Posts about Bob McDonnell

New tax plan for Virginia: Governor Bob McDonnell proposes eliminating the state sales tax. He would make up the revenue by a 50% tax on hybrid or electric cars, organic produce, reusable grocery bags, and bicycle inner tube replacements. Observers now consider him a shoo-in for the 2016 GOP Presidential primary.

Congestion solved: The Texas Transportation Institute found that lost jobs from sequestration improved congestion. "Therefore, the logical policy for transportation must be further job loss," said Tim Lomax. Plus, Stockton, "foreclosure capital of the world," has the nation's lowest congestion, making it a clear model to emulate.

Where's the birth certificate?: Donald Trump is offering a reward for anyone who can prove DC Councilmember McDuffie isn't a "native Washingtonian." Stronghold resident McDuffie owns the house he was raised in and says he was born here, but no incontrovertible proof was immediately available after a 5-minute Google search.

Metro becoming more self-service: As part of its efforts to create a more "self-service" system in the Momentum plan, Metro will replaces all escalators with stairs and convert trains and buses to a Flintstone's-style power system.

Examiner will keep going: The Washington Examiner has reversed course and will continue its current publishing format. "Once we saw how upset our editorial style made David Alpert, we figured we were doing our job and had to continue," said editor Stefan Schmitt. The paper will, however, still fire Kytja Weir and Liz Essley, as both sometimes had positive things to say about transit.

Cheh apologizes: After weeks of speculation and inquiries from the local press, Mary Cheh relented and issued a letter of apology for her completely legal campaign fundraising activities. "DC residents have come to expect so much more of their elected officials," said DC voter Amy Zoneger.

Since Governor McDonnell unveiled his plan the day before session began, there have been plenty of twists and turns to the effort to pass the most significant transportation funding boost in the Commonwealth since 1986. Reflecting the deep disagreement over various proposals, the House and Senate each narrowly adopted a major package, with sharp differences between the two versions.

A conference committee met this week and hammered out the proposed deal that now must pass each chamber. The House and Senate could vote on it as early as today.

Where will the money come from?

The primary disagreement between the House and Senate has been over whether to raise revenues through the gas tax and other user fees or to take money from the general fund.

Gas tax: The governor's proposal and the House version of the transportation bill would have eliminated the current 17.5¢ per gallon state gasoline tax, which the Senate voted to raise it and index it for inflation. The conference committee version would eliminate the gas tax, and fill the resulting budget hole (over $4.5 billion in the next five years) by imposing a wholesale tax on gasoline and diesel and increasing the sales tax on vehicle purchases.

Eliminating the gas tax weakens the logical tie between transportation use and funding, and Virginians who use roads less will subsidize those who use the roads more. The compromise does retain elements of a user-pays approach through the wholesale fuels tax and sales tax on vehicle purchases, although it sends a weaker price signal.

A better alternative would have been to increase and/or index the gas tax, or apply the sales tax to gasoline purchases, as the Senate version did. These measures would properly tie fees and taxes to use of public infrastructure and allow revenues to grow with the price of gas. The governor is correct that the gas tax is a declining revenue source, but the main reason it is declining is that it doesn't rise with inflation and hasn't been increased since 1986.

General fund: If much of the proposed funding deal only brings us back to where we are today, where do the additional funds come from? The deal would divert a portion of the existing sales tax, increase the sales tax, and devote possible future online sales tax revenue to transportation.

Sales tax revenues typically go to the general fund. Although transportation is a core function of government, there are few or no other state dedicated revenue sources for education, health care, public safety, and conservation. The deal would divert an estimated $3 billion over the next 5 years that could have gone to other core services, at a time when Virginia ranks 35th in state investment in higher education, 38th in public K-12, and 46th in Medicaid spending.

Clean vehicle fees: The compromise also would impose a $100 fee on alternative fuel vehicles, as the governor had proposed. This "hybrid car tax" is particularly hard to justify when gas taxes are being cut, and it would create a disincentive for purchasing vehicles that help achieve critical goals such as reducing pollution and conserving energy.

