Road Plan A Bad Idea
Users Should Pay Roads
Posted: January 29, 2013
At the beginning of his term, Gov. Bob McDonnell set a straightforward agenda: Fix the budgetary mess left him by his predecessor, nurture an economic atmosphere conducive to creating jobs, and address Virginia’s transportation woes.
We commend the governor for his laser-like focus, particularly on those first two items. Now, in the last year of his tenure, he has turned to transportation, and to a plan he views as legacy-building. Let it not be said that his $3.1 billion proposal for roads and public transit is not bold and serious. It is. And it is praiseworthy.
We just happen to disagree — and disagree forcefully — with the funding mechanisms of this initiative.
Here’s what Mr. McDonnell, in hopes of crafting a sustainable funding solution for road-building, wishes to do:
■ Eliminate the 17.5-cent motor fuels tax. The governor considers this funding source “stagnant,” due to inflation, heightened fuel-mileage standards, and the introduction of hybrid and alternative-fuel vehicles. Those are valid points.
■ Replace the gas tax with an .8-cent increase in the state sales tax, thereby elevating this levy to 5.8 percent, or 5.8 cents on the dollar. All proceeds from this increase will go to transportation. The state already dedicates a half-cent of the existing sales tax to road maintenance and construction.
■ Dedicate an additional .25 cent of the existing sales tax revenue to transportation, an increase to be phased in
over five years.
■ Increase the motor-vehicle registration fee by $15, with all proceeds going to passenger rail and transit.
Impose a $100 fee on alternative-fuel vehicles.
■ And, finally, start taxing all out-of-state Internet sales. The realization of such a revenue windfall is contingent on Congress passing a law allowing the states to do so. A scheduled 3.675 cents of this 5.8 percent tax — or roughly $1.02 billion — would go into the Transportation Trust Fund.
What’s not to like about this plan? A goodly amount.
For starters, such funding proposals veer sharply from long-held state principles as to how road-building and other transportation needs should be financed — principles best summarized by this simple notion: “The user pays.” That’s sound policy in our book.
Under the McDonnell plan, not only will millions of out-of-state drivers and truckers — whose use of state roads was pegged at 30 percent by state Sen. Don McEachin, D-Henrico, in a recent Richmond Times-Dispatch op-ed — be removed from the user-fee equation, but state residents who neither drive nor own a car will be asked to pick up a bigger portion of the tab for road-building. And to think, the gas tax, however “stagnant” it may have become, will be replaced by an increase in a tax subject to the volatile vagaries of the economy.
What’s more, in terms of sound tax policy, by increasing the sales levy and also taxing Internet sales at 5.8 percent, Mr. McDonnell not only raises taxes but also broadens the tax base. That’s almost Obama-esque in impulse.
By contrast, an alternative proposal advanced by state Sen. John Watkins, R-Powhatan, would add a “rack tax” to the cost of gasoline but, at the same time, provide offsetting relief by lowering the income tax rate on Virginians. And Mr. Watkins would keep the gas tax on road-users.
Again, we appreciate the vibrant dialogue and strong desire on the part of the administration and legislature to address these needs. If Virginia is to maintain its current standing as an exemplary place to do business, it must attend to these needs — and promptly.
We believe Mr. McDonnell and legislative leaders in both parties universally agree that something must be done. But is this the way to do it? We don’t think so.
Users should pay for roads, just as they have for the past 80 years.
We commend the governor for his laser-like focus, particularly on those first two items. Now, in the last year of his tenure, he has turned to transportation, and to a plan he views as legacy-building. Let it not be said that his $3.1 billion proposal for roads and public transit is not bold and serious. It is. And it is praiseworthy.
We just happen to disagree — and disagree forcefully — with the funding mechanisms of this initiative.
Here’s what Mr. McDonnell, in hopes of crafting a sustainable funding solution for road-building, wishes to do:
■ Eliminate the 17.5-cent motor fuels tax. The governor considers this funding source “stagnant,” due to inflation, heightened fuel-mileage standards, and the introduction of hybrid and alternative-fuel vehicles. Those are valid points.
■ Replace the gas tax with an .8-cent increase in the state sales tax, thereby elevating this levy to 5.8 percent, or 5.8 cents on the dollar. All proceeds from this increase will go to transportation. The state already dedicates a half-cent of the existing sales tax to road maintenance and construction.
■ Dedicate an additional .25 cent of the existing sales tax revenue to transportation, an increase to be phased in
over five years.
■ Increase the motor-vehicle registration fee by $15, with all proceeds going to passenger rail and transit.
Impose a $100 fee on alternative-fuel vehicles.
■ And, finally, start taxing all out-of-state Internet sales. The realization of such a revenue windfall is contingent on Congress passing a law allowing the states to do so. A scheduled 3.675 cents of this 5.8 percent tax — or roughly $1.02 billion — would go into the Transportation Trust Fund.
What’s not to like about this plan? A goodly amount.
For starters, such funding proposals veer sharply from long-held state principles as to how road-building and other transportation needs should be financed — principles best summarized by this simple notion: “The user pays.” That’s sound policy in our book.
Under the McDonnell plan, not only will millions of out-of-state drivers and truckers — whose use of state roads was pegged at 30 percent by state Sen. Don McEachin, D-Henrico, in a recent Richmond Times-Dispatch op-ed — be removed from the user-fee equation, but state residents who neither drive nor own a car will be asked to pick up a bigger portion of the tab for road-building. And to think, the gas tax, however “stagnant” it may have become, will be replaced by an increase in a tax subject to the volatile vagaries of the economy.
What’s more, in terms of sound tax policy, by increasing the sales levy and also taxing Internet sales at 5.8 percent, Mr. McDonnell not only raises taxes but also broadens the tax base. That’s almost Obama-esque in impulse.
By contrast, an alternative proposal advanced by state Sen. John Watkins, R-Powhatan, would add a “rack tax” to the cost of gasoline but, at the same time, provide offsetting relief by lowering the income tax rate on Virginians. And Mr. Watkins would keep the gas tax on road-users.
Again, we appreciate the vibrant dialogue and strong desire on the part of the administration and legislature to address these needs. If Virginia is to maintain its current standing as an exemplary place to do business, it must attend to these needs — and promptly.
We believe Mr. McDonnell and legislative leaders in both parties universally agree that something must be done. But is this the way to do it? We don’t think so.
Users should pay for roads, just as they have for the past 80 years.