A response to Dr. Utt’s criticism of the Governor’s Transportation PlanPolicyPoliticsVirginia

What Dr. Utt refers to in his column here as a “novelty act” represents one of the first truly innovative ideas in transportation funding in a long time. The reality to anybody paying attention to the transportation funding problems we face on both a state and federal level is that the gas tax is dying. It is simply not bringing in enough money to cover the needs of Virginia and the nation. And the solution – which is both bad policy and politically impossible – of raising it every time there is a shortfall is no solution at all. It’s time for leaders to think outside of the box on transportation funding, and this plan represents a good first step in that direction.

Dr. Utt describes the gas tax as a “user fee.”  This is a common statement, but one I have never fully understood. Everyone benefits from roads. Everyone. Even folks, like my mother, who are bedridden. The folks in her nursing home who care for her get to work using the roads. The trucks who deliver the food she eats use the roads. Everyone benefits from roads, even people who never get behind the wheel of a car or step on a bus. Those folks do not pay for the benefits they receive – they’re free riders when it comes to infrastructure spending. Roads and transportation infrastructure are things that benefit everyone, not simply the people driving on them. Thus, if anything, these are the kinds of things that taxes were designed for. Folks who drive pay additional, legitimate “user fees” in the form of car registrations, personal property tax, and the like, not all of which goes back to transportation. The gas tax as a user fee idea needs to die a quick death because it ignores the reality of the benefits we all receive from the system.

Dr. Utt also laments that ending the gas tax will remove market-based incentives and disincentives to certain behavior – like driving too much, or driving gas guzzling cars. The reality is that the price of gas itself, which may go down but not likely by a significant amount if the tax is repealed, is what creates those incentives and disincentives, not the tax rate. Throw in mandated CAFE standards at the federal level, and people are driving less and more fuel efficient cars anyway, regardless of the gas tax.  The gas tax has a minimal impact on those market-based incentives.

Dr. Utt’s claim that that consumer choice fuels transportation spending priorities more than politics is hard to understand. He notes correctly that mass transit gets a far larger chunk of the infrastructure pie than it should based on usership. This is absolutely true, and something I wanted to address when I ran for office. But the reason for that is, well, politics. That problem exists and has existed for the last thirty years, since mass transit and “smart growth” began being trumpeted as the panacea to end all traffic woes – which they have never turned out to be. The idea that transit sucking away infrastructure money will somehow get worse with the end of the gas tax is hard to fathom – how could it really get any worse?   Politics has been the bane of transportation funding solutions and the result has been the current impasse that has resulted in steadily dwindling funds for years.  You will never completely get politics out of the equation.  As for mass transit vs. roads, politics is the solution to that concern as well – its time for drivers to stand up and demand more roads, not more buses and trains they don’t use.

The bottom line is that transportation infrastructure funding relies on a dying source of revenue. As more and more drivers opt for smaller cars, hybrids and other alternative fuel vehicles, and as CAFE standards ratchet up in the coming years, the amount of revenue the gas tax generates will continue to shrink. Simply raising the tax – besides being politically impossible – is not a long term solution to this problem.

The Governor’s plan, however, is a long term solution. And it’s still a choice that makes sense from a purely logical standpoint. The sales tax is, effectively, a tax on commerce. Commerce cannot exist without the infrastructure to enable it to exist. Farmers can’t get their produce to market without roads. Retailers can’t stock their shelves without roads. We can’t get to the store without roads. So tying road money to the sales tax just makes common sense. And since the tax is not a fixed dollar fee per sale – unlike the gas tax, which is a fixed price per gallon – the tax really never has to be raised. It’s automatically indexed to inflation, it grows as the economy grows, and it’s just as dedicated to transportation in the Governor’s plan as the gas tax is. It solves a myriad of political as well as policy problems.

The fact that the plan has the support of many legislators in the House and Senate already speaks volumes. The Governor knows as well as any of us, and as well as Dr. Utt, the potential downsides to suggesting changes that can be easily decried as tax increases. He would not have announced support for this proposal if he thought it was going to destroy his career or would garner so little support in the General Assembly as to turn him into a laughingstock.

