since so much NOVA money goes downstate and doesn’t come back. Is the state spending enough to provide the services actually needed, enought to cover road use, Metro? (I’m not touching that one.) And if the state was spending enough, such that we didn;t need this new debt, would our commuter friend still be paying enough to cover his own bills, including his extended commute?

    I submit that we don’t know. All we know is that all the bills we have are paid by taxpayers, the payments are not level, and neither are the uses. Remember, he is still the exception, not the rule. He has a lot of friends and neighbors that pay as much or more and commute a lot less. What we are really talking about is an average commute of 32 minutes.

    Then ask yourself, suppose we cut that in half? Would it reduce our road expenditures by half? Not likely.

    Then, if you think that he is not paying his own way, like most residential customers, what does that say about our Farmville teacher, who is getting by on a lot less and has a lot more road at her disposal?

    And she is the exception, too. I’d wager that if you took a poll of all the Farmville teachers you might very well find that their average commute is closer to the statewide average. And they may be doing it in former NOVA cars.

    It isn’t only the commuters using congested roads that drive long distances. The parts guy in my tractor store drives here from Stafford. Go figure.

    Finally, remember, they both do this of their own volition. If the teacher really thinks she is getting screwed, she can move to NOVA and enjoy her long distance commute on crowded roads in order to get the big bucks. If our Commuter friend is tired of sending his money downstate, he cango downstate after it.

    As you have pointed out, we all make our choices. As I have pointed out, they aren’t always realistic. I’d say that your generalized comment leads to conclusions that aren’t realistic, either.

    If we really want to know who is spending the money and who gets the benefits, we need to study this a lot more closely. Even when we have the answer, we may find we don’t like it, if it doesn’t fit our notions.

    My view is that we have not really been spending enough, which is one reason maintenance is taking over. Now we are about to send the bill to our children.

  14. Ray Hyde Avatar
    Ray Hyde

    I think Roll Tide 6:46 has the right analogy.

  15. Phil Rodokanakis Avatar
    Phil Rodokanakis

    Rol Tide said: “That is why the payback will come “off of the top” regardless of other needs.”

    I’m not sure about that. Since the bonds haven’t been approved by the voters in a referendum and are not backed by the full faith and credit of the Commonwealth, a future session of the General Assembly could decide not to honor the debt. That’s why these bonds will be a lot more expensive, because of the credit risk involved.

    There is no reason why they couldn’t get the voters to approve the bonds in a referendum, as most voters blindly vote for approving bonds when the question is placed on the ballot. However, Howell and company have learned their lesson from the 2002 Sales Tax Referendum and will never again let the voters decide such delicate questions–afterall, they know what’s best for us.

  16. Larry Gross Avatar
    Larry Gross

    “that guy coomuting a hundred miles probably live in a McMansion and makes a lot more money than the teacher.”

    Are you assuming that only rich folks live in NoVa and Poor folks in Farmville?

    People who earn more do pay more but I don’t think it relates to where they live does it?

    What we’re talking about is everyone – rich or poor or in-between paying the same proportional amount of tax according to the income into the general revenue fund for transporation – REGARDLESS of how that individual uses transportation.

    So.. Ray .. take a Rich guy in NoVa and a Rich guy in Farmville and look at how much each pays for transportation and how much they use.

    The rich guy in Farmville drives 5 miles to work and is paying the same amount in taxes for transportation as the rich guy in NoVa who is driving 100 miles a day to a McMansion.

    This is NOT user pays which is the fundamental premise behind Conservatism and the TTF.

    What you are essentially advocating is having everyone pay the same and then have someone else decide how to re-allocate back but not according to what they paid.

    This is an inherently socialist concept that removes from the equation any personal respnsibility about choices made that have financial consequences – not on the person who made the choice but others who have to subsidize him.

    If we used this as a model for say… electricity .. where everyone paid into a general fund no matter what they use – what do you think would happen?

    Well, Ray.. there would be no incenstive for not using more and in fact, some folks would see this as an open invitation to use as much as they could.

    The result would be shortages, heavy congestion, and unreliable service at peak hour and no service during unexpected incidents because there was never enough money to build redudancy into the network.

    Ray – the above description applies to our road system right now because we do not charge according to use but instead charge according to the way you advocate – and the way the GA Republicans have gone about transportation funding.

  17. Larry Gross Avatar
    Larry Gross

    and Ray.. consider those at the other end of the spectrum.

    Consider those on fixed incomes in Farmville who are barely able to keep pace with taxes and who probably don’t even drive that much anyhow.

    How fair are tax increases to them?

  18. Ray Hyde Avatar
    Ray Hyde

    Larry, the whole pont of my exercise was to show how ridiculous it is to make policy based on generalizations.

    I’m glad to see you agree.

    I said it was a generalization at the outset, and I based it on what I thought would be the accepted genre based on the usual tenor here.

    I’d say my generalizations are just as bad as yours. We don’t know that peole in farmville drive all that much less. Maybe they commute less, and then drive to Potomac Mills to shop.

    When Fed Ex and Brown make deliveries, the don’t charge by the mile but by the zone: in spite of the fact that their trucks have GPS. You could say that under this system some of their customers subsidize others. But charging by the mile might make some long distance customers drop out, with the result that other (closer customers) would pay more. It could easily turn out the same with roads.

    My contention is that we don’t know the real answer. Furthermore, given the huge number of variables the real savings, if there is one, is likely to be small for any individual. I dont think it is worth worrying about.

    What we have isn’t perfect, but it is only a disaster in a few places. Until we have the real numbers, I’m unwilling to endorse a half-baked idea that might cost us more and kill the goose. We could easily wind up spending a million dollars to resolve $250,000 worth of inequity.

    ——————————–

    “This is an inherently socialist concept that removes from the equation any personal respnsibility about choices made that have financial consequences – not on the person who made the choice but others who have to subsidize him.”

    This is precisely how I feel about my situation with the county. They have a socialist concept that removes from themselves any responsibility for the choices they have made which have financial consequences not on themselves, but on me. I know for a fact that the savings they claim to make for taxpayers are more than offset by the cost to one taxpayer – me.

    It is a perfect example of false conservation.

  19. Larry Gross Avatar
    Larry Gross

    I’m not opposed to the use of zones for delivery charges because it’s a private transaction willingly entered into and not an imposed charge that one can choose not to accept.

    Right now… there are companies that won’t deliver beyond a certain distance and/or they charge a premium for doing so.

    And the zones – without GPS, was the only reasonable way. I don’t doubt for a minute that we’re going to see an actual mileage charge put into place by some companies.

    Again – the key difference is that it is an optional transaction where there is agreeable and quid pro quo between the seller and the buyer.

    And -as you know I support willing seller/willing buyer for land transactions also and I am highly skpeptical of the concept of taking land for public use because of the litany of abuses to those who the land is taken from.

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