The real problem with the transportation planPolicy

A lot of attention has been paid, both here on Bearing Drift and across the blogosphere, to the Governor’s transportation tax plan.  Yes, it’s the largest tax increase in history and we know a lot of Republicans don’t like it.  We can argue over whether tax increases are good or bad policy (usually bad, but not always), whether this one is too high (given our needs and the fact that thanks to inflation we’ve gotten 27 years of gas tax cuts, I don’t think so) or if this is a betrayal of Republican principles (it isn’t), but all of those arguments ignore the real problem the new law creates through the fundamental unfairness built into the new system.  The real problem with this bill isn’t how much – it’s the “how” itself.

This law continues to make Northern Virginia and Hampton Roads the piggy bank for the rest of the Commonwealth, and the hybrid tax is a misguided, abrupt reversal of over a decades worth of government cajoling about alternative fuel  vehicles.  These two issues fundamentally undermine what would otherwise be an arguably necessary law to change how we fund transportation in Virginia.  Instead, we have built in two very bad policy decisions, and those decisions are getting short shrift in the histrionics about the size of the increase.

The hybrid tax represents governmental schizophrenia in the worst way.  Although I am firmly against using the tax code to reward and punish behavior, that is how the system has evolved and many of the policy decisions in the tax code flow from that philosophy.  For almost a decade, it was the policy of both the federal and the Virginia governments to encourage the purchase of alternative vehicles.  The federal government provided a substantial tax credit for purchasing a hybrid car, which was only phased out in 2010.  Virginia still allows hybrid car owners to use HOV lanes regardless of the vehicle occupancy on certain roads for vehicles purchased before 2011.  And as anybody who drives I-66 in the morning can tell you, many, many people bought hybrids and took advantage of those credits.  They did what government wanted them to do.

The hybrid tax represents a 180 degree shift in the government’s stance on hybrids.  Instead of encouraging their use, they are now being actively discouraged through a tax penalty.  This penalty comes on top of the higher price tag, which already means a heftier car tax bill for these vehicles.  Now, with the additional $100 tax, a good chunk of the savings the consumer realizes from the better gas mileage ends up going back to the state anyway.  Whatever benefit having a vehicle that uses less gas may have provided is completely wiped out by that tax – the equivalent of the tax a hybrid owner would pay on 571 gallons of gas under the old system.  Further, it singles out a single type of vehicle for extra taxation, which is something we have decried at the federal level – the gas guzzler tax was passed by a Democratic Congress and signed by Jimmy Carter – and have resisted in Virginia.  This is just bad policy.  It makes zero sense for government to coerce consumers into adjusting their behavior and then immediately turning around and penalizing those same consumers when they comply.

It’s like giving a cat a treat and then kicking him if he eats it.  It makes no rational sense.  What’s next?  Banning 32 ounce Big Gulps?  The hybrid tax should have been dropped in the very beginning of the process.

But the hybrid tax pales in comparison to the regional sales tax increases.  If anybody wants to make an argument about unfairness, I can’t think of anything done legislatively in recent memory that is as misguided and unfair as the additional tax burdens imposed on Northern Virginia and Hampton Roads by this law.  Sure, the increased sales tax revenue is supposed to be channeled to projects specifically in those regions, but that doesn’t mitigate how ridiculous this provision is.

The fundamental point of taxation is that everybody pays for goods and services that benefit the entire community.  When I pay my state taxes, some of that money is going to go to people, projects, and places that have almost no impact on me.  I’m paying salaries for teachers at a school my kid will never attend, to pave roads that I will never drive on, to put police on the streets of a city I will never visit.  But the same is true for everybody else.  Unless, of course, you live in Northern Virginia and Hampton Roads.  Not only do you get to pay for everyone else’s roads, you also have to pay – again – for your own.  This increased revenue to Northern Virginia and Hampton Roads simply means those regions have a dedicated funding source – and that means they don’t need as much money from the general pool of resources the state has to divvy out .  I don’t believe, not for one second, that this law is going to actually result in significant increased money for roads in NoVA and Hampton Roads.  And, frankly, the projects identified in Northern Virginia that will get funded – like widening Route 28, or the 28-66 interchange which are both desperately needed – would have gotten funded anyway because they are top regional priorities.  In the end, this bill simply allows the rest of Virginia to continue picking the pocket of Northern Virginians and our friends in the Tidewater.