As Dr. Utt notes, the Charge of the Light Brigade, Pickett’s Charge and Napoleon’s invasion of Russia were all bold plans. So was storming the beaches at Normandy, Washington’s crossing of the Delaware, and Nelson at Trafalgar. Bold plans work as often as they fail, and the best laid bold plans succeed.

The Governor’s plan represents the first real long-term solution for solving our transportation funding crisis anyone on either side of the aisle has proposed in years. We’ll see how it fares in the General Assembly, but it deserves a more rigorous review than the knee-jerk panning I’ve seen coming from too many corners – none of whom seem to have any better solutions, either.

  • MD Russ

    Brian,

    This is the second time this week we have had to cross swords. The error of your logic is that you presume that payers of the fuel tax don’t pass along those costs to their customers. Everyone, regardless of their actual use of the roads, pays a portion of the fuel tax as a consequence of consumption of goods and services. The problem with Gov. McDonnell’s proposal is not that it is bold but that it places Virginia so completely out of sync with our neighboring economic partners, i.e. other states. Taxation policy, for better or worse, drives economic behavior in the marketplace. Rarely is a government program immune from the Law of Unintended Consequences. Repealing the fuel tax will not substantially lower fuel costs–to believe so is to deny the reality that gasoline prices in Fairfax County can vary by 10-cents per gallon or more within a one-mile radius. But raising the sales tax to accommodate the loss of fuel tax revenue will have unforeseen and far-reaching consequences.

    BTW, everyone seems to think that the fuel tax revenue is dwindling because of more fuel-efficient cars. Nothing could be further from the truth. Despite record fuel prices, SUV sales in 2012 represented one out of every three new vehicle purchases.

    • http://www.brianschoeneman.org/ Brian W. Schoeneman

      MD, if you want to make that argument, then folks paying the fuel tax are paying twice. The proposal may be different than other states tax regimes, but that doesn’t mean it has to cause us problems. Here’s a rundown of neighboring states’ sales taxes:

      MD – 6%
      WV – 6% (localities can add their own)
      TN – 7% (localities can add their own)
      DC – 6%
      NC – 4.75% (localities can add their own, and the average in most counties is
      between 6.75% and 7%)

      As you can see, even if consumers were extremely conscious of sales taxes and willing to cross state lines specifically to pay the lowest sales tax, we’d still beat every state but NC, and even then we still usually win because of county taxes. You don’t think the .8% wasn’t done specifically to ensure we’re lower than our biggest competitors?

      I don’t expect that repealing the gas tax will lower gas prices – I don’t think that should be anybody’s expectation with this plan. The reality is that the market has demonstrated it can bear the current cost of gas with the tax; without it, gas stations will simply make a larger profit. I’m sure they don’t have a problem with that.

      SUVs built today get better mileage than those built a decade ago. And as new and tougher CAFE standards kick in, that will be a trending problem. That’s not the entire problem – demand dropped when prices shot up, too. It’s not simply one thing that caused the drop in revenue. But the sales tax doesn’t have these problems.

  • http://www.facebook.com/craig.m.kilby Craig M Kilby

    This conversation is all just mental masturbation. “Bold,” “innovative” and other analogies to Napoleon and Hitler invading Russia aside, they all end up in disaster. This is the dumbest idea I have ever heard of. And this all coming from Republicans? God, I really am in the wrong the party. If there is a revenue problem because the gas tax isn’t paying its own way, then for God’s sake raise the gas tax. Don’t pull some stunt like abolishing it and replacing it with a sales tax INCREASE and say you’ve solved the problem. You haven’t. All you’ve done is open the door to more taxes without any accountability. I cannot believe VDOT is behind this. This is just plain horrible liberal public policy on steroids.

    • http://www.brianschoeneman.org/ Brian W. Schoeneman

      Raising the tax is neither politically feasible, nor is it a long term solution. Did you not read that the dozen times we’ve said it, Craig? Come on.

