- Published on Wednesday, 16 January 2013 00:05
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Several years ago the Virginia Department of Transportation (VDOT) warned that the time wasn’t far off when the cost of maintaining the Commonwealth’s existing road network would completely crowd out new construction. It sounded like a dire prediction and many called it alarmist. Unfortunately, it has turned out to be all too true and once again Virginia is facing a crisis in its transportation funding.
For the past several years debate in the General Assembly has focused on the gas tax. Virginia’s gasoline tax funds most of our transportation programs. There have been several proposals to increase the gas tax and to use the extra money to create a separate new construction fund. This has been popular with Democrats and some Republicans, but it’s never gotten off the ground. The strong GOP anti-tax philosophy, particularly prevalent with House Republicans, doesn’t make room for an increase in the gas tax. Even invoking Ronald Reagan’s long ago support for a gas tax increase to fund road building doesn’t move them. And so, the funding stalemate continues.
What many people forget, as they argue about roads, almost as if they were a luxury, is that a sound road network is a cornerstone to economic growth. One of the reasons Virginia enjoys such a healthy economy, and has so many businesses, within its borders, is because of its transportation network. Also, employers are more likely to locate in an area where mobility, for their workers, their customers and in terms of moving their goods, is easiest. Virginia’s growth rate is currently among the highest in the nation and our unemployment rate amongst the lowest in the nation. If we want to continue enjoying this kind of economic health we can’t afford to disinvest in our transportation network.
This is not a new debate. Even the notoriously budget conscious Harry Byrd, when he ran for Governor in the 1920’s, did so on a platform of “getting Virginia out of the mud.” Years later, Governor Jerry Baliles, closely tying economic growth to building our transportation infrastructure, convinced the legislature to make major investments in new roads. It was a tough sell, but our economic growth in the decades that followed proved him right.
Governor McDonnell, now in the last year of his term, has been hamstrung in his quest to become the next transportation governor. But biting good Democratic nails, and yes it does hurt, he deserves credit for trying. Unable to tap new revenue sources and he knows better than to even ask, he opted instead to fund new roads through extensive bond issues. This approach isn’t necessarily the Virginia Way since large scale borrowing tends to make both parties nervous, but it nonetheless provided an avenue for funding new construction. Now, the Governor is proposing a radical change to transportation funding.
McDonnell’s principle target is the gas tax. He wants to end, completely, the state’s gas tax. The current tax, at 17.4 cents per gallon is one of the lowest in the nation, and if Virginia drops the tax, it will be the first state in the nation to do so.
The plan is to look towards the state sales tax, with a less than 1% increase as a source of funding for future transportation projects. McDonnell’s administration estimates that with this modest sales tax increase will not only make up the lost gas tax receipts but provide an additional $600 million annually. It’s an appealing argument, and for the first time in years, it is a plan, proposed by a Republican, that is aimed at increasing funds for road transport and expanding the revenue base. The gas tax, at its current rate, isn’t growing, while in all likelihood, the sales tax revenue, over the long term, will. McDonnell’s plan also includes a rather questionable $100 tax on clean fuel vehicles. But aside from that it’s both a radical and at the same time surprisingly workable shift in the funding formula.
McDonnell, in his last year in office, is anxious to leave a legacy. That’s tough to do in Virginia where a Governor is limited to just one term. But, McDonnell’s plan, while not the optimal solution, is an approach to expanding transportation that if it’s given a fair hearing, just might work.