Bacon's Rebellion

Democracy Thrives in Sunlight

Responding to McSweeney et al

—

by

James A. Bacon
in

It looks like Norm Leahy is not the only one who wants to take a swat at the “Conservative Transportation Alternative” signed by Patrick McSweeney and other conservative activists. A former contributor to

Bacon’s Rebellion, who must go unnamed, was so riled up by the “Alternative,” that he submitted a rebuttal. It was substantive enough that I thought it warranted its own post on the blog. So, here goes… (–Jim Bacon)

Responding to the McSweeney, et. al. “Conservative Transportation Alternative” Paper.

The first overall comment is that the authors completely ignore 20 years of inflation. You would think 2007 and 1986 dollars were the same in purchasing power or in economic cost to the taxpayer. The authors know better than this, of course, but adjusting figures for inflation would undermine their premise that transportation spending has soared from $1.2 billion in 1986 to $4 billion last year. In reality, per capita, adjusted for inflation, state transportation funding has barely risen. And as has been well documented, construction funds are dropping.

JLARC’s most recent state spending report has a chart on actual expenditures (Appendix E) that shows state transportation spending rising 160 percent (in unadjusted dollars) from 1986-2007. In the same period total state spending rose 310 percent, education spending rose 275 percent and individual and family services spending rose 326 percent. Transportation spending has been flat since 2002 at $3.4 billion per year. (That is in actual dollars, meaning that real spending declined 2002-2007.) The infusions of General Fund money the authors cite have left us, like Alice’s Queen, running faster to stay in the same place.

The second major comment is specific and goes to the heart of the debate…. (click on “comments” to read the rest of this missive.)

Update: Pat McSweeney has written extended remarks in response to this post. Click on “comments” and scroll down to the 12th comment (12:54 p.m.) to read them.

Share this article

ADVERTISEMENT

(comments below)

ADVERTISEMENT

(comments below)

Comments

  1. Jim Bacon Avatar
    Jim Bacon

    (This is a continuation of the original post…)

    There is a statement at the top of page 7 wherein the authors are “startled” that the 1986 transportation package failed to provide all the necessary maintenance and operations money for the new highways it funded. The 1986 plan did provide enough M&O funds for sixteen years, until 2002, which was the first year when construction funds had to be diverted to maintenance. But here is the key rebuttal: Everybody in 1986 assumed that from time to time the motor fuel tax (17.5 cents per gallon) would continue to be adjusted to compensate for inflation. That was the least controversial 1986 provision, because gas taxes were adjusted up fairly routinely in the previous 60 years. In those days the motor fuel tax was viewed as a user fee, not as the holy grail of conservative anti-tax orthodoxy. Nobody then would have predicted it would remain unchanged for 22 years. More important, nobody would have advised that.

    A third general comment:I agree that the user should pay. “Impose the cost…on those who will benefit directly…” The motor fuels tax does that extremely well. The sales and use tax on transfer of a vehicle does that. If their point is that user fees like the gas tax make more sense then a general sales tax, that a special taxing district makes more sense than a grantor’s tax, I agree. But to make it work you have to agree to make the fees fit the costs.

    And a fourth general comment: I do not accept that the 1986 special session was a failure, as some of these authors love to claim. Yes, we still have congestion and poor planning contributed to that. Massive economic growth also contributed. We have a state economy that is the envy of most states, if not recession proof at least recession resistant. The transportation investments of the late 1980s and early 1990s were essential to that.

    I’ve been arguing some of these same points since that 1986 special session, when I was largely in support of what the Governor was trying to do and some of these same people were in opposition. And they make some legitimate points. But they also ignore a lot of things.

    Yes, some, not all but some, of the planned projects should be funded with tolls. The Route 288 project mentioned in the report, connecting I-95 and I-64 west of Richmond, should have been tolled. But such a move would have been just as politically unpopular as any gas tax hike or general tax hike. The Hampton Roads bridge and tunnel projects are all candidates for tolling. The authors fail to mention that the political will for tolling is also lacking. And hundreds of smaller, routine projects needed around the state won’t lend themselves to tolls.

    Funding can also be found or supplemented by creating special taxing districts or in some other way recouping costs from the commercial landowners and developers who will see direct economic benefits from new projects. Many projects now underway are funded exactly that way.

