Bacon's Rebellion

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Whatever Happened to the Lockbox for the Transportation Trust Fund?

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by

James A. Bacon
in ,

Gov. Timothy M. Kaine delivered some bad news to the Axis of Taxes yesterday, saying that a state Senate plan to raise the gas tax by five cents per gallon won’t make it through the House of Delegates. Reports Jeff Schapiro with the Times-Dispatch (my italics):

Kaine, who favors new taxes for transportation but won’t fight for them this year, said House Republicans are firm in their opposition to any tax increase.

“They haven’t decided the way they’re going to kill them, but they’re going to kill them,” Kaine, a Democrat, told reporters yesterday.

Does anybody remember when Tim Kaine was running for office? Does anyone remember his promise not to raise taxes for transportation until an amendment to the state constitution prevented any budgetary raids on the Transportation Trust Fund? I still remember but Mainstream Media has been seized with amnesia. You can argue that the lockbox is a moot point as long as Kaine is not actively plugging for hikes in the gas tax, as opposed to merely expressing sympathy for them. But you’d think that maybe, just maybe, a reporter would ask him, “Whatever happened to that lockbox idea? Why aren’t you trying to move that forward?”

Here’s my hunch: The lockbox idea was a ploy to make tax hikes for transportation more palatable — not born of a genuine conviction that it was needed. It serves no useful political purpose anymore, so it has been all forgotten. For what it’s worth, I still think it’s a good idea.

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  1. The Logician Avatar
    The Logician

    The idea of a “Transportation Fund Lock Box,” like the ill-fated “Social Security Lock Box,” is nothing more than a conjured political buzz word, backed up with fuzzy government accounting. There is no such thing.

    Politicians, when presenting these ideas during stump speeches and interviews, play upon the general public’s misconception that the State (or Federal) treasury is equivalent to an individual’s bank accounts. You or I can simply go down to Wachovia, open up a separate savings account or CD, and funnel a portion of our income into that for whatever need we have down the road, be it a kid’s college tuition or a down payment on a house, or even an unspecified rainy-day fund. We make a pledge to ourselves not to touch it except for the intended purpose, and it’s out of sight and out of mind.

    The Treasury, however, has no separate accounts. There is simply account #1 for the State of Virginia. While you can perhaps fence off parts of the budget (and even that is fuzzy math), fencing off a part of the state’s “Savings account” is a pipe dream. For a state that’s running a deficit or a debt, that money in the lock box is going to be “loaned” to the state for its other bills, probably in the form of bonds, with an effective IOU left in its place. Where does the money to pay off the IOU come from? Future budgets, future taxes, whatever.

    Bottom line is no one’s enacted the lock-box concept yet because it isn’t a real, feasible solution. But it sure sounded great in a campaign ad, didn’t it?

  2. Jim Bacon Avatar
    Jim Bacon

    Logician, I don’t think you can compare the social security “lockbox,” which exhibits the very problems you describe, and a transportation trust fund lockbox.

    Kaine’s idea, a good one, was to pass a constitutional amendment that would prohibit the General Assembly from raiding the transportation trust fund to pay for non-transportation needs. State dollars are NOT necessarily fungible.

    Of course, we have quite the opposite problem now. We are inappropriately using General Fund dollars to pay for transportation. I suppose that’s why the lockbox discussion is off the table.

    But it could all change in a couple of budget cycles, and the legislators will be raiding transportation dollars to make up for deficits elsewhere.

  3. Larry Gross Avatar
    Larry Gross

    If you take a look at the Virginia Budget at

    http://www.dpb.virginia.gov/budget/buddoc08/index.cfm

    you’ll see that every Secretariat’s funding comes from two distinct sources: General Funde and Non-General Fund.

    Further, if you look at the Department of Transportation – the lions share of VDOT’s 4 Billion comes from the Non-General Fund.

    Then if you take a look at the Department of Game and Inland Fishieries – you’ll see that it’s ENTIRE $52,173,376 comes from the non-General fund.

