Going in circles on transportation

With the competing proposals for funding Virginia’s road system before the General Assembly, the timing on the Texas Transportation institute’s latest Mobility Report could not be better. In it, we discover that nationwide, drivers waste billions of gallons of gasoline and enormous amounts of time sitting in traffic. We also see that the economic cost is quite large — $121 billion.

Leading the list of the nation’s most congested areas is Washington, DC, its second year at the top. How to get out of this jam?

The methods and measures developed by TTI and used in the Urban Mobility Report have been successfully implemented for policy making and prioritizing congestion-mitigating projects,” says report co-author and researcher Tim Lomax. “In light of the recent signing of the Moving Ahead for Progress in the 21st Century (MAP-21) Act, there is greater importance on using such measures to prioritize transportation improvement spending to get the highest investment return for the public.”

Researchers say that the most effective way to address traffic congestion varies from one urban area to another, but that in all cases, a multi-faceted approach should be used, relying on more efficient traffic management and public transportation in addition to new construction. Travel options such as flexible work hours and telecommuting should also be part of the mix.

Prioritization, choice, flexibility — three words you will not find in any of the transportation bills currently pending before the General Assembly.

Does this mean the entire transportation exercise has been a waste of time? Dumping more money into a system that does not prioritize construction and maintenance projects based upon their economic value, ability to improve safety, or relieve congestion is futile. It is also the Virginia way.

But surely, the ideas to use the sales tax, as the Governor proposes, or Sen. Newman’s wholesale sales tax, will make some difference?

Sales tax receipts are tied to the economy and thus can never be counted on to grow in future years. If anything, tying road funding to the sales tax exposes it to far more variables in economic activity than a straight gas tax.

So what about applying the sales tax to gas at the wholesale level? That’s a bit different, but consider one of the assumptions its proponents make:

Newman’s plan would lose about $20 million in fiscal 2014, but he said with inflation and increases in the cost of gas, it would bring in $500 million to $650 million a year by 2018.

Senator Newman is counting on inflation and higher prices to drive receipts. That’s fine if both occur. But what happens when the cost of gas falls? Bad news for roads (and when did conservatives decide inflation and higher prices were good things?).

If the Governor and Sen. Newman wanted to really juice road revenues through their alternatives, they would take several pages from the TTI on getting the most from existing transportation monies first to relieve congestion. If those aren’t enough, there are a number of revenue options, too, including one on fuel tax indexing that offers this helpful nugget:

Indexing the gas and diesel tax rate to the Highway Cost Index or the Consumer Price Index allows the tax rate to keep pace with the rate of inflation.

If we must put a tax on auto-pilot, either of these is alternatives is far better than those in the current proposals before the General Assembly. In the former case, it ties the tax directly to the cost of road building and maintenance — apples to apples.

But such ideas aren’t part of the discussion. Instead, we’re caught-up in political legacies and coming election campaigns. Which means we’ve not moved much at all from the last time Virginia raised taxes.

Way back in 2004, Gov. Warner broke the GOP over an increase in the sales tax. It was for public safety, education, health care. Transportation got nothing.

Which reminds me of some remarks Sen. Steve Martin made nearly nine years ago over why transportation was left out of the last battle over taxes:

In John Chichester’s original proposed tax-and-spend hike, highways got a $1.6 billion slug of cash. When the legislature went into special session, the Senate quickly yanked the highway funds out of their proposal. When the dust settled, it was state education that reaped an enormous windfall of tax money — about $1.5 billion — three times greater than the largest, previous hike in education funding on record.

According to Martin, some legislators could have, legitimately, claimed some of this massive pile of cash for highways — roughly $500 million. They were told no.

And that “no” continues to echo today.

Some sort of proposal will be hammered out in conference in the weeks ahead. It will not be perfect — it will likely not even be very good. But I will wager one thing: five years or so after the deal has been implemented, Virginia’s road system will be in much the same shape it is today, and we will have to re-fight this battle all over again.

Update

The redoubtable Jim Bacon has his own thoughts on the TTI report and the various funding schemes floating in the GA right now:

… there is no justification for the mad panic gripping the legislature and business community right now, which is based on the assumption that congestion will get continually worse as it did for decades before 2006. As the TTI data shows, that assumption is five years out of date.

Instead of blindly raising more revenue, we need to pause to see how Virginia can spend its transportation dollars more wisely. Once we have tightened the link between transportation and land use… once we have developed a methodology for prioritizing transportation projects… once we have made the Public-Private Partnership process more transparent… by all means, we can turn our attention to finding new sources of revenue, if they are still needed. But rest assured, if we raise taxes first, legislators will have no stomach to enact the other, much-needed reforms, and nothing will get done.

An example of the “mad panic” Jim references can be found in Gov. McDonnell’s most recent press release on transportation. Traffic congestion, the Governor thunders, demands action:

“We must act decisively and we must act now to pass comprehensive transportation funding reform. Today is the day Virginia must act.”

In other words, nothing must be allowed to stand between the Governor and his legacy.