Regional funding: The proposed deal also includes regional funding packages of approximately $300-350 million annually for Northern Virginia and $175-200 million annually for Hampton Roads. Funding is likely to come through local sales tax revenues but many details remain unclear.

Where will the money go?

Amid all the debate, a central issue has largely been ignored: how will the state spend these additional funds?

Highway construction: The General Assembly authorized almost $4 billion in additional transportation funds just 2 years ago. The administration has earmarked almost all of these funds for roads, and has spent much of the money on destructive projects that do not address pressing transportation needs.

In the proposed deal, although there is some good news for rail and transit, most of the funding again will go to road-building—at least $2.6 billion over the next 5 years alone. The ultimate impact of this deal depends on how wisely this money is spent.

Passenger rail funding: Passenger rail is a transportation success story, with record ridership last year. Without dedicated, sustainable funding, however, Virginia could lose its intercity services due to federal funding changes. A bright spot of the proposed deal is that it would provide roughly $50 million annually to preserve and expand passenger rail.

Transit funding and Dulles Rail: The deal would provide additional funding to transit as well. In addition, $300 million would go to Phase 2 of the Dulles Metrorail (Silver Line) project, which would help address the relatively small contribution Virginia has made to a project that could significantly enhance multimodal transportation in one of the nation's leading economic and employment corridors.

However, going forward, it appears transit will only receive about 1/6 of the funding devoted to roads, despite transit's benefits in reducing congestion, energy consumption, and pollution while providing better services for elderly, disabled, and low-income citizens.

The compromise before the General Assembly offers some meaningful benefits, but it has numerous shortcomings and does nothing to advance overdue policy reforms to help ensure that our transportation dollars are used wisely.

Virginia needs a more balanced, efficient, and cleaner transportation system. Time will tell how far this deal gets us.

Without critical amendments, the bill that ultimately emerges from the conference committee is unlikely to be a good deal for Northern Virginia or other metropolitan areas of the state. The McDonnell administration has squandered much of the $3 billion in borrowed funds the legislature authorized in 2011. The governor spent it on highway projects in rural areas, while neglecting funding for Dulles Rail, Tysons Corner, and Hampton Roads' top priorities—their bridge-tunnel crossings.

Prominent among the McDonnell Administration's wasteful projects have been Route 460, the Coalfields Expressway, Charlottesville Bypass and the Outer Beltway. If Virginia continues to pursue these projects it could waste a combined $5.5 billion, but if the legislature makes review and reevaluation of these projects a condition of new funding, there's still a chance to redeploy the funds to real transportation needs.

Eliminating all taxes on gasoline, the centerpiece of McDonnell's bill, could make traffic in our metro areas worse, reducing transit use and increasing driving. It cuts the sensible tie between transportation use and funding, forcing Virginians who drive less to subsidize those who drive more, hurting seniors and low-income people, carpoolers, transit users, those who live closer to their jobs.

Switching to the sales tax could also make Northern Virginia and Hampton Roads further subsidize long-distance driving throughout the state. It would also divert state general funds essential for education, health care, public safety and conservation.

Without amendments to ensure the Virginia Department of Transportation sets better priorities, there is no guarantee in these bills to meet the needs of the metro areas or the state's growing transit needs. There is no guarantee these bills will restore funding for local roads; for the past 2 years, VDOT has zeroed out funding for secondary roads in localities despite record transportation spending.

Fortunately, nearly all of the Democrats and a number of Republicans believe that eliminating all taxes on gasoline is a bad idea. Opposition to the idea also extends from the smart growth community to the Wall Street Journal.

