Transportation Financing - Greater Greater Washington

Pay your way

Fri, 07 Jun 2013 08:30:00 EDT

Fairfax and Loudoun Counties agreed to pay for some Silver Line expenses to ease tolls on the Dulles Toll Road, but now Fairfax wants to get state money to pay their share, and Loudoun County officials are not happy about it. (Examiner)

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LeMunyon: No money for trails

Wed, 29 May 2013 08:57:00 EDT

by David Alpert

Delegate Jim LeMunyon (R-VA) opposes using any money from the new transportation bill to pay for the W&OD trail. (FABB)

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Columbia Pike streetcar may still get federal funding

Wed, 24 Apr 2013 10:28:00 EDT

by Canaan Merchant

Arlington's plans to use federal funding for the Columbia Pike streetcar hit a snag recently, when the project was not accepted into the FTA's Small Starts grant program. Streetcar opponents took this news as a sign that the project is in trouble, but it's not.

Photo by cliff1066™ on Flickr.

The FTA isn't turning down the project permanently. They are requesting changes and suggesting Arlington reapply later this year. Federal rules changed with last year's MAP-21 transportation bill, and so Arlington has to apply under the larger New Starts program instead of Small Starts.

The delay is good, anyway. Another new rule is that once a project is accepted into New Starts, construction has to begin within 2 years. Even if it had won funding this year, Arlington is 3 years away from construction, so next year is the right time to apply in any case.

County Board chairman Walter Tejada confirmed at a board meeting last night that county leaders are still committed to funding and building the streetcar.

It's not really $410 million

Some reports erroneously claim the that FTA turned down the streetcar because it thinks the project will cost $410 million. That's not what happened, explained Arlington transit bureau chief Steven DelGiudice.

The FTA's report on Columbia Pike does cite a $410 million figure, but that isn't for the cost of the streetcar. Instead, it's an insurance figure that shows the worst-case scenario, if everything imaginable were to go wrong. It shows the streetcar cost, plus the cost of other tangential projects nearby, plus a $70 million contingency figure in case of overruns.

What sort of tangential projects? Things like 12th Street in Pentagon City. 12th Street doesn't exist right now. A private developer will build it as part of a skyscraper development, regardless of whether or not there is ever a streetcar.

Once 12th Street is there, it will be a convenient place to put the streetcar. But since Arlington plans to run the streetcar down a street that isn't built yet, FTA's rules say the total has to include all of the street's costs—even though all of the money comes from a developer. FTA assumes that if the development is delayed, the county might have to build the road itself.

The total cost also has to show an insurance contingency for those tangential projects, like 12th Street. Double whammy. FTA also recommended that the county increase its contingency fund from 18 to 35%.

There are a few new costs the FTA identified that will probably increase the budget. They anticipate very heavy ridership on the route, and recommended that the county look at a larger vehicle to meet these capacity demands.

The result is a slightly higher real cost figure, and another paper figure that's way bigger than what the project will actually cost to build. FTA knows it won't really be $410 million. In fact, their cost range says $255 million is just as likely, with the probable cost somewhere in between.

Because the rules of Small Starts require including everything and cap projects at $250 million, the streetcar project has to go under a different program. The Small Starts program is for small, low-cost, particularly easy-to-accomplish projects. Most new rail lines, and many large BRT lines, go through the New Starts program instead.

Since the New Starts program is larger, that also means that the project can get more total dollars of federal funding. The statute allows FTA to provide up to 80% of the funds for a project, but because there are more projects applying than available funding, the federal share is more likely 50%.

The chances of getting New Starts funding are good

According DelGiudice, the FTA's report is very positive for the streetcar and affirms the county's projections.

FTA believes the ridership will be strong, and even suggested Arlington increase the capacity of the streetcar with more cars and a bigger railyard. That shows FTA believes this is a good place for rail transit.

Despite not being accepted into the Small Starts program this year, FTA's report on Columbia Pike is actually very good news and shows the FTA thinks it's a strong project. Arlington can reapply under the larger program, and since they're 3 years away from construction anyway, doing so is not even a delay.

