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McDonnell Transportation Plan Fundamentally Flawed by Doing Away with Key User Fee

by: Goldmanusa

Tue Jan 08, 2013 at 16:12:56 PM EST


(UPDATE: Wow, Jim Bacon demolishes this monstrosity, writing "There is no way to sugar-coat this: McDonnell's transportation-funding package would be an unmitigated disaster." Yep. - promoted by lowkell)

Gov. Bob McDonnell just announced his transportation plan, which would do away with the gas tax while raising the sales tax. It may be fundamentally flawed, but give McD his due: he has proposed a bold idea, making Virginia the first state to do away with gas taxes - a user fee - and replacing it with general taxation, such as a Sales Tax.

Except for one problem: loading up the sales tax for transportation was never the intention! To the contrary, the sales tax was intended as the key funding source for EDUCATION, not for transportation.

As I wrote yesterday, the big issue in this session is: transportation vs education vs Medicaid, with McD now saying Medicaid might be more doable than he first thought. It is starting to emerge as predicted.

Question: Can the sales tax serve two masters, transportation and education? The answer is NO.

The user fee concept of a gas tax must not be totally abandoned or education loses in the long run.  

As I wrote last week, we needed a debate in the state this year on whether the most important user fee in the state - the state gas tax which was created to make sure users of the highways paid for this usage directly - still has a central role to play in funding transportation in the 21st century.    

Goldmanusa :: McDonnell Transportation Plan Fundamentally Flawed by Doing Away with Key User Fee
The gas tax stood as a great innovation in the early part of the 20th century and led to Virginia having one of the best maintained road systems in the country.  But starting in 1986, with the passage of the Baliles 1/2-cent gas tax dedicated to transportation, the gas tax has become less important over time as a source of transportation funding.

BUT it still contributes in the vicinity of $850 million a year.

Governor McD now proposes to go the "whole hog" and eliminate the gas tax, replacing it with a general tax, about another 0.8% on the sales and use tax, bringing it to around 6% in round numbers.

Give him credit for a bold idea, being the first state to eliminate the gas tax is a potentially big national seller for an image.

But he is now putting both transportation and education ON THE SAME REVENUE SOURCE: The sales tax. Do we really want to do this? I think we need a real discussion in this state, as I have been saying for months now.

Can the sales tax serve two masters, transportation and education? I don't think so. user fees such as a gax tax must play a role in transportation funding.

THE GOVERNOR MAKES A FUNDAMENTALLY FLAWED MISTAKE DOING AWAY WITH THE USER FEE CONCEPT OF A GAS TAX.

The gas tax may not be as powerful a tool as before in fairly apportioning the burden of maintaining and building roads. But it must have a place. Otherwise, THE BIG LOSER WILL BE EDUCATION IN THE LONG RUN. And that's not acceptable.

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It also appears to raise no new revenue, actually (0.00 / 0)
might even turn out to be a net negative, plus as an added bonus it raids the general fund and screws hybrids and electric vehicles. What's not to like...er HATE?!?

P.S. The dead giveaway that this plan sucks is that Bill "ALEC" Howell endorsed it, as did Ken Kookinelli. That's all you need to know.

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What's with the big ideas? (0.00 / 0)
First the selling off of the ABC stores?

Now eliminating the gas tax?

Does McD have any idea how glacially slow the GA moves?
This is a political proposal and nothing else. Will go down in flames.


[ Parent ]
Don't forget mythical offshore oil drilling revenues (4.00 / 1)
which in 2009, McDonnnell promised would pay for transportation improvements in Virginia. Hmmmmmm.

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[ Parent ]
Madness (0.00 / 0)
Madness alone does not explain the workings of a man like Bob (killer of women) McDonnell, it must be something hanging in his brain like phlegm or backed up flatulence.

Mere parsimony is not economy. Expense, and great expense, may be an essential part in true economy.
Edmund Burke


[ Parent ]
Based on McDonnell's numbers.... (0.00 / 0)
contained in this fact sheet, it appears that about 1/3 of the money in his plan comes from revenues Virginia may never see, as they depend on Congressional action. Good luck with THAT! LOL  Another $811 million comes from raiding the General Fund, aka screwing over education (the year of the teacher? try the year of SCREWING OVER the teacher!). Then there's $66 million from taxing alternative fuel vehicles, which makes no sense at all. This plan is truly awesome...if you're a masochist, perhaps.

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I thought you guys would be happy (0.00 / 0)
I thought you guys would be happy with eliminating such a regressive tax like the gas tax, and replacing it with something far more progressive, like the sales tax.