On January 15, a Wall Street Journal editorial argued that McDonnell's scheme "violates the user-pays principle" of sound public finance:

[It] would mean that a Virginia resident who may not even own a car has to pay more for road repairs when he buys a cell phone, computer or Big Mac. Motorists who benefit most from the roads would pay almost nothing directly to use them... [F]unding transportation through a sales tax "makes roads free," at least in terms of direct payments, and thus will lead to more driving and more gridlock—the opposite of what McDonnell says he wants to achieve.

Let's hope the legislature rejects the Governor's proposal to eliminate the gas tax. We hope the legislature will vote for the following amendments:

• Include mandatory reevaluation of VDOT's megaprojects. We could save much of the $5.5 billion to use to address our real transportation needs.
  
• Reform the Public Private Transportation Act to ensure greater public oversight.
  
• Keep the gas tax. It is an appropriate user fee tying payments to use of Virginia's roads, and it ensures out of state drivers also contribute. Apply the sales tax to gas at the wholesale level and/or index the gas tax to inflation.
  
• Withdraw any increase in the statewide sales tax. A statewide increase will mean the state (VDOT) will just siphon the money from Northern Virginia and Hampton Roads.
  
• Allow a local sales tax for transportation in Northern Virginia that Northern Virginia controls and the same for Hampton Roads. Let our two most congested regions decide what to fix and build.
  
• Require 25% of the new funding to go to transit, both urban and rural.
  
• Require 15% of the new funding to go to local roads. VDOT has zeroed out money for local roads in order to build unnecessary highways in lightly trafficked areas. If we don't specify this, then we still won't get local street funds including pedestrian and bicycle facilities.
  
• Keep the $15 vehicle registration fee for intercity passenger rail and public transit funding.

Without these amendments, the legislature should reject the Governor's bills and new funding for the state transportation agencies.

Here's a more detailed breakdown of where we find nearly $5.5 billion in waste:

• Route 460: This $1.4 billion proposed new highway between Suffolk and Petersburg costs over $1.1 billion of taxpayer funds, plus tolls. The current Route 460 carries just 11,000 trips per day.
  
• Coalfields Expressway: A $2.8 billion new highway is in the least-trafficked area of the state.
  
• Charlottesville Bypass: This $243 million project doesn't solve congestion and saves minimal travel time for commuters.
  
• North-South Corridor: This estimated $1 billion piece of an Outer Beltway around DC doesn't address commuter needs and would add development and traffic in areas without infrastructure.

Any transportation plan, the House Democrats say, should:

1. Generate at least $1 billion in new money per year.
   
2. Rely on a realistic, dependable source of revenue, based on Virginia's actions, not potential federal changes that may or may not happen.
   
3. Not transfer monies that otherwise fund schools, health care, and public safety.
   
4. Fund not just maintenance, but construction, including rail and transit.
   
5. Provide additional revenue both immediately and into the future.
   
6. Give authority to Northern Virginia and Hampton Roads to raise additional funds for their own transportation needs.

These are solid principles, and they offer a stark contrast to McDonnell's plan. The governor's proposal would raise far less, and relies on money from the general fund, as well as from a federal Internet sales tax that has not passed Congress.

The 9 specific bills that Democrats cited as true to those core principles are HB1677, HB1878, HB2063, HB2179, HB2253, HB2333, HB1450, HB1472, and HB1633. The House could pick one of those 9 to push, or it could try to amend one of them to combine the best provisions from all.

Republicans control the Virginia House, and the Senate is evenly split, so any plan will need GOP support to pass.

Although it's true that some questionable highway projects would surely be built if Virginia ultimately adopts this transportation funding plan, this also offers far more support for transit and urban needs than the governor's proposal, and it doesn't include as many harmful, regressive policies. This is a far more reasonable outline.

Cross-posted at BeyondDC.

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Even a few Republicans are maybe interested in finding a tortured path around their promises not to ever raise taxes, like Delegate Dave Albo's not-entirely-insane idea to raise the gas tax but give Virginia residents an income tax break to offset it.