The decision ultimately lies with the County Board to choose whether to apply under New Starts, but if they do, the streetcar project stands a good chance of winning approval next year.

37 comments

Cuccinelli won't repeal VA transpo funding

Thu, 18 Apr 2013 08:49:00 EDT

by Peter James

The presumptive Republican gubernatorial candidate, who opposed the recent $1.4 billion transportation package, says he won't attempt to repeal it if elected. (Post)

Comment

No fed dollars for Pike streetcar

Mon, 15 Apr 2013 08:33:00 EDT

by Steven Yates

The Columbia Pike streetcar will not get federal funding, at least from the latest round of Small Starts, but officials plan to proceed with the project and still hope to get federal funding later. (Post)

Comment

VA funds transportation

Thu, 04 Apr 2013 09:06:00 EDT

by David Alpert

The Virginia transportation funding bill got final approval after a few amendments by Governor McDonnell. Instead of taxing Northern Virginia and Hampton Roads specifically, it uses a criteria that only those two meet. (Examiner)

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Maryland, Virginia, fund these projects!

Wed, 03 Apr 2013 13:57:00 EDT

by Dan Malouff

Maryland and Virginia will both enact major new transportation funding bills this year. Neither bill says exactly which projects will be funded, but here are the top 10 projects in Maryland and Virginia that most deserve to get some of the funds.

Tysons grid of streets, no. 2. Image from Fairfax County.

1. 8-car Metro trains: Metrorail is near capacity, especially in Virginia. More Metro railcars and the infrastructure they need (like power systems and yard space) would mean more 8-car trains on the Orange, Blue, and Silver Lines.

2. Tysons grid of streets: Tysons Corner has more office space than downtown Baltimore and Richmond put together. Converting it to a functional urban place is a huge priority.

3. Purple Line: Bethesda, Silver Spring, Langley Park, College Park, New Carrollton. That's a serious string of transit-friendly pearls. The Purple Line will be one of America's best light rail lines on the day it opens.

4. Baltimore Red Line: Baltimore has a subway line and a light rail line, but they don't work together very well as a system. The Red Line will greatly improve the reach of Baltimore's rail system.

5. Silver Line Phase 2: The Silver Line extension from Reston to Dulles Airport and Loudoun County is one of the few projects that was earmarked in Virginia's bill, to the tune of $300 million.

6. Arlington streetcars: The Columbia Pike and Crystal City streetcars both have funding plans already, but could potentially be accelerated.

7. Route 7 transit. Leesburg Pike is the next Rosslyn-Ballston corridor waiting to happen. Virginia is just beginning to study either a light rail or BRT line along it.

8. Corridor Cities Transitway: Gaithersburg has been waiting decades for a quality transit line to build around. BRT will finally connect the many New Urbanist communities there, which are internally walkable but rely on cars for long-range connections.

Corridor Cities Transitway, no. 8. Image from Maryland MTA.

9. MARC enhancements: MARC is a decent commuter rail, but it could be so much more. Some day it could be more like New York's Metro North or Philadelphia's SEPTA regional rail, with hourly trains all day long, even on weekends.

10. Alexandria BRT network: This will make nearly all of Alexandria accessible via high-quality transit.

Honorable mentions: Montgomery County BRT network, Potomac Yard Metro station, Virginia Beach light rail, Southern Maryland light rail, and VRE platform extensions.

Cross-posted at BeyondDC.

51 comments

MD Senate funds transportation

Sat, 30 Mar 2013 09:55:00 EDT

by David Alpert

The transportation funding bill passed the Maryland Senate and now goes to Governor O'Malley for certain signature. The Purple Line and various road expansions will get needed state funding. (Post)

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Transportation money and lockbox

Fri, 29 Mar 2013 08:48:00 EDT

by David Alpert

A Maryland Senate committee approved the transportation funding bill and a "lockbox" that prohibits using transportation money for other purposes. (CBS) ... Ben Ross argued against the lockbox idea in 2011.

