Transportation funding is going to be a big issue this General Assembly session. The Governor has taken the step of agreeing we need more revenue and tax increases to pay for transportation; but the details of his initial proposal are cause for concern. We need a balanced, fair and long-term solution. We are not there yet.
The question this session is whether we’ll find compromise or whether we'll stay in our respective corners unable to address Virginia’s job-killing congestion. Our state has a multi-billion dollar hole in transportation funding and needs a solution that puts us on a path towards a billion dollars a year in new transportation revenues. The lack of such a plan will continue to put our infrastructure at risk, harm our business climate and impact our quality of life.
I have not yet seen a formal transportation proposal that fairly addresses our local needs for transit funding, provides reliable long-term funding without taking existing revenues from schools, safety and community health. I support a comprehensive transportation approach and I think both Democrats and Republicans have offered creative ideas to increase the gas tax and add other revenue sources for transportation. But the Governor’s initial proposal fails to meet a fairness, balance or long-term solution test. It creates an unfair tax system on different types of vehicles and creates a back door way to remove money from schools, public safety and more.
The Governor’s idea is to take away the gas tax and replace it with a sales tax. People out of state pay for 30 percent of the gas tax so this change would immediately put more burden on Virginians and leave out of state drivers off the hook to pay for the roads they use. A sales tax also disproportionally impacts lower income residents. User fees tie the use of a service to the cost of using it. The gas tax, while not perfect, is a user fee because the more you drive, the more you pay. The problem with the gas tax is that it hasn’t kept up with inflation and growth over the last 20 years. That is a pretty easy issue to solve. Getting rid of it is also a potential windfall for oil companies because eliminating the gas tax isn’t likely to significantly change the price at the pump — the marketplace sets those prices and gas companies will make sure they can get as much as the market will pay.
Eliminating the gas tax while keeping a tax on diesel vehicles, as has been proposed, would create an unfair tax system as there are a number of clean diesel cars on the road that would end up paying more than other vehicles because of their fuel source.
The proposed idea of adding a new tax on hybrid vehicles and arguing it is needed because they pay less gas tax makes little sense when you are also proposing to eliminate the gas tax. The argument that this makes up for lost Federal transportation revenue is creative, but a stretch. It is really just an unfair tax on alternative fuel cars. Combined with the diesel tax, this simply props up traditional gasoline vehicles and disadvantages any other type of fuel.
The Governor’s proposal that we stake the future of transportation funding on the Federal Government’s ability to pass an Internet retail sales tax for the bulk of the proposed new transportation revenue seems odd. The Governor and many others have correctly called the Federal government dysfunctional. While we wait for them to get something done our roads could disintegrate into gravel. And the idea of using the Internet retail sales tax has a second problem. As more folks shop online, you’ll see a decline in traditional retail sales tax revenues. Those traditional sales tax revenues fund the basic operations of our government. So the more you buy online the less money we’ll have for schools, police, courts, and much more.
My sense is that there is a strong majority in Richmond that understands we have to address transportation. I think the question is whether we are just looking for a press release to say we tried or if we are looking for a true answer. I’m always optimistic. I’ll keep looking for a bi-partisan approach that is fair, balanced and long-term. It is too important to our state’s future not to.
You can keep up with what is happening in Richmond by following me on Twitter (RobKrupicka) or keeping tabs on blog posts to my website at www.krupicka.com Please feel free to contact me during session and definitely stop by if you are in Richmond.