Jim Titus suggested Virginia consider a variant of a proposal Maryland debated last year, to extend some or all of the sales tax to gasoline instead of raising the gas tax. Gas is exempt from the sales tax, which means that while the gas tax raises some revenue, the state's general fund loses the revenue that would have come from taxing the sale of that gas just like it taxes housewares or computers or anything else.

McDonnell's plan takes the opposite tack. He would eliminate the gas tax entirely, but also keep exempting gas from the sales tax. He said, "That's right, no more gas tax at the pump. No sales tax at the pump either."

The state would then collect no money at all on people buying gas, even though it collects money from people buying most anything else. It even has a sales tax on groceries, unlike DC and Maryland. This means you would pay something for buying grapes and ginger but not gasoline.

But wait, isn't McDonnell's plan a transportation funding plan? McDonnell would then raise the sales tax by 0.8 cents on the dollar. This would bring in $183 million a year by 2018, but less now. Meanwhile, many people say the state needs about $1 billion a year for transportation. Fairfax County alone says they need $300 million a year. The Washington Post calls the revenue from this plan "paltry."

Governor McDonnell proposes dedicating the first $300 million the sales tax raises to the Silver Line. He's certainly doing this to try to win the votes of northern Virginia legislators. But the state should already have been providing at least $500 million or more for this project years ago. McDonnell, instead, withheld the money and now is trying to use it as a bargaining chip.

This is insane

This is not just a silly proposal or, like most from the tax-phobic Virginia Republicans, ineffective. It's actually deeply harmful.

While it raises a small amount of revenue, it more significantly shifts the burden of paying for transportation away from people using transportation and onto everyone. Don't have a car? Except for the car tax, you will still pay for Virginia roads as much as everyone else. Live close to your job? Too bad, you pay the same as someone with a 50-mile commute.

It's notable that McDonnell didn't propose making transit free. If we're talking radical ideas, how about that? It's a close equivalent to having no gas tax, as road users pay some (but not all) the cost of road maintenance through the gas tax (and Virginia covers other costs with revenue from other sources), and transit users pay some (but not all) the cost of transit through fares.

Virginia's gas taxes also have a regional impact. Some people already prefer to buy gasoline in Virginia versus DC or Maryland because it's cheaper. If Virginia goes for McDonnell's idea, the gap between Virginia gas prices and DC and Maryland gas prices would widen. More people would buy gas in Virginia. Some would even drive out of their way to go to a gas station in Virginia, making traffic even worse.

But for all that, the state wouldn't even benefit one bit. When Virginia steals companies away from DC and Maryland with corporate tax breaks, it's a net loss for the whole region, but at least from Virginia's point of view there's an upside in that they get other revenue. This doesn't have an upside, except possibly a very tenuous general attraction for a few people to live in Virginia because of the gas taxes; but if any of those people exist, they drive a lot, meaning they'll worsen traffic for everyone else.

There's more

Besides the sales tax, there are a few other elements to the proposal.

It would raise vehicle registration fees by $15 per year and allocate 50% to transit and 50% to intercity rail, raising about $109 million per year. The latter portion would fund commitments the state has already made for expanded Virginia Amtrak service.

Another element is to charge alternative fuel vehicles $100 per year. McDonnell's argument is that since these use less gas, they should contribute to the costs of road maintenance. But it's particularly ironic that he's looking to have these vehicles pay for road maintenance while exempting regular gas-guzzlers.

Finally, McDonnell is hoping Congress will pass the Marketplace Equity Act, which lets states charge sales taxes on online purchases. But it's very dubious to count on this bill, as observers think it has only a small chance of passing. Plus, absent the Governor's plan, this bill could give Virginia money it also needs for education, public safety, and other priorities.

McDonnell has somehow managed to come up with one of the worst transportation funding plans conceivable. It's even worse than doing nothing, and doing nothing should not be an option. The legislature needs to laugh him out of the room and either come up with something better, or hope that the next governor has better sense.