Virginia’s Transportation Problem

Virginia has a transportation problem. Traffic is badly clogged in both Northern Virginia and Hampton Roads and the primary funding mechanism in Virginia’s 2007 Transportation Bill was largely struck down by the Virginia Supreme Court in March. That was after the other funding mechanism in the bill, the abusive driver fees, had to be repealed because of voter backlash. Virginians have been complaining about transportation for years now and the General Assembly has completely failed to deal with the issue. As of now, not only does Virginia lack adequate capacity on its roadways, but it is facing a shortfall in funds for road maintenance.

But Virginia’s General Assembly is getting another chance to get transportation right. Governor Kaine has called for a June Special Session of the Assembly to deal with transportation. Everyone more or less agrees agrees what needs to be done. As a coalition of Virginia business groups said,

“We believe the Commonwealth’s transportation infrastructure is a critical component of its economic success and the quality of life of all Virginians. Additional investments of at least $1 billion annually must be made to sustain maintenance and construction costs,” the letter said. “The most appropriate solution is a package of revenue generators that are simple, sustainable, and sufficient and accrue from broad-based revenue options.”

The only question is how to raise the $1 billion a year Virginia needs.  Governor Kaine just proposed his plan to raised the needed money. He wants to increase the sales tax by 1 percent in Northern Virginia and Hampton Roads, raise the grantor’s tax, a tax on home sellers, from 10 cents per $100 of assessed value to 35 cents, increase the sales tax on cars by 1 percent and increase the annual car registration fee by $10.

So what is the Virginia GOP’s response? According to the Washington Post:

Del. David B. Albo, a Fairfax Republican involved in transportation negotiations, said Kaine’s plan had a “0.000 percent chance” of winning approval.

Many see Kaine’s tax proposal as a way of reaching out to Republicans in the House of Delegates. According to Jim Bacon, a conservative Virginia policy blogger,

Kaine appeared to adopt key elements of the plan — a motor vehicle sales tax, a vehicle registration fee and a grantor’s tax — because House Republicans embraced them last year when they crafted HB 3202, although not in precisely the same configuration. In his naivite, the governor no doubt assumed that if GOP legislators liked those levies last year, they would be OK with them this year. So, how did those charges become so unpalatable all of a sudden? It’s hard to avoid the suspicion that they are just opposed to anything that Kaine might propose?

Republicans aren’t the only ones who are down on Kaine’s plan. Liberals like Raising Kaine and Not Larry Sabato have blasted the plan, arguing that the sales tax increase is overly regressive and will hurt the working poor.

I largely agree that the sales tax isn’t the way to go. To begin with, it’s regressive. Sales taxes hit the poor the hardest and increase their tax burden as a proportion of their income the most.

Secondly, it has absolutely no connection to the people who will use the roads that are built with it. It will tax everyone at the same rate regardless of how much they use the roads or what choices they make. Jim Bacon is right in that “This highway funding mechanism will do nothing — repeat N-O-T-H-I-N-G — to encourage drivers to seek alternate modes of transportation or otherwise change the behavior that has created this crisis in the first place.”

Thirdly, the sales tax is only increased in Northern Virginia and Hampton Roads. Now, I know there is a somewhat compelling argument to be made that since NoVa and Hampton Roads are the localities that need transportation improvements the most they should pay for it. It’s a logic that is probably very persuasive to Delegates from the rest of Virginia. But that logic is wrong. Every year, NoVa and Hampton Roads pay far more into state coffers than they get back. Taxpayers in these two regions have subsidized the rest of the state for decades. It is time they finally got some help back from the rest of the state to pay for transportation improvements that will improve the economic climate in NoVa and Hampton Roads, which will in turn increase the amount of tax money they send down to Richmond to subsidize the rest of the state. It’s an everybody wins scenario.

Lastly, its already been rejected. In 2002 Northern Virginia and Hampton Roads had the opportunity to pass a referendum which would have increased their regional sales tax. The referendum failed miserably. Now Kaine is trying to bring back a solution that citizens rejected directly and put it through the General Assembly.

A gas tax increase would be a far better solution. As Lowell at Raising Kaine wrote:

Virginia’s gas tax is among the lowest in the nation and hasn’t been raised since 1986, which  means that inflation has seriously eroded its value.

Currently, the Virginia gas tax constitutes only about 5% of the total price at the pump, and that percentage is declining all the time.  Looked at the other way around, every 1-cent-per-gallon increase in the gas tax raises about $65 million per year. This means that to raise $860 million per year, the gas tax would have to be raised about 14 cents per gallon. This may sound like a lot, but to put it in perspective, the overall price of gasoline has risen more than $2.20 per gallon since May 2002 — about 16 times the 14 cents per gallon mentioned above.

A gas tax benefit would have other benefits too. It would reduce the demand for fuel slightly, thereby helping reduce greenhouse gas emissions. It would be paid directly by the people using the roads, making heavier users pay more and allowing people to save on the taxes my making different choice in how they get around. Senate Democrats are on board for a gas tax hike. They passed one last session and are willing to do it again. However, its the no tax GOP who is unwilling to even consider a gas tax hike.

One final criticism. Kaine’s plan doesn’t envision any way to prioritize what projects get funding, beyond repairs to existing roads come first. To quote Bacon yet again,

No objective methodology for setting priorities. Nothing in this bill requires the commonwealth to establish an objective methodology for prioritizing projects based on their effectiveness at mitigating traffic congestion. There is nothing to prevent the usual suspects with the most to gain from boring into the political system like beetles into tree bark, canoodling administrators, making donations to elected officials, attending obscure public hearings, and bird dogging projects through the bureaucratic maze.

There is at lest one real positive in the Kaine plan. The grantor’s tax increase would be dedicated to a Transportation Change Fund, which would “increase investment in transit, rail, and innovative solutions to reduce traffic congestion like teleworking and ridesharing.” That is a major improvement over the way things are done. That would put about $155 million annually into mass transit, which would help create alternatives to driving for Virginians.

Kaine is at least trying here. He’s been willing to anger his political base, including the blog that was created to elect him, in order to propose a plan he had reason to think would be palatable to GOP lawmakers. But the House Republicans are saying “no” once again. It is pretty sad to see. Kaine was elected on an unambiguous platform of transportation reform. He’s now in his third year as governor and has yet to get a long-term, workable plan passed. Every time he has tried he has run into the roadblock of House Republicans. Even when the State Senate was in Republican hands Kaine was able to work with them and come to agreements. Yet the only thing House Republicans have proposed thus far is what turned into the awful 2007 transportation compromise that has already been almost entirely struck down or repealed. And Republicans wonder why there are only a handful of them left in Northern Virginia.

I’ll leave the end of this post to Jim Bacon. Virginians should take Kaine’s imperfect plan as a jumping off point. He has moved the ball forward at least somewhat on transportation and hopefully it won’t all come to naught again. Bacon addresses his list to “no tax” Republicans. But it really goes for everyone. Here’s what we need.

(1) Create a mechanism for actually raising money. We can’t build a transportation system for the 21st century with fiscal tricks and legerdemain.

(2) Be sustainable over time, and they need to be structured so that legislators can’t lay their hands on the tax money for other purposes.

(3) Display a direct and transparent nexus between who pays and who benefits from transportation projects.

(4) Address the “demand” side of the transportation equation, in other words, incentivize people to seek alternative means of mobility and access.

(5) Incentivize citizens and developers to adopt more transportation-efficient human settlement patterns.

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