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Hybrid owners get a break

Wed, 27 Mar 2013 08:34:00 EDT

by David Alpert

Governor McDonnell has proposed cutting the hybrid tax in the new transportation bill from $100 to $64, and expanding the regional taxing provisions to try to address arguments they might be unconstitutional. (WAMU)

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Hope for Maryland transportation

Tue, 19 Mar 2013 08:56:00 EDT

by David Alpert

A Maryland House committee approved a transportation funding bill that slightly modifies Governor O'Malley's proposal: instead of lowering the gas tax and adding a larger gas sales tax, it will leave the gas tax alone and just add a small gas sales tax. (CBS)

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O'Malley unveils transportation funding plan

Tue, 05 Mar 2013 09:22:00 EDT

by Dan Malouff

Yesterday, Maryland governor Martin O'Malley released his proposal to restructure Maryland's gas taxes to raise $3.4 billion for transportation over 5 years. The plan is superficially similar to the recent Virginia transportation funding bill, but improves upon it in several ways.

The Purple Line won't happen without more money. Image from Maryland MTA.

Maryland needs new revenue this year. Without it, the Purple Line, the Corridor Cities Transitway, and the Baltimore Red Line could all stop moving forward.

The key to the bill is a new 2% wholesale tax on gasoline. Wholesale taxes differ from normal gas taxes in that the gas distributor pays them rather than the consumer. The distributor then usually passes the tax along to consumers via higher prices.

The plan partially offsets this wholesale tax by reducing the normal gas tax, from 23.5¢ per gallon to 18.5¢ per gallon. But the plan would also index the new lower gas tax to inflation, so it would increase slightly each year.

Taken together, overall tax revenue from gas would go up by about 2¢ per gallon as soon as the bill takes effect. In 2014 the 2% wholesale tax will increase to 4%, increasing gas tax revenue by another 9¢

Maryland's bill versus Virginia's bill

Both bills reduce the normal gas tax but add new wholesale gas taxes. But while Virginia plans to reduce its total gas tax and subsidize highway building with revenue from other sources, Maryland's proposal sticks to the principle of transportation user fees.

Unlike Virginia's bill, Maryland's does not include new fees on hybrid car owners, increases to the sales tax, nor any taxes on land or hotel visits.

Like Virginia's bill, Maryland's specifies that if Congress allows states to raise internet sales taxes, Maryland will do so, and will allocate some of it to transportation. If Congress doesn't allow an internet sales tax by 2015 then Maryland's wholesale gas tax will increase from 4% to 6%.

One thing Maryland's proposed bill does that Virginia's does not is to index transit fares on MTA buses and trains to inflation. That will put more burden on transit riders, but will also provide MTA with a more predictable budget.

Since Maryland cannot impose rules on WMATA without agreement from DC and Virginia, WMATA fares will not be indexed to inflation.

Smart Growth advocates are generally more supportive of O'Malley's proposal than the Virginia bill. Montgomery County councilmember Hans Riemer says the bill "appears to be a very strong plan and just what Maryland needs to get big infrastructure projects going."

The bill will undoubtedly face stiff opposition from Maryland Republicans, so its passage is no sure thing. But O'Malley's proposal is co-sponsored by Senate President Mike Miller and House Speaker Michael Busch, so it is clearly a serious initiative with a real chance of becoming law.

Cross-posted at BeyondDC.

52 comments

Transportation bill constitutional?