    It’s true our current system subsidizes sprawl. Our unnaturally low gas tax does, too. The gas tax should be set to make sure that the cost of using the system reflects the true cost of building and maintaining it. Anything else encourages waste.

    It is a legitimate idea to give the localities the responsibility and the funding authority over secondary and urban systems, as long as there is some planning mechanism for those regional projects that cross locality lines — as many do. There were reasons the state took over the process 80 years ago and the same problems will crop up again if we are not careful. In recent years the General Assembly has made it possible for localities to take more authority — but it’s voluntary and many choose not to volunteer without the revenue or taxing authority. Is the group recommending that the counties have their own gas taxes?

    The mechanisms are also already in place for private road projects and public-private partnerships, as the authors advocate. Why aren’t the bulldozers bustling all over Virginia building private roads? Because the tolls they need to charge to make a profit are too high without at least some public participation. To draw the investment the state is going to have to put up something, as well, and the cupboard is bare.

    There is no way that all the projects on “wish” lists will ever be funded. But again, when the cost of unfunded projects grows from $21 billion in 1986 to $74 billion in 2005, don’t ignore the impact of inflation. Construction inflation has been even higher than general inflation. That statistic also underlines the high cost of delays. Probably the most valid point in the paper, which runs counter to the current House of Delegates Republican position, is that debt is not revenue. Debt merely delays the day of reckoning and exacerbates the maintenance- construction imbalance. As the demand for transportation projects has grown in the last decade, the Assembly and prior Governors have been eager to pull out the credit card to build roads and the leave future Assemblies the bill.

    HB 3202 in 2007 was built around another $3 billion in state debt and laid the groundwork for larger regional bonds. The major cash element, $500 million from the so-called “surplus”, proved a promise that could not be kept and $180 million of that figure has since been converted to debt.

    In summary, the authors make their point that the system as managed in recent decades provided too many incentives for inefficiency. But they ignore the recent progress that has been made in pushing more costs onto developers, and in requiring better planning and integration. They ignore a very efficient mechanism for passing along a true user cost, a higher motor fuels tax. As the price of gasoline rises, the users of the system will demand and get more efficiency. And the highway formulas are not the only ones that encourage sprawl – shall we reopen the SOQ debate, too? Equalize county real estate taxes and watch the settlement patterns change.

  2. Larry Gross Avatar
    Larry Gross

    where will sustainable funding for transportation come from if the GA either refuses a gas tax increase or even if they go along with a 5-10 cents increase?

    I don’t see much difference to be honest between a zero cents increase and a 10 cent increase – over the longer term… if maintenance costs are going up 10% a year.

    All you’re doing is buying .. probably less than 5 years… before you’re right back to the same problem…as maintenance costs will consume most of the increase

    .. and in 5 years.. in gasoline does what it did in the last 5 years.. the “terrible congestion” problem might well evaporate….

  3. Anonymous Avatar
    Anonymous

    Make the increase per dollar instead of per gallon – end of problem.

  4. Groveton Avatar
    Groveton

    That was an excellent rebuttal. The point about ignoring inflation is “spot on”. The Conservative Transportation Alternative’s arguments ignore inflation. In my opinion, this omission makes those arguments either intellectually dishonest or accidentally inept. True conservatives state the facts clearly and honestly. Anything else is the work of CINOs – Conservatives In Name Only.

    As I said, I think the rebuttal was well structured and written. I don’t agree with every point but I can see why some people would endorse each point. However, there was one point that was made almost as an aside at the end of the rebuttal:

    “And the highway formulas are not the only ones that encourage sprawl – shall we reopen the SOQ debate, too? Equalize county real estate taxes and watch the settlement patterns change.”.

    I would be very interested in more detail regarding this point. I have often said that the SOQ transfers were more about subsidizing real estate tax differences than educational opportunities. This point seems to be on the same wavelength but I’ll wait in the hope of further detail on this topic.

    Larry-

    “He who turns and runs away lives to fight another day”.

    Increasing the gas tax is imperfect and cannot be the long term answer. However, we need a short term answer in order to “buy time” on the long term. 22 years is a long time to go without adjusting for inflation.

