| The governor's argument - we need to go from a user fee based system to a different source of revenue to solve the transportation mess - is being followed. But as they say, the devil is in the details.
The gas tax hasn't been eliminated: rather, it is being hidden, called something else. Instead of calling it a gas tax user fee, what we will now have a big new "wholesale tax on distributors" that will be passed on to consumers, and an even bigger "6% wholesale tax on diesel fuel," which will be passed onto either consumers, or taken out of the hide of truck drivers and other workers in the transportation grid.
To make matters worse, the line in the sand drawn by the Senate on any shift in general
fund money from education and mental health and the like to transportation has been breached big time. The Senate said no more than $50 million a year could be switched. But this proposal does $200 million a year. $200 million; this is enough to fund scholarships for most of the A and B students in Virginia who are willing to stay in the state to go to school.
The Senate/House conferees have then added yet another new tax, raising the titling fee on motor vehicles by 33%, from 3% to 4%. Where did this come from? It is yet another new user fee, and a big one at that.
As for fixing the Internet Sales Tax discrimination, this plan says: if that doesn't happen soon enough, then we will load on an additional 1.6% tax on the wholesale price of gas.
THE BOTTOM LINE POLITICAL POINT: Under this plan, it is very conceivable GAS TAXES, IN ANOTHER FORM, are going UP, NOT DOWN!
Or put another way: the governor, if he signs this bill, will in effect be REVERSING COURSE, embracing a user fee system is has said for weeks is broken, and cannot fix our transportation mess.
This is not speculation on my part. The governor's original plan raised the sales tax to 5.8%. This Senate/House conferee plan raises it only to 5.3%, barely more than it is now. Yet both plans raise roughly the same amount of money in the aggregate. So, the math is self-evident: If you are getting far less from the sales tax in the Conferees plan, then the only way to make up the difference is by using the very type of user fee approach the governor has said for weeks now will not get the job done for Virginia.
The bottom line: The Senate/House proposal does raise a lot of new revenue for transportation, and to the extent we have a problem in that area, it might be the best one can get. The "least worst option" I have written about, in other words. But my column discusses 200-proof politics, not optimal policy. In some respects, the conferees' plan ironically resembles the Senate conservative plan, which made no more sense before than it does now.
Politically, I think the conferees plan, with the right gubernatorial campaign, can be painted in the end as a Trojan Horse for simply a big tax increase for transportation: nothing more, nothing less, no bells, no whistles, no extra political points. Just basically your bread-and-butter package of higher taxes that will by November be seen for what it is.
If you count all the potential increases in taxes on gas that will be passed through to the consumer one way or another, I say this will raise the effective gas tax rate. Or quote the old line: A rose (in this case a thorn) is still a rose (or in this case a thorn) by any other name.
Since Cuccinelli and McAuliffe don't have a vote: I say they should politely decline backing it. If they have the stomach for the fight, they should actively oppose it. At least we can insist on truth in packaging, right? If the governor wants to reverse course and tell Virginians he really is willing to take whatever he can get, then he needs to be honest about it. If not, then he needs to fight for his principles here.
Others more qualified can do the policy. As for the gubernatorial politics, I think the political play for Terry McAuliffe and Ken Cuccinelli is to oppose this proposal, not embrace it. |