Fri, 01 Mar 2013 08:21:00 EDT

by Steven Yates

Under the Virginia Constitution, all taxes levied must be equal in all areas, so could that mean the recently passed Virginia transportation bill is unconstitutional? (Post, caps fan, JimT)

Comment

Follow the money in Virginia's transportation bill (Feb 25, 2013)
It's "Crossover Day" in the Virginia legislature (Feb 10, 2009)
Is there a tea party urbanism? (Feb 9, 2011)
Moran criticizes McDonnell transportation plan (Jan 22, 2011)
Anti-livability bill passes Virginia House committee (Jan 27, 2011)

Get rid of the hybrid tax

Tue, 26 Feb 2013 08:27:00 EDT

by David Alpert

Scott Surovell (D-Fairfax) and Adam Ebbin (D-Alexandria) created an online petition to ask Governor McDonnell to line-item veto the $100 hybrid fee in the transportation bill. Dave Albo (R-Prince William) wants to keep it. (Post)

Comment

Follow the money in Virginia's transportation bill (Feb 25, 2013)
Virginia Senate kills bad anti-livability, WMATA board bills (Feb 22, 2011)
"My way or the highway" bill awaits VA governor's decision (Apr 4, 2012)
Good environmental bills die, bad transportation bills wounded in Virginia House (Jan 31, 2011)
Virginians: Ask your reps to oppose bad highway bills (Jan 20, 2011)

And...

Tue, 26 Feb 2013 08:27:00 EDT

by David Alpert

Now that Virginia funded transportation, will Maryland follow (but with a better plan)? (Examiner) ... Crystal City will get new apartments and become more residential. (ArlNow) ... There are fewer surface parking lots for Nats games this year. (JDLand)

Comment

Then and Now: Crystal City (Jan 22, 2011)
Crystal City plan makes BRAC lemons into lemonade (Sep 16, 2010)
Full steam ahead for suburban skyscrapers (Sep 13, 2012)
Virginia Republican pursuing vendetta against Arlington for not wanting to be a "giant interchange" (Jan 25, 2011)
Video shows plans for Crystal City redevelopment (Jul 25, 2011)

Follow the money in Virginia's transportation bill

Mon, 25 Feb 2013 09:48:00 EDT

by Stewart Schwartz

Virginia's complex transportation funding bill, HB2313, is headed to Governor McDonnell for his signature and potential amendments. The bill is a prime example of political sausage, seeking to satisfy Republican and Democrat, urban and rural, transit and road constituencies.

Photo by jimmywayne on Flickr.

It also represents poor public policy by undermining the "user pays" principle, failing to reform VDOT spending, allocating far too little to transit in an urbanizing state, and off-loading responsibility for local roads to Northern Virginia and Hampton Roads.

Some political observers argue that the only way Northern Virginia and Hampton Roads could win rural legislators' support for new revenues would be to place the burden on themselves. And they have, by increasing local sales taxes, recordation fees and transient occupancy (hotel) tax, and with a higher state sales tax, which derives heavily from the two regions.

Virginia's smart growth and conservation community expressed concerns with the bill on Saturday.

While Northern Virginia and Hampton Roads will able to raise (tax themselves), keep, and allocate new transportation revenue, VDOT escapes responsibility for meeting the needs of the two most economically important parts of the Commonwealth. The bill frees VDOT to take more of the statewide sales tax revenues for highway construction outside the two regions.

Now that the bill has passed, and presuming the Governor signs it, it will be incumbent upon legislators, local elected officials and the public to watch-dog how the money is spent, starting with the next update of the state's 6-year transportation plan, due in June. Setting the right priorities with the local money from and for Northern Virginia and Hampton Roads will be equally important.

Who voted for and against?

The 25 to 15 vote in the Senate included 17 Democrats and 8 Republicans voting yes, and 3 Democrats and 12 Republicans voting no. Northern Virginia yes votes were Senators George Barker, Charles Colgan Sr., Barbara Favola, Mark Herring, Janett Howell, Dave Marsden, Toddy Puller and Richard Saslaw, all Democrats. No votes were Democratic Senators Adam Ebbin and Chap Peterson, and Republican Senators Richard Black and Jill Holtzman Vogel.