    Anon 8:21 – Indexing the tax to the cost of gas would have provided more revenue. It would have been a better plan that the intellectually bankrupt idea of just holding the tax constant over decades of growth. However, it opens a few issues:

    1. The price of gas is, if anything, inversely proportional to road use and the need for new construction and additional maintenance.

    2. Spikes in gas prices hurt those in the lower quintiles of income the most. Accelerating the pain with a gas price spike with a spiking tax might really challenge those with the least ability to meet the challenge (economically speaking).

    3. The politicians cannot be trusted. In times like today, the gas tax (indexed to the price of gas) would be generating a lot of revenue. Can you really trust politicians to use high revenues from the periods of high gas prices effectively? Would they preserve the revenues if they could not spend today’s high gas tax revenue effectively? Or, would they fritter away the high tax receipts on wasteful projects or non-transportation matters only to whine, carp and complain when gas prices fall?

  5. Bob Avatar
    Bob

    Very nice analyis, but it lacks in one key respect. Focusing on transportation dollars spent is the incorrect measure.

    How much money has been raised from user fees imposed solely on drivers 20 years ago compared to today?

    I’m talking: gas tax, registration fees, sales tax on cars, automobile personal property tax, and the big kahuna: traffic tickets. I have no idea, but I suspect the inflation adjusted answer is that we’re raising more now than ever.

    That transportation spending has been flat for decades is no surprise. You need to know that raised money is being spet properly before suggesting the need to raise even more. Otherwise, we’d raise the gas tax $1 and put tolls on every road just to fund Tim Kaine’s Pre-K “free daycare for everyone” boondoggle.

  6. Anonymous Avatar
    Anonymous

    Gee, Bob, I hate to break it to you but the “Big Kahuna,” traffic tickets, are all going into the Literary Fund for schools, as directed by the state constitution. They have nothing to do with transportation. Frankly that whole abuser fee thing was a blatant end run on the constitution (a bi-partisan disease, obviously — the end runs.)

    To go back 20 years I need to do some digging tomorrow, but I can tell you right now a couple of things —

    The motor fuels tax isn’t going to fit your premise. Since 1986 everobody has paid the same 17.5 cents per gallon, or $3.50 on a 20 gallon tankful, and the fuel efficiency of the average vehicle has improved. I had some data a while back that it had declined in real dollars per capita and per registered vehicle.

    The sales tax on motor vehicles has probably kept up with or exceeded inflation, thanks to our appetite for giant SUVs and massive pickups.

    The annual registration fee went to $28 in 1986 and just went up another $10 this past year. Keeping up with inflation for 20 years would have put the current fee closer to $50 annually probably.

    But I’m still getting a good laugh out of your foolish notion that traffic tickets are a major transportation funding source, the Big Kahuna. That level of ignorance and sophistry is part of the problem. (And I’m sure that compared to 1986, they have gone down, too — increases in fines are few and far between.)

  7. Anonymous Avatar
    Anonymous

    Oh and Bob, personal property taxes? The car tax? What state are you posting from? Virginia now pays $950 million a year to localities to subsidize major cuts in the personal property tax on private vehicles. So no, I don’t think that 20 years of data will show revenue growth in excess of inflation…I personally paid $571 in 1996 and $261 in 2007.

  8. Bob Avatar
    Bob

    Anonymous,

    My whole point was that money is being taken from motorists and redistributed to non-transportation uses and that this should stop. So, um, thanks for pointing out that money from traffic tickets is going to a non-transportation use. Annual ticket profit is about $173 million, by the way. It’s the Big Kahuna in terms of General Assembly obsession, in case you didn’t notice. Before enacting the abuser fee ban the House voted 82-17 in February to create “mandatory minimum fees” before finally figuring out that was a suicidally dumb idea — that’s obsession.

    As for whether the gross amount of revenue collected from driver is higher than it was 20 years ago, I guess you missed the part where I said “I have no idea.” It has no real bearing on my argument. I have no objection to raising the gas tax a bit to cover funding roads once all motorist funds (see above) are devoted solely to road maintenance, construction, and the inevitable VDOT bureaucracy. And this would be accomplished in part by Bob Marshall’s constitutional amendment HJRes 18 — his idea makes a good starting point. Billions more for transportation by defunding bloated state government rather than imposing new “fees.”

