by James A. Bacon
Governor Bob McDonnell has submitted his proposal for overhauling the state’s antiquated transportation funding sources. Unfortunately, he has moved in precisely the wrong direction — rather than tightening the nexus between how much Virginians drive and how much they pay into the system, he would totally sever it.
According to a press release issued this afternoon, the proposed funding plan would add $1.8 billion more in highway construction funding over the next five years. McDonnell proposes to accomplish this by eliminating the state’s 17.5-cent-per-gallon gasoline tax and replacing it with an 0.8 percent increase to the Sales and Use Tax, diverting 0.25% from existing sales tax revenues, increasing vehicle registration fees, and then locking in the revenue streams by passing a separate constitutional amendment.
The package also would impose a $100-per-year fee on vehicles using alternative fuels and would dedicate an additional $15-per-year fee on vehicle registrations to intercity passenger rail and transit.
Stated McDonnell:
Transportation is a core function of government. Children can’t get to school; parents waste too much time in traffic; and businesses can’t move their goods without an adequate and efficient transportation system. My 2013 transportation funding and reform package is intended to address the short and long-term transportation funding needs of the Commonwealth. Declining funds for infrastructure maintenance, stagnant motor fuels tax revenues, increased demand for transit and passenger rail, and the growing cost of major infrastructure projects necessitate enhancing and restructuring the Commonwealth’s transportation program and the way it is funded. We simply cannot continue to do what we have always done and expect this problem to go away.
Other transportation-funding proposals have been floated in the run-up to the 2013 General Assembly session but McDonnell’s is the one to watch. Judging by the political figures quoted in the press release, he has lined up impressive support across the Republican Party. Backers include House speaker William J. Howell, R-Fredericksburg, Lieutenant Governor Bill Bolling, and Attorney General Ken Cucinelli, the presumptive Republican Party nominee for the 2013 gubernatorial race, as well as senior legislators like Tim Hugo, R-Centreville, and Sen. Steve Newman, R-Lynchburg. Barry Duval, president of the Virginia Chamber of Commerce, and Jeffrey Southard, executive vice president of the Virginia Transportation Construction Alliance, also have endorsed the package.
Bacon’s bottom line: There is no way to sugar-coat this: McDonnell’s transportation-funding package would be an unmitigated disaster. As it is, the governor has partially rolled back Kaine-era initiatives to coordinate transportation and land use planning, a prerequisite for creating a rational transportation system. Now, he proposes to obliterate the principle that those who use and benefit from the transportation system are the ones who should pay for it.
The principle is so simple and sound that even a politician should be able to understand it: Reducing the cost of driving by eliminating the gas tax only encourages more driving. Thus, while shifting the tax burden from the gasoline tax to a sales tax will raise more money, it will also worsen the congestion that the added tax revenues are supposed to address. A more sane approach would be to scrap all miscellaneous road-funding sources and increase the gas tax so that people paid for road usage in direct proportion to which they use it, thus creating an incentive to drive less.
McDonnell raises a legitimate point when he says that the motor fuels tax is stagnant, as people shift to more fuel-efficient cars and even to vehicles using alternate fuels. But the logical alternative is to institute a Vehicle Miles Driven tax, in which drivers pay a fee per mile regardless of what fuel they use.
It is an article of faith among free-market thinkers that taxes influence behavior. McDonnell’s proposal ignores this fundamental principle. Not only is his tax package intellectually unsound, it is unfair. The new tax would punish pedestrians, telecommuters, cyclists, carpoolers and mass transit riders, who are doing the virtuous thing of driving less, while subsidizing the voracious appetites of drivers.
As McDonnell’s press release notes, if this legislation is enacted, “Virginia will become the only state in the nation without a tax on gasoline.” Earth to McDonnell: There’s a reason why other states maintain their motor fuels taxes! Eliminating our gas tax would take us in the wrong direction. It’s not even as if you’re actually reducing the tax burden on citizens. You’re just shifting it to a different tax! Aargh! Aargh! Aargh!
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