The 60 to 40 vote in the House included 25 Democrats and 35 Republicans voting yes, and 4 Democrats and 36 Republicans voting no. Northern Virginia yes votes were Democratic Delegates Robert Brink, David Bulova, Eileen Filler-Corn, Charniele Herring, Patrick Hope, Mark Keam, Kaye Kory, Robert Krupicka, Alfonso Lopez, Kenneth Plum, James Scott, Mark Sickles, Luke Torian and Vivian Watts; and Republican Delegates David Albo, Mark Dudenhefer, Thomas Greason, James LeMunyon, Joseph May, Randall Minchew, and Thomas Rust.

Northern Virginia no votes came from Democratic Delegate Scott Surovell and Republicans Richard Anderson, Barbara Comstock, Timothy Hugo, Scott Lingamfelter, Robert Marshall, Jackson Miller, and David Ramadan.

The complete bill history can be found here.

Follow the money

The best source for tracking the new taxes and the funding allocations is the HB2313 Transportation Conference Report, but even this requires interpretation.

While the bill no longer eliminates all taxes on gasoline, it still reduces what road users will pay in daily operating costs. It eliminates the 17.5¢ retail gas tax and shifts to a wholesale sales tax on gas. This reduces user fees in 2014 by nearly one-third, and by 20% in 2018 assuming the receipts increase because of a rise in gas prices.

The bill makes up for reducing gas taxes primarily by increasing the sales tax on new car purchases, charging a $100 fee on alternative fuel vehicles like hybrids, and tapping statewide sales taxes on goods and services (but not food).

Day-to-day vehicle user costs will decline, and all taxpayers will pay more even if they drive little or not at all. Meanwhile, transit fares are likely to continue to climb in the absence of adequate state support for transit maintenance and operating costs.

VDOT is free to continue wasting money on unnecessary highway projects

The statewide portion of the bill is truly a highway bill: it directs $538 million (annually by 2018) to the highway maintenance accounts, but this will effectively free up an equal amount in highway construction funds, allowing the current administration to continue a pattern of funding rural highways with little traffic demand.

Just last week, VDOT announced it would allocate another $869 million in federal Garvee bonds to Route 460 and the Coalfields Expressway, two of the most wasteful, unnecessary projects in the history of Virginia. Four questionable projects—Route 460 ($1.4 billion), Coalfields Expressway ($2.8 billion), Charlottesville Bypass ($240 million), and the Outer Beltway in Northern Virginia (estimated $1 billion)—total a potential $5.5 billion in misallocated spending.

Many expect that Secretary Connnaughton intends to divert a substantial portion of the new statewide money to the controversial and sprawl-inducing Outer Beltway, rather than to the critical commuter corridor needs of the metro regions.

Just 21% of the statewide funds go to transit and passenger rail in 2018, although passenger rail advocates are rightly pleased that $44 million in 2014 and $56 million per year by 2018 will go to current Amtrak services for which Virginia is now responsible, and for capital investment in the passenger rail network. An existing funding source supports upgrades for freight rail.

The $84 million for public transit isn't a lot of money when it must be shared among transit agencies across the state. The bill allocates a separate $300 million to Dulles Rail, but like some of the road money it's coming from the existing state sales tax at the expense of General Fund needs like education and health care.

The bill fails to address the empty secondary and urban road capital accounts, unless the administration commits to use some of the freed-up road money in the Transportation Trust Fund for this purpose. Instead, the bill implicitly off-loads the cost of local roads to Northern Virginia and Hampton Roads through the local sales tax increases in those two regions. Shifting this responsibility allows VDOT to spend more money on rural highways.

Part of the future depends on a bill in Congress

Part of the bill also depends on the federal Marketplace Equity Act, a bill in Congress which would let states charge sales tax on Internet purchases. If that does not pass by January 2015, the sales tax on gas will rise another 1.7 percentage points to make up for the expected revenue from the MEA. This would bring gas taxes back to a level comparable to where they are today, if not a little higher at current per-gallon prices.

The Washington Post also reports that Senator Janet Howell (D-Fairfax) secured another provision that would kick in if the MEA does not pass. In that case, the amount of general fund revenue directed to transportation would drop from $200 million a year to $60 million a year.