      You’re complaining about an increase in the sales tax, and your suggestion is to raise the gas tax instead. What’s the difference? You’re saying raise taxes to solve the problem anyway, so what is liberal about this?

      • http://www.facebook.com/craig.m.kilby Craig M Kilby

        The gas tax is (or is supposed to be) a user tax. A sales tax is a consumption tax on basic needs like bread. What’s you’re next great “innovative” idea, Brian? To tax air?

        • http://twitter.com/BrianSchoeneman Brian W. Schoeneman

          Craig, did you read my article at all? I explained why the “user fee” theory is nonsense. I also explained why sales taxes still have a connection to roads. And why everyone, including the poor, use roads.

          • http://www.facebook.com/craig.m.kilby Craig M Kilby

            Yes, Brian. I read it. I thought I had somehow wandered over to Elizabeth Warren’s home page.

          • http://www.brianschoeneman.org/ Brian W. Schoeneman

            If this were Elizabeth Warren’s homepage, the article would have advocated increasing the gas tax, increasing the sales tax and then banning cars.

          • http://www.facebook.com/craig.m.kilby Craig M Kilby

            Well, for quite a long time, Elizabeth Warren’s home page was a banner ad on right here on Bearing Drift. I questioned that at the time. Reading this, I now know why.

          • http://twitter.com/BrianSchoeneman Brian W. Schoeneman

            Craig, you know how google ads work. Come on.

          • http://www.facebook.com/craig.m.kilby Craig M Kilby

            No, Brian, actually I don’t know. I was under the assumption that people who promote themselves as “Virginia’ Conservative Voice” would not be SELLING ad space to Elizabeth Warren for a link to her web site. I guess I have a lot to learn about just what a site calling itself “Virginia’s Conservative Voice” really is. Perhaps it should be renamed “Virginia’s Common Whore.”

          • MD Russ

            Craig,

            You are embarrassing yourself. Do you people from Missouri know about this thing called the Internet?

          • http://www.facebook.com/craig.m.kilby Craig M Kilby

            No, MD, I’m not. If you can explain to me why Bearing Drift, the self-described “Virginia Conservative Voice” was running banner ads for Elizabeth Warren, I can’t wait to hear your embarrassing explanation.

          • http://www.brianschoeneman.org/ Brian W. Schoeneman

            I already explained it. If you don’t want to see the ads, get an ad blocker.

          • http://twitter.com/BrianSchoeneman Brian W. Schoeneman

            We have Google ads on the site. We do not control the content of those ads. They are based on an algorithm that Google uses based on the content of the page. The ads we sell directly are the banner and graphical ads, and we have not sold to Democrats. They wouldn’t bother with us anyway.

          • http://www.facebook.com/craig.m.kilby Craig M Kilby

            Brian. Read this twice. “We do not control the content of those ads.” REALLY? You have no problem taking the money, put up banner ads for the most left wing candidates on Bearing Drift, and have the temerity to tell me you can’t control what is happening on your own web page? It is no wonder Romney lost.

          • http://www.brianschoeneman.org/ Brian W. Schoeneman

            Craig, we do not control what ads Google puts in the Google ads slot. No. That’s how Google ads work. They’re contextual ads that change based on what’s on the page. This is not a hard concept, everyone uses them. I’m sorry if that bothers you, but it has nothing to do with anything remotely substantive. http://en.wikipedia.org/wiki/Contextual_advertising

          • MD Russ

            Craig,

            What Brian said.

            Let me try to explain this another way for those who think that the Internet is “a bunch of tubes.” Suppose that you had a tract of land and an outdoor advertising company signed a lease with you to put up a highway billboard on it. Would you be allowed to preview and reject ads that they wanted to display on the billboard? Not even in Missouri.

          • pinecone321

            That portion of your argument in particular sounds an awful lot like Obama’s “You didn’t Build That.” We’re the government and we’re here to help. If it wasn’t for the government either businesses wouldn’t exist at all, or they would still have hitching posts instead of parking spaces for their customers. The truth of the matter is that if those businesses didn’t exist first, the government wouldn’t have any sales tax revenues to build a sidewalk.

