The economic slowdown isn’t just hammering the General Fund, it’s also putting the squeeze on the Transportation Trust Fund. Reports Peter Bacque with the Times-Dispatch: State transportation revenues will be $1.1 billion less than projected over the next six years.
Virginia Department of Transportation CFO Reta Busher attributes the revenue shortfall to lower-than-expected tax receipts on vehicle, home and retail sales, fuel consumption, and vehicle licenses, as well as the pending repeal of abusive-driver fees.
Debt payments get first claim on Virginia highway dollars, followed by maintenance expenditures and state matches to federal funding. That means the cuts will fall hardest on the new construction budget. Local street and highway construction will see an average 44 percent reduction, and funding for transit will decline an average of 10 percent per year.
Bacon’s bottom line: Virginia’s transportation financing system is broken. Clearly, Virginia needs to invest more in its transportation system. But there’s no more agreement on how to raise the money than there is on where to invest it. Little wonder: There is no transparent nexus between who pays and who benefits from the current system.
The only way around the logjam is to move to an explicitly user-pays system so citizens can see a direct link between what they pay and the benefits they receive: (a) a gasoline tax (with plans to convert eventually to a Vehicle Miles Traveled tax) to cover maintenance and to match federal funds; (2) privately funded ventures to build major new projects, paid for with tolls; (3) congestion tolls for gridlocked corridors and urban districts; (4) impact fees and/or proffers for secondary roads; (5) CDAs and TIFs to tap the increased value of private property made possible by public improvements, especially as a means of mass transit funding; and (6) no General Funds for transportation.
Advantage #1: Requiring drivers to pay the cost associated with their road use will dampen automobile travel demand, thus reducing Vehicle Miles Traveled and easing the strain on the system.
Advantage #2: Such a system would not be dependent upon political vagaries for funding. Funding would materialize as demand materializes.
Advantage #3: A user-pays system would eliminate the inter-regional transfer of funds to build new roads and bridges. Citizens could be assured that they’re not getting reamed by politicians and lobbyists manipulating the system.