More taxes rise in NoVa and Hampton Roads

The bill would raise between $300 and $350 million per year in and for Northern Virginia by 2018. It does so by increasing the sales tax in northern Virginia by 0.7 percentage points on top of the statewide 0.3 point increase, for a new total of 6%.

There's also a 0.25% recordation tax on recorded deeds and a 3% transient occupancy (hotel) tax. The bill retains the existing local 2.1% tax on fuel. 70% of the funds will go to "regional" projects and 30% to local projects in the locality where the money is raised. The funds can go to roads or transit, and the Northern Virginia Transportation Authority will decide how to allocate the money.

For Hampton Roads, the bill would raise $219 million in 2018, using a local sales tax increase of 0.7 percentage points and a 2.1% local tax on fuel. However, the legislation directs these funds only for roads, despite the great need for transit and widespread support for light rail in the region.

Following the success of "The Tide" light rail in Norfolk, 62% of voters in Virginia Beach's referendum last November supported extending light rail to the beach. The Navy has also expressed its strong support for extending light rail to Norfolk Naval Station.

In a final example of VDOT off-loading costs onto the two metro regions, the bill failed to allocate state funds to Hampton Roads' Midtown/Downtown Tunnel project which local officials want. Instead, the authors of the bill say that localities should use the new regional funding sources if they want to buy down the costs of the tolls, even as VDOT diverts $1.12 billion of state and federal funds to the unnecessary Route 460 over the objections of many in the region.

58 comments

Support Maryland's economy, increase the gas tax

Fri, 22 Feb 2013 12:58:00 EDT

by Dan Reed

Improving Maryland's transportation network isn't just about being "green," or even moving people and goods. It's about supporting our regional economy, and a small increase in the gas tax can go a long way.

Photo by ehpien on Flickr.

Earlier this week, University of Maryland Diamondback columnist Andrew Do argued that increasing Maryland's gas tax would be a "burden" and a "punishment" on drivers. With gas prices nearing $4 a gallon, I'm sure many drivers feel the same way. But what a gas tax can accomplish is well worth it.

Forty years ago, the state of Maryland set up the Transportation Trust Fund, a dedicated funding source for the Maryland Department of Transportation. It gets money from a variety of sources, ranging from the gas tax to car registration fees and transit fares. In recent years, however, it has been depleted not by mismanagement, as Do suggests, but by falling revenues and rising costs.

The gas tax works because you pay for what you use. Those who drive more place more wear and tear on our roads, and they should pay to maintain them. Out-of-state drivers also use our roads, and the gas tax allows them to pay their fair share.

Currently, the gas tax is currently 23.5¢ per gallon, the same as it was in 1992. Meanwhile, construction costs for have doubled. At this rate, the Transportation Trust Fund will run out in 2018. That means no money for transit, no money for roads, and no money to even maintain what we already have.

Even if you don't use public transit, you reap the benefits of it. Each day, over 700,000 Marylanders take transit, including the Metro, the MTA, and local transit providers like Montgomery County's Ride On, to work, school and other activities.

Not only do they get an alternative to sitting in traffic, they reduce congestion for everyone else by not driving. A study of our regional transit network's benefits found that it saves us 148,000 hours a day from being lost to traffic congestion and 40.5 million gallons of fuel each year. If not for transit, we would need to build over 1,000 new lane-miles of highways, the equivalent of adding 15 lanes to the Capital Beltway.

On top of that, every dollar we invest in transit generates $6 in local economic activity. That means more jobs, stronger businesses, and more tax revenue to pay for transportation and other public services. Traffic congestion already burdens our region with wasted time, wasted gas and wasted money. As our state continues to grow, our transportation network needs to grow or it will only get worse.

That means building the Purple Line between Bethesda and New Carrollton, the Baltimore Red Line between Woodlawn and the city, and the Corridor Cities Transitway between Shady Grove and Clarksburg. It means expanding MARC commuter rail so it runs all day, every day. And it means investing in our existing roads and bridges, ensuring that they can handle current and future traffic.