I guess if a Democrat had proposed it, you'd be on board. Go figure.


You're funny. (0.00 / 0)
The sales tax is "far more progressive" than the gas tax? Well alrighty then! LOL  

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[ Parent ]
Wow, Jim Bacon absolutely demolishes the plan (0.00 / 0)
McDonnell Throws Virginia Transportation Policy into Reverse.
Bacon's bottom line: There is no way to sugar-coat this: McDonnell's transportation-funding package would be an unmitigated disaster. As it is, the governor has partially rolled back Kaine-era initiatives to coordinate transportation and land use planning, a prerequisite for creating a rational transportation system. Now, he proposes to obliterate the principle that those who use and benefit from the transportation system are the ones who should pay for it.

The principle is so simple and sound that even a politician should be able to understand it: Reducing the cost of driving by eliminating the gas tax only encourages more driving. Thus, while shifting the tax burden from the gasoline tax to a sales tax will raise more money, it will also worsen the congestion that the added tax revenues are supposed to address. A more sane approach would be to scrap all miscellaneous road-funding sources and increase the gas tax so that people paid for road usage in direct proportion to which they use it, thus creating an incentive to drive less.



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[ Parent ]
"Paid for road usage in proportion to use" (0.00 / 0)
The gas tax is a user tax, but it does not tax people according to the "direct proportion to which they use" roads. My little car gets almost 40 miles to the gallon. Someone with an old clunker, who cannot afford a newer car, will pay a greater percentage per use than I. I wait for the day when we will study more creative ways to get greater transportation revenue, like tying the registration fee to the miles a vehicle drives per year. It would be simple to keep up with mileage through the mechanism of the annual inspection of a vehicle, with reporting to the DMV by the inspector.

The problem with the gas tax is that as we require autos to get better mileage to reduce pollution, we lower the revenue stream. Another remedy would be to add user taxes to other things related to transportation, like the labor for auto repair.

McDonnell's "plan" is absurd and dangerous. It ranks right up there with Jim Gilmore's "no car tax."


[ Parent ]
Most Regressive Tax (4.00 / 1)
The most regressive tax that any level of  government can levee is the sales tax. If I am head of a family of 3 and I make $30,000, I pay the same tax on everything I buy as a person making $1 million per year. You need to apply simple arithmetic to your contention that a sales tax is "more progressive" than a gas (user) tax. It just requires a review of percentages.

[ Parent ]
The sales tax even applies to food! (0.00 / 0)
There's nothing more regressive than that. As for the gas tax, it's mildly regressive, but that can be compensated for in a variety of ways (e.g., provide inexpensive, top-notch public transportation).

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[ Parent ]
By the way, if you recall, I blasted the "transportation monstrosity" (0.00 / 0)
(what I called it over and over again) when Tim Kaine was governor. So NO, this is not a partisan thing, as I am quite capable of thinking for myself and not just following whatever the guy in charge of the "blue team" supports. The bottom line with McDonnell's plan: it's utterly brain dead, the complete opposite of what we should be doing, and McDonnell's latest, desperate attempt (earlier ones included mythical offshore oil revenues, ABC privatization, etc.) at finding SOME sort of solution to Virginia's transportation mess.  So far, it's been a total #FAIL, just like his entire governorship.

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[ Parent ]
Yes! (0.00 / 0)
McDonnell's term has been an unmitigated disaster on just about every front. He has failed to meet any of the challenges facing the Commonwealth.

[ Parent ]
Seriously? (0.00 / 0)
The gas tax taxes those who use the roads most. The cost of transport of goods and service is already incorporated into the price charged to the purchasers of those goods. If revenue is not enough to pay for the roads those goods travel, increase the gas tax and the the portion that should be assessed to non-drivers will trickle down upon them.

Republican (0.00 / 0)
Easy to see why a republican should never be in charge of government. Besides anti tax their next thing is cut spending. Why does my little county now have two high schools, increase in population. So how do you cut spending unless you can convince people to live somewhere else.  

So Tolls are ok and gas tax-not so much? (0.00 / 0)
Unbelievable-do these guys have a clue in the Governor's mansion?

So let's see... (0.00 / 0)
You drive a gas guzzling SUV and suddenly you can do so far more cheaply...

You drive a fuel efficient hybrid or electric vehicle, you are suddenly charged and extra $100 to use the roads.

You are poor and you suddenly have to pay more in sales taxes so those that drive gas guzzling SUVs can drive more..

Good plan there Governor !



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