I’ve had a few hours to digest the Governor’s new “transportation” plan which eliminates the state gas tax and raises our sales tax, with the new revenue to go to transportation.
Most of the reports have focused on the dollars raised (which is all hypothetical at this point). Since those numbers can be adjusted and re-forecasted, that discussion is both premature and essentially marginal.
The real story is the discontinuing of “user fees” to fund transportation — and instead making our roads and transit projects just another item in the state general fund. That is a startling turn of events.
Long before he became linked to “massive resistance,” Harry Byrd of Winchester was a pretty damn good Governor. He brought the state into the modern age by creating a state highway department and a modern state government. In many ways, he put the pieces in place for the enormous economic growth of Virginia in the post-WWII era.
Ironically, while we walk past Governor Byrd’s statue every day on our way to the State Capitol, we’ve spent most our time destroying his legacy.
As Governor, he created a state inheritance tax to ensure that all Virginians (not just workers) paid taxes on their income. He developed the “pay as you go” philosophy for building roads and public buildings using current revenues, not borrowing. Finally, Byrd developed our statewide road system and VDOT using a gas tax, which started at 2 cents a gallon and then was quickly raised to 4 cents.
This system gave Virginia a “AAA” credit rating from the 1930′s to the present, while staying one of the lowest tax states in the U.S.
How have we treated this legacy?
In 2006, after a “grass roots” campaign of the wealthy and well-connected, the Assembly repealed the Virginia estate tax.
In 2011, the Assembly passed a massive ($3.4B) bond bill for our highways which consisted entirely of money borrowed against future Federal spending.
In 2013, the Governor pledges to end the gas tax and fund our transportation needs through an across-the-board hike in the retail sales tax, which will go from the simple 5% to the mind-bending 5.8% (trying figuring that without a computer).
The “justification” is that the gas tax at a fixed rate brings in less money in our hybrid age. But that hardly seems like a reason to jettison it. (And no other state has). Indeed, eliminating our traditional road funding because cars are more efficient makes about as much sense as canceling your child’s college fund because tuition keeps rising.
And what about the tax increase?
Remember that the retail sales tax was initially started in the 1960′s by Governor Mills Godwin to create a community college system in Virginia. Since that time, it has traditionally shouldered the cost of public education. Indeed, in 2004 when we raised the sales tax to 5%, we specifically dedicated the increase to K-12 education.
Of course, the retail sales tax is paid directly by the consumer. In that sense, it is far more onerous on citizens than the gas tax which is an input cost on a product (gasoline) which is “priced to market.” That’s why the level of gas tax has little if any effect on the price consumers pay at the pump.
In conclusion, this is not knee-jerk partisan opposition. I have supported the Governor on many transportation initiatives, including his reform of the WMATA board in 2011. This year, I will be the chief sponsor of his bill to allocate transit funding based on ridership performance and not past history. Those are good ideas.
But eliminating the gas tax paid by highway users and raising taxes on all other Virginians to pave our roads makes no sense. Cars may use less gas per capita, but the combustion engine is not going anyway in our lifetime. (Let me know when electric cars gain more than 2% market share.)
I understand that this is a beginning of a conversation. Kudos to the Governor for starting the conversation. But let’s not tear down a system which has worked well — just so we can provide a “legacy” to an outgoing administration.