  9. Larry Gross Avatar
    Larry Gross

    Bob – I’d highly recommend page 6 and 7 of the VDOT Budget

    http://www.virginiadot.org/projects/resources/VDOT_Budget.pdf

    … where you’ll discover that VDOT gets 421 million dollars a year from 1/2% on the Virginia Sales Tax.

    … That money comes from a tax on all goods and services that are subject to the sales tax.

    .. That means we you pay $20 for a shirt at Kohls that VDOT gets a dime – in ADDITION to the tax on the gasoline and the tax on your license plate, etc.

    On those same pages, you’ll find what VDOT spends on “other” stuff and if we gave the 1/2% on the sales tax back to the General Fund along with those “other” things, VDOT would go another 300 million deeper into the hole.

    Kaine is actually proposing that the sales tax be applied in full to new car purchases.

    but I don’t think any of this matters because the more money you give VDOT – the more roads will get built except they won’t be were the need is highest.. they’ll go, instead, to where the politically connected want them.

    the problem is not that money intended for roads goes to non-roads… the problem is that money intended for roads gets spent on roads.. and just spending money on roads doesn’t do anything but encourage more driving.

  10. James Atticus Bowden Avatar
    James Atticus Bowden

    I don’t see a rebuttal. I see a criticism of the numbers and a modest modification of the proposals.

    I haven’t seen a complete alternative to the Conservative alternative. I appreciate the discussion of altering the changes proposed – which I support.

  11. Anonymous Avatar
    Anonymous

    “Since 1986 everobody has paid the same 17.5 cents per gallon, or $3.50 on a 20 gallon tankful, and the fuel efficiency of the average vehicle has improved.”

    And that is exactly the problem. It’s per gallon instead of per dollar. If we paid the same percentage on a dollar basis as we did in 1986, there would be more money now, and there would have been more money up to now.

    Part of our problem is that we have underfunded for so long, that now it is hard to play cath up.

    Are you sure the mpg of the average care has gone up? Does that include all the SUV’s and light trucks that don’t get counted in the Auto average?

    My 1970 volkswagen and my 2004 volkswagen both get 25 – 30 mpg. the new one has a lot more HP, but no better mileage. We burn considerbly more fuel because of the pollution control equipment. My 1970 volkswagen would probably use all of its 43 HP just to run the pollution control gear that is on the 2004 model.

    Nothing against pollution control, but it isn’t free, and it does affect mileage.

    —————————-

    “they won’t be were the need is highest.. “

    Because that is where the land is most expensive, the road is more expensive, and even if it is used mnore it isn’t cost effective. Besides, it’s in a non-attainment area.

    Roads where the need is highest will neve get built. Instead, youtry and get out ahead of the problem and build them where they will be needed next. Naturally someone is going to benefit from that, so they MUST be politically connected.

    ———————————-

    “and just spending money on roads doesn’t do anything but encourage more driving.”

    Now your true colors are showing. The reason you support tolls is that you know it will provide less money for roads, and it is easy to highjack for other purposes.

    This argument is just wrong. There are thousands of miles of roads that somebody built and I have never had the slightest desire to go drive on them. I don’t get in the car and spend 75 cents a mile for the fun of it: I do it because I have some kind of business to conduct, and that business makes the expense worth while.

    What is true, is that not spending money on roads will ead to more congestion, more pollution, and more waste. Not building enough roads is as big as environmental disaster as building too many.

    RH

  12. Jim Bacon Avatar
    Jim Bacon

    Pat McSweeney has asked me to post his response to the anonymous author of this post. I reproduce his remarks here verbatim. — Jim Bacon

    The anonymous commenter who responded to A Conservative Transportation Alternative on April 7, 2008, in Bacon’s Rebellion argues that the report ignores inflation and mistakenly contends that the 1986 special session of the Virginia General Assembly that enacted higher taxes for transportation at the urging of then Governor Gerald Baliles was a failure. The arguments in that commentary actually make the point that is central to A Conservative Transportation Alternative. The old tax-funding approach requires constant tax hikes.

    At the 1986 special session, the state sales tax was increased for transportation purposes as a part of the overall package to counter the effect of inflation. The fact that inflation since 1986 has resulted in effectively widening the gap between the overall cost of our highway program and the available revenues to cover that cost supports the report’s argument that the tax-funded approach inevitably leads to calls for constant increases in taxes. At the same time, however, the dramatic enlargement of that gap between September 1986 and January 1989 from $20.5 billion to $37.8 billion cannot be explained by inflation.