As usual, Northern Virginia gets treated like the piggy bank for the rest of the Commonwealth, and I am truly tired of it.  Singling out specific regions for higher taxation is unfair and misguided policy, even if it may be politically expedient.

Government breaks down when we start picking winners and losers on such a specific, hard to justify, basis.  The bill would not have been worse off without either the regional sales tax increases nor the hybrid tax.  It still would still have accomplished the governor’s goals of transitioning from a cents-per-gallon gas tax and increasing revenue for transportation.  This is just flat out bad policy and something that should be addressed in future General Assemblies.

  • http://www.facebook.com/profile.php?id=1427002848 James Cohen

    I am a major proponent of alternative energy transportation fuels and the use of alternatives and have been involved with alt fuels enabling technology engineering since the 80′s. http://www.google.com/?tbm=pts#hl=en&biw=1847&bih=964&tbm=pts&sclient=psy-ab&q=james+cohen+siemens&oq=james+cohen+siemens&gs_l=hp.3…1486.5633.0.6576.19.17.0.2.2.0.209.1926.9j7j1.17.0.les%3B..0.0…1c.1.4.psy-ab.-jg4k5h18AE&pbx=1&bav=on.2,or.r_gc.r_pw.r_qf.&bvm=bv.42768644,d.b2U&fp=a32726e92b9ff6f4 That said, I do not see any reason for the users of alternative energy to not share the burden of paying for the roads all vehicles use. There are enough credits and incentives to offset the losses manufacturers and users incur when using alt fuel vehicles.. Got to play fair here..

    • MD Russ

      Turbo,

      Then you agree with Obama when he says that the top 5% of all taxpayers, who already pay 65% of the Federal income tax revenues, need to ‘pay their fair share?’

      • http://www.facebook.com/profile.php?id=1427002848 James Cohen

        I already pay my fair share and many others fair shares..

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

      Most hybrid owners already do. We still have to buy gas, Turbo.

      • Guest

        But not nearly as much per miles of road driven.

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

          Depends on the type of car.

  • Capitol Square

    Brian:

    Your post makes several valid points and we can certainly agree that some of the policy decisions in HB 2313 are not ideal. However, the fact of the matter is Virginia needs a significant infusion of revenue to fund our transportation network. The motor fuels tax has been declining and with it our statewide, regional and secondary road network.

    Northern Virginia and Hampton Roads are the economic engines of Virginia and therefore we will always pay more. Furthermore, as a Commonwealth, regionalism is secondary to statewide priorities. Northern Virginia benefits from the agricultural products of southside just as we benefit from the commodities that come off of the products unloaded at the Port of Virginia. I do not have an issue paying for roads in other parts of Virginia because at the end of the day, whether directly or indirectly, I will benefit.

    Finally, the hybrid vehicle fee was part of the original bill introduced and its rationale was that those vehicles use less fuel, and therefore pay less in taxes while causing the same amount of stress to our roads. I maintained from the beginning and currently believe that this fee is reasonable when you consider the aforementioned rationale.

    We needed $1 billion in transportation funding. Even with this bill, we are short that figure but the Commonwealth has spent 27 years trying to develop a long-term, sustainable funding solution and HB 2313 provided that solution.

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

      I fully recognize that we needed more revenue, and that’s why I am not blasting the tax increases or the change over from the cents-per-gallon tax.

      My issue is that these bills all too often cleave along regional lines, and NoVA is typically stuck with the bill for a meal we never ate.

      The hybrid vehicle fee is misguided for the reasons I mentioned above, but also because of its size. You are effectively charging every hybrid owner for over 500 additional gallons of gas every year – this isn’t a one time fee. Hybrids get better gas mileage, but it’s unlikely they are saving 500+ gallons a year. I would have liked to have seen more justification on that number, because it sounds arbitrary to me.