      • http://www.facebook.com/craig.m.kilby Craig M Kilby

        I have never signed any Grover Norquist pledge. Anyone who has done so should have their head examined. But we are talking about roads and transportation, and POOF! you wizards have just changed the deck and made it about sales taxes. Wow. That will fix a lot of roads and bridges. This just goes to show that Virginia is very much lacking in “innovative” and “bold” leadership. To the contrary, Brian, bold leadership means taxing those who use the infrastructure to pay for it. This has never been an issue until now. Now you want to tax the poor to pay for the trucker’s lobby. No way. No way. You are not going to change the equation with this BS sophomoric argument.

      • http://www.facebook.com/michaelj.barrett.355 Michael J Barrett

        Well Brian, saying that raising the gas tax is politically infeasible is an oxymoron; that is, it is your Governor, your Speaking of the House, and your Delegates who have made it so, and it is your republican caucus in the House and Senate who now face an outraged electorate because you simply will not do the right thing. Now, if you wish to face that electorate on November 5th with your opposition to raising the gas tax intact, please chose to do so. You may still win in the House, but the tide is turning. The travesty of your failure to support arguably the most critical function of government is catching up to you, and when it does, it won’t bode well for republicans.

  • http://www.facebook.com/michaelj.barrett.355 Michael J Barrett

    The basic problem with the Governor’s proposal is that it simply obfuscates without fixing the problem. If you want to be bold and innovative, at least solve the problem. His proposal, even if fully funded, is so tepid as to be unworthy of consideration nor implementation. Further, the robbing of the general fund to put more into transportation without addressing our pressing needs in education, public safety, and human services reveals how this Governor simply is not serious. The damage he has done to funding of K-12 education, and to affordability of colleges and universities, is palpable, yet this proposal will exascerbate that trend and while not solving the funding of major transportation projects. As predicted, this is a non starter.

  • http://www.facebook.com/michaelj.barrett.355 Michael J Barrett

    At least the Governor has finally admitted that we need a sustainable funding
    source of funding for transportation. That is a giant step forward. But we need $3 B per year for at least the next 20 years, and his proposal is woefully short. But the concept
    of a revised funding source makes some sense, so the best action would be to raise the
    gas tax now to $0.35, index it immediately, and establish a bipartisan
    commission to revise the source so that the issues can be discussed and
    negotiated before the revision goes into effect. Today, the undeniable need for
    more revenue is held hostage to the perfect solution which clearly exists only
    in the eye of each beholder.
    Lastly, the attempt to furhter cut the programs of general government like colleges and universities, K-12 education, local government services, and publoic safety, must not be allowed. Keep transportation as a user funded activity.

  • Mike Barrett

    For the last two decades, Virginia has been under the control of anti tax politicians for whom taxes are the enemy. For part of that time, as they followed Norquist’s dictum of no new taxes, the effects were minimal and these officials got reelected in record numbers. They still do, but as the effects of their stinginess appear all around us, citizens and voters now realize the damage they have caused. Rising tuitions at colleges and universities, cuts in local government services across the board from K-12 education to public safety to employee pay, and the need to now privatize public assets because Virginia no longer has the required resources or bonding cacacity.

    But it is in transportation that the effects are the best known and appreciated. Abandoned bridges, flooded tunnels, highway congestion, pot holes galore, faded stripping on roadways, highways to badly decomposed they need to be replaced. And still, these politicials have the audacity to minimize the effects of the damage they have caused, frankly because they are scared to admit the damage they have wrecked on our Commonwealth.

    In the end of course, it is us to blame; we should have known you can’t listen to politicians who will simply obfuscate to get elected. There is no justifiable reason to reelect politicians who have signed the no tax pledge. In fact, better to charge them with derelection of duty and make them pay for the havoc they have caused because they lack the fortitude to speak the truth.