    The implicit assumption in the anonymous commentary that higher taxes would close the gap between the overall cost of our transportation program and available revenues is not supported by our recent history. The more we spend in the old-fashioned way, the further behind we seem to be. The reason is that our current system of funding is undisciplined and overly politicized. It’s time for fundamental change, not higher taxes.

    There is apparent agreement that asking developers to pay more of the cost of our transportation program is desirable, but the way those costs are determined must reflect the actual relationship between increased transportation program costs and a developer’s contribution to those costs. As the commenter says, the fees must fit the costs. If the methodology used does not account for the distance-related aspects of any new road improvements required by a particular development as well as the cost attributed to that development of the cumulative road requirements resulting from all future developments along the corridor, it will not make our transportation system more efficient, will likely result in substantial inequities and will do little or nothing to counter the tendency to build on less expensive and more distant land with the expectation of publicly funded infrastructure to follow.

    We disagree with the commenter that a gas tax is a user fee. A fee is a user charge for access to a particular project. A tax is quite different. Residents of Wythe County pay gas taxes to fund trolleys in Alexandria, while Alexandria residents pay gas taxes to maintain subdivision roads in Wythe County. The difference between a fee and a tax is fundamental.

    It may be true, as the commenter writes, that everyone in 1986 assumed that taxes would continue to be increased, but that is not what everyone was willing to concede in the 1986 debate. Virginians were assured at the time by Governor Baliles and other proponents of the tax hike that the revenues generated would take the Commonwealth into the 21st century. A concession by proponents in 1986 that taxes would need to increase periodically might have doomed the tax package and prompted serious consideration of the alternative we now propose.

    A Conservative Transportation Alternative does not contend that the 1986 plan failed to provide sufficient funding for maintenance, which is the first call on transportation revenues. What the report says is that increased maintenance costs were not fully anticipated in 1986. That oversight ultimately resulted in less revenue available for construction of new projects.

    What the commenter fails to take into account is that private developers can voluntarily fund or contribute to transportation improvements where government fails or declines to provide adequate funding. Residents of subdivisions increasingly demand that their subdivision roads be treated as private roads rather than part of the state highway system even after they are accepted by VDOT and maintained with tax dollars. It’s time to consider whether those subdivision roads should be taken into the state highway system. A better approach might be to let the residents or their homeowners’ association assume financial responsibility for those roads.

    Despite its criticism of A Conservative Transportation Alternative, there is considerable agreement between the report and the anonymous commentary. One thing seems obvious: Virginians would benefit from a vigorous, no-holds-barred debate about transportation. There must be a better way to pay for this important function.

  13. Jim Bacon Avatar
    Jim Bacon

    To pick up on a minor point that appears in Pat’s riposte to the anonymous poster… Pat clarified my thinking on the controversy surrounding the acceptance of subdivision roads into the state road network.

    As we reported in Road to Ruin articles in years past and have noted on this blog, subdivision developers and the citizens who buy houses in those subdivisions are eager to unload their subdivision roads onto the state system for maintenance; at the same time, they resist moves to interconnect subdivisions on the grounds that they don’t want traffic cutting through their residential roads.

    Pat articulates better than I ever have the underlying principles at stake: Homeowners want to treat their subdivision roads as private roads — operated for the benefit of the neighborhood, not road users generally — but they also want the public (e.g., the Virginia Department of Transportation) to take over the responsibility and cost of maintaining those roads.

    Homeowners should not be able to have it both ways. If they want to limit access to their roads and curtail connectivity with the public road network, they should assume responsibility for maintaining their private roads themselves. Only if they are willing to allow the roads to function as part of a larger, public road network should VDOT (or local government) pick up the tab.

  14. D.J. McGuire Avatar
    D.J. McGuire

    Before any of my fellow subdivision dwellers race to defend their subsidy (good luuk with that), I just want to say that Jim and Pat are exactly right. There is no reason that any of my fellow Virginians – or even my fellow Spotsylvanians – should have to pay for my subdivision streets. They’re nothing more than common area asphalt, and should be treated as any other subdivision common area – as a subdivision responsibility, not a state responsibility.

Leave a Reply

Read More