  • http://twitter.com/icanhasbailout Alexis Rose Bank

    Brian deftly negotiates a way to save face after it becomes plain and obvious that continuing to masquerade as a Republican while supporting the transportation deal would be a rough road to hoe. Now this is skill, ladies and gentlemen.

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

      There are plenty of a Republicans praising the deal. While there are parts I don’t have problems with, it’s not a perfect bill. These are the biggest objections I have.

      • EricMcGrane

        You are in the uber minority here. The sooner you come to terms with that, the sooner you can salvage some sense of credibility.

        I’ll lead you to the light:

        http://www.redstate.com/2013/02/25/virginias-governor-bob-mcdonnell-thinks-youre-an-idiot/

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

          I don’t care if I’m the only one. You guys love to complain that I never stand on principle, well, I’m standing on principle now. We needed more revenue for transportation, and we needed to begin replacing the gas tax because it is dying. This gets us part of the way there. We cannot kick the can down the road on infrastructure spending anymore.

          • http://www.facebook.com/profile.php?id=100002069829708 Daniel Cortez

            Brian you are not the only one…I talk to many many in my locality who agree with this in principle. Again this will be the demise of the Republican party….the all or none mentality. As you are aware not even our founding fathers had it all their way…and they had spirted disagreements but not the scorched earth mentality of hate of the extremists tea party types. No elected official gets it all their own way. Republicans have no one to blame but themselves when they lack the outreach to make their party the majority party….and while respectable in principle the tea party movement is dividing the Republican party further rather that working to unite. Let us not forget the man who gave his state the largest tax increase at the time in its history and raised taxes nationally 11 times…..Our beloved Ronald Reagan. Nobody ever wants a tax increase and every arm chair quarterback who has never held office knows better….I’m sticking with the guy who clearly has more vision and had the leadership to get this “imperfect” bill passed. His name is Bob McDonnell. They criticized Reagan too….and look how history has treated him.

  • Capitol Square

    Thanks for the clarification. Of course, I am sure you own a Hybrid!

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

      The wife does. Even if we didn’t, I’d still oppose it. Over 80% of the hybrid plates registered in Virginia are in Northern Virginia, so this is just another attempt to pick our pockets.

  • http://www.facebook.com/profile.php?id=100002069829708 Daniel Cortez

    Brian you make some interesting points but the most accurate is the reality is that this is not a perfect bill. What piece of leglislation ever is? But what should be disturbing and perhaps needs to be spoken to is the excoriation the Republican party is taking by alleged supportive conservative commentators who like some of the extremist organizers of the tea party movement (some not all are extremists) are helping liberals recapture the Virginia’s Governor’s mansion by vilifying Bob McDonnell and his bill. What I see is legislation that can be used to demonstrate Republicans ability to reach across party lines and advance Virginia. I have never believed in revenue neutral legislation….There is no free lunch in politics…somebody pays and taxation remains the part of representation no one embraces. Nevertheless millions of families will profit by a safer and improved transportation system and the thousands of jobs created by McDonnells leadership. Sadly this is overlooked as liberals take credit for this positive action concervatives created. I simply don’t remember the last time any ligitimate WMAL or Fox media commentator had his name on a ballot box with the exception of Ollie North…and he lost. But we allow them to divide the conservative movement and attempt to lead it to the point of near extinction.
    Such infighting is what keep Hispanics, Blacks, Asians and moderates from supporting a party in conflict with itself. Simply examine the exit polls from the last election if this remains an issue in question. Brian your assessment is responsible but for the plain naysayer some civility would be appropriate especially by candidates who one day wish the occupancy of the Richmond mansion. Attempting to destroy Bob McDonnell who controls the bully pulpit and can behind the scenes make or break a contenders campaign will prove foolish. McDonnell will remain a national figure and attackers need to ask themselves one question. What if his plan works? Criticism is always easy from the cheap seats. But I’m betting on the man or woman who can bring us all together not divide us by suggesting we all have to be of one mind.

    • http://www.facebook.com/profile.php?id=100002069829708 Daniel Cortez

      And to be clear WMAL and Fox has very responsible commentators…but attempting to destroy Bob McDonnell because of his bill demonstrates the all or nothing mentality that is destroying the Republican party by pundits that can’t carry his socks or much less ever win an election.