    Now.. if DGIF’s entire budget comes from FEEs and the General Assembly decided to divert some of that money to roads… would anyone consider that to be a de-facto violation of a conceptual “lock-box”?

    Now.. before anyone gets up on their high horse, consider that 421,000,000 of VDOT’s money does not come from the Non-General fund but, in fact, from a 1/2% sales tax that everyone pays whether they drive or not.

    Note also that another 1/2 billion of VDOT’s revenues ARE out of the General Fund (Special Session).

    so.. about a Billion of VDOT’s funds are ..NOT .. derived from road users at all….

    What’s interesting is that most of the “pro” lock-box folks believe that the 1/2% sales tax is justified because “everyone benefits from roads” but isn’t this a little like saying that part of the sales tax should be given to DGIF because everyone benefits from the Fish and Game protection of resources?

    One could essentially make that same argument along those same grounds for every Secretariat in the Sate – as there are no Secretariats that do not serve the public interest anyhow.

    And I’d tweak jim a bit here.

    What would be the “lock box” concept for Education and Health Care?

    Is there a definable number/percentage that would be a conceptual “lock box” for those items?

    Why should VDOT and DGIF be anymore a “user pays” organization than .. say education and health care?

  4. Anonymous Avatar
    Anonymous

    “We are inappropriately using General Fund dollars to pay for transportation.”

    You don’t think there is ANY nexus between General Fund dollars and transportation? That ALL of transportaton costs should come from user fees?

    You think all transit costs should come from user fees?

    What about all the “other” non tranportation stuff that comes out fo transportation funds?

    What about paying for transportation infrastructure through increases in the value of real estate it creates?

    RH

  5. Anonymous Avatar
    Anonymous

    You don’t think there is ANY valid reason for people to pay into transportation costs from a 1/2% sales tax that everyone pays whether they drive or not?

    Whether you drive or not, your kids may go to school on a bus. You may go to work on a bus. You might like the fire department to be able to drive their trucks too your house.

    Would you suggest that user fees fr those on buses be high enough to cover the costs of operating the bus AND all those nasty external costs we ascribe to autos? Like road maintenance?

    RH

  6. Anonymous Avatar
    Anonymous

    “…isn’t this a little like saying that part of the sales tax should be given to DGIF because everyone benefits from the Fish and Game protection of resources?”

    Good question.

    DOES everyone benefit from protection of fish and game resources?

    RH

  7. Larry Gross Avatar
    Larry Gross

    Did the point come across that VDOT receives MORE money than what the fuel tax generates?

    Isn’t the LOCK BOX concept based, in theory, on the idea that money generated by the fuel tax is being “diverted” to non-road uses?

    So.. let me ask this question.

    Does the “lock” in lock-box mean that ONLY the money from fuel-taxes is supposed to be used for road funding?

    If one thinks this is not true – that other money from the general revenues can be “diverted” for roads – ..if you believe that is true – then what keeps the money from flowing in the other direction also?

    Is the idea of a “lockbox” for transportation really mean that it keeps everything it generates and then grabs as much more as it gain… like a budget version of a “black hole”?

    If one believes that – then is there a number that can be justified for “diverting” GENERAL REVENUES to transportation or is the answer.. as much as can be diverted?

    Tell me again.. why ordinary folks should have faith in this kind of a philosophy when it comes to justifying higher taxes?

    so the question remains folks and I’ve not got an answer.

    If $4 BILLION dollars for transportation is not enough – then what is?

    6 Billion, 8, 10?

    We could get 6 billion if we raised the gas tax by 40 cents (each penny generates 50 million).

    Assuming that the Va GA would sign off on this ..baaaahhhhhaaaaaa…

    what would we spend the additional 2 billion a year on?

    something in NoVa or HR/TW?

    sure….. all those guys from Farmville and Bath County are going to sign up for 40 cents more a gallon for their folks.. so that the money could then be used to
    build a Western Transportation Corridor or a Potomac Techway or a new US 460 or a new 3rd crossing…

    gee.. I wonder what the folks who live in Farmville and Bath County think a “lock box” is?

    🙂

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