Like many transportation projects around the country, these efforts may get part of their funding from the federal government, but they need to know that Maryland has some skin in the game as well. If we don't find matching funds for crucial projects like the Purple Line and the Red Line this year when they come up for federal review, they may never get built.

Given, many people in Maryland do drive. Personally, I drive a 2003 Honda Civic, whose gas tank holds about 11 gallons. If our gas tax were raised 14.5¢ a gallon, which would bring it back to where it was in 1992 with inflation, it would cost me $1.59 extra to fill up.

Is that too much to ask? Some, like Andrew Do, might say yes. But it's a small price to pay for securing Maryland's economic future. I urge anyone who truly cares about our state's future to join Get Maryland Moving in the fight for more transportation funding now. You can visit our website, follow us on Facebook and Twitter, and sign our petition calling on Maryland legislators to act now.

42 comments

Transportation plan reactions

Fri, 22 Feb 2013 09:05:00 EDT

by David Alpert

Ken Cuccinelli opposes the Virginia transportation "compromise" not because it's a bad deal but because won't ever raise any taxes; Terry McAuliffe supports it and calls it "mainstream." (Examiner) ... Bob Thomson notes that it's unclear if Northern Virginia commuters would benefit from the plan. (Post)

Comment

Virginia conferees reach flawed transportation deal (Feb 21, 2013)
McDonnell's insane transportation plan: no gas tax (Jan 9, 2013)
Virginia legislators say "raise the gas tax" (Jan 29, 2013)
Could McDonnell's transportation plan be any worse? (Jan 19, 2013)
Moran criticizes McDonnell transportation plan (Jan 22, 2011)

Virginia conferees reach flawed transportation deal

Thu, 21 Feb 2013 09:28:00 EDT

by Trip Pollard

As the clock winds down on the 2013 Virginia General Assembly session, a conference committee has reached a deal to eliminate the gas tax, but impose a wholesale tax on gas, divert more general fund revenue to transportation, and charge a $100 per year fee on alternative fuel vehicles. Some of the new funding will go to transit and rail, but the lion's share will go to highway construction.

Photo by ervega on Flickr.

The conference committee deal would generate an estimated $3.5 billion in additional transportation funds over the next 5 years, roughly $900 million a year after that, and even more in future years. It includes some positive provisions to address our transportation challenges, but is a flawed deal, with a number of provisions that are cause for serious concern.

If approved, the deal will affect for decades how Virginians travel, how much we pay in fees and taxes, and how our tax dollars are spent.

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.

29 comments

Show us the money

Thu, 14 Feb 2013 08:16:00 EDT

by David Alpert

Dr. Gridlock effectively sums up the transportation funding problem: "Our transportation funding formula is in perfect balance: We are determined to win relief from congestion, and equally determined not to pay for it." (Post)

Comment

Oberstar tweaks transit's federal funding formula (May 20, 2008)
Proposed Metro service cuts take more from DC (Feb 25, 2009)

Gas tax "compromise" emerges

Wed, 13 Feb 2013 08:46:00 EDT

by David Alpert

A Virginia Senate panel passed a transportation funding plan which raises the gas tax 5¢ (instead of eliminating it), adds a 1% sales tax on wholesale fuel, moves some general fund money to transportation, and lets counties also impose a 1% sales tax for transportation. McDonnell said Virginia is "on the brink of success," though it seems this is the exact opposite of his plan. (Post)

Comment

Gas tax likely will stay

Tue, 12 Feb 2013 08:02:00 EDT

by David Alpert

Bob McDonnell is willing to compromise on transportation funding, likely to a package that does not eliminate the gas tax. (Post) ... GOP candidates for Virginia statewide offices don't like McDonnell's plan either. (Examiner)

