When I first heard of VA Governor Bob McDonnell’s plan to “solve” the state’s never-ending transportation funding problems by eliminating the gas tax and raising the state sales tax, I didn’t like the sound of it. To me, you’re shifting the burden of paying for the road system from the people who use it to many who might not use it. And people from out of state that drive through – they get the privilege for free (assuming they need to stop to get gas, which isn’t always true). You’d think folks would get bent out of shape over the regressive nature of the sales tax increase. A 16% increase in the tax on everything purchased stands to impact low-income folks much more than others.
Dr. Ron Utt points out that same objection, and a couple of significant others in an article at Bearing Drift. More disturbing than my objection is the proposed disproportional percentage of the funding that will go to mass transit – something that folks in Virginia don’t use very much, but legislators don’t seem to mind funding, and funding, and funding (they never pay for themselves).
There is much that is wrong with this plan; chief among them is the end of the fuel tax – which operates as a user fee falling only on those who use the roads. While this user fee/tax is far from perfect, it does closely connect costs with benefits, provides incentives to drive less and operate more fuel-efficient cars, and falls disproportionately on those who drive the most and those who operate cars with poor fuel economy. Is this a problem? Sadly, all of these market-based incentives and disincentives will disappear with the fuel tax, and those who drive the most and do so in gas guzzlers will no longer face any penalty now that their added costs to society and the transportation system will be covered by the state’s consumers through a higher sales tax.
The other disadvantage in shifting transportation funding from a user fee paid by the motorist to a broad-based tax paid by everybody is that motorists can no longer claim that they have earned a higher priority for road spending, as it is at present. Once this link is broken, the allocation of state transportation spending among the various and competing transportation modes will be determined by politics, not consumer choice, and the influential unions and environmentalists will be in a much better position to shift spending from cost-effective roads to costly and heavily subsidized and underutilized trolleys, trains, buses and bicycles.
Indeed, the McDonnell plan reveals that the Governor intends that such a shift will occur once the full plan is enacted into law. My colleague Karen Jaroch, a member of the American Dream Coalition, has prepared a detailed spread sheet of the governor’s transportation spending plans and concludes that overall it appears that 59 percent of future funding will be for roads and 34 percent for mass transit, while the remaining 7 percent or so will go for ports, aviation, and local transportation priorities.
The Governor’s hectoring vision of what should be is in conflict with the modal preferences of the citizens he represents. According to the U.S. Census Bureau, 91 percent of Virginia’s commuters get to work by private car, while only 4.5 percent use transit, slightly less than the share of “commuters” who work at home. And yet this sad performance for transit occurs despite extraordinarily large subsidies for those who use transit. In the transit rich NOVA area, more than 85 percent of commuters don’t use transit, and in the Hampton Roads area and Richmond it is more than 95 percent.
I’ve liked most of what Bob McDonnell has done (or tried to do, in the case of privatizing the ABC business) for Virginia so far, but this thing has a smell about it. It smells fishy, and like “legacy” material for someone who, in my opinion, already has a good one.