Comment

Could McDonnell's transportation plan be any worse? (Jan 19, 2013)
Virginia legislators say "raise the gas tax" (Jan 29, 2013)
Floor debates begin on flawed McDonnell transportation bills (Feb 4, 2013)
McDonnell's insane transportation plan: no gas tax (Jan 9, 2013)
Where's Bob? McDonnell MIA on Metro funding (Feb 16, 2011)

Not a local income tax

Tue, 12 Feb 2013 08:02:00 EDT

by David Alpert

Northern Virginia officials are less enthusiastic about a measure to let jurisdictions individually raise income taxes to fund transportation, saying the funding needs to be statewide and regional, not just local. (Examiner)

Comment

Is there a tea party urbanism? (Feb 9, 2011)
Virginia legislators say "raise the gas tax" (Jan 29, 2013)
Graham proposes regional gas tax hike for WMATA (Apr 21, 2010)
McDonnell's insane transportation plan: no gas tax (Jan 9, 2013)
McDonnell admin. drops another transit funding bombshell (Jun 18, 2012)

Taxes needed for Purple Line, CCT

Thu, 07 Feb 2013 08:35:00 EDT

by Steven Yates

Without a tax increase from the Maryland legislature, design on the Purple Line and Corridor Cities Transitway will come to a halt. (Post)

Comment

What's up with the Purple Line (Jun 4, 2008)
Sign the Purple Line petition (Sep 16, 2008)
The Corridor Cities Transitway and the future of the middle suburbs (Dec 29, 2008)
Maryland worried about new transit-hostile FTA (Feb 8, 2008)
Changes mean more Purple Line and trail grade-separation (Sep 21, 2011)

Cuccinelli's gas tax plan

Tue, 05 Feb 2013 08:40:00 EDT

by David Alpert

Ken Cuccinelli has an alternate transportation plan, to replace the gas tax with a sales tax on gas that would rise with inflation. It would raise less than McDonnell's proposal but not hike sales taxes on non-driving activities. (Examiner)

Comment

Could McDonnell's transportation plan be any worse? (Jan 19, 2013)
McDonnell's insane transportation plan: no gas tax (Jan 9, 2013)
Virginia legislators say "raise the gas tax" (Jan 29, 2013)
Floor debates begin on flawed McDonnell transportation bills (Feb 4, 2013)
O'Malley's sales tax on gas is the right way to fund transport (Feb 2, 2012)

Miller intros transportation plan

Tue, 05 Feb 2013 08:40:00 EDT

by David Alpert

Mike Miller introduced his transportation bill to put a 3% sales tax on gas, let counties add their own gas taxes, authorize property tax districts to pay for projects like the Purple Line, and maybe lease the ICC. (Baltimore Sun)

Comment

Maryland transportation "lockbox" has a big hole (Feb 8, 2011)
O'Malley must step up on transportation funding (Dec 19, 2012)
The Purple and Red Lines will benefit all of Maryland (Feb 9, 2011)
Expand MARC through higher state gas taxes (Sep 7, 2011)
Raise Maryland's gas tax? Only if it'll be spent wisely (Feb 8, 2012)

Floor debates begin on flawed McDonnell transportation bills

Mon, 04 Feb 2013 14:48:00 EDT

by Stewart Schwartz

Governor McDonnell's transportation funding bills (HB2313 and SB 1355) are on the floor of the Virginia House and Senate today and tomorrow. The McDonnell Administration is facing objections on many fronts, but the Republican majority quickly pushed the bills through committee.

Photo by MSVG on Flickr.

Votes to pass the bills must take place before "cross-over" on midnight Tuesday in order for them to survive and cross over to the other chamber.

Many legislators, both Republicans and Democrats, will seek amendments on the floor, but observers believe that the Governor and leadership want to push the bills into a closed-door conference committee where the Republican majority will control crafting the final bill. That means the best opportunity for major amendments is now.

If you are concerned about these bills, you can get the latest from the Coalition for Smarter Growth, contact your elected officials, and monitor @csgstewart and @betterDCregion for a Twitter play-by-play.

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.

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