McDonnell's Good Transportation Plan

Here are the key points to Bob McDonnell's transportation plan:

• Dedicated General Fund money - $48 million by 2014, ramping up to $275 million by 2018
• Eliminate the Gas Tax
• Raise Sales Tax from 5% to 5.8%
• $10 raise in car tax
• $100 fee for fuel efficient cars
• Marketplace Equality Act Revenue

Overall, I think its a good plan to start with.  The most important aspect is that finally a politician in Virginia has sacked up and committed real general fund dollars to transportation.   I saw Mark Keam on the news today say that transportation needs its own fund run by its own new revenue stream.  Been there and done that.  For years we have tried gimmick after gimmick to solve this problem and avoid truly tackling it.  We've had a transportation trust fund (which was constantly raided by greedy legislators looking to grow government elsewhere), unelected regional tax authorities, regional and statewide tax referendums, and so on.  Each in itself was a cop-out by governors and legislators, both Republican and Democrat, to truly dedicate general fund dollars.  I refuse to trust any sort of "trust fund" or separate module for transportation money because its just going to be spent on other things and its a giant cop-out.  This way, legislators and governors will have to be responsible for their actions.

That has been the heart of the problem.  Legislators and governors refusing to make the hard choices.  Regional tax authorities, trust funds, local and statewide referendums; they have all been ways to raise taxes or generate new revenue without the elected official actually responsible for it.  McDonnell is finally taking responsibility.  

The gas tax going down to zero is an exceptional idea, and will really help the regular folks out there where gas is a real concern.  Sales tax is a much more equitable way to raise revenue because those who pay for more things will pay more taxes.  Gas is something everyone needs and the size of gas tanks doesn't fluctuate by income.  Those who have less money don't purchase as much so they won't pay as much, and so on and so forth.  I will take a .8% raise in the sales tax in exchange for a 17.5% elimination of the gas tax.  I'm hoping this will help Northern Virginia get more of its money back because, obviously, more sales tax is generated here and now transportation funding will come from general fund money rather than somewhere else.  I think it just makes things easier.  But then Bob goes and makes things a little harder by slowly onboarding .25% into, again, a lock box.  Just keep it all in the general fund for transparency's sake.

What I don't like is the fees.  Fees are cowardly, taxes without being called taxes and are generally punitive, in my opinion.  The $100 fee on green cars is especially off-putting.  We should be ecouraging people to buy fuel efficient cars, not punishing them.  It sort of undermines the argument of helping fuel costs by then punitively taking extra money from people who buy fuel efficient cars.  

I also really hate the federal money McDonnell is assuming.  Forgetting that its basically an internet tax and a bad idea to begin with, it's also dangerous to build state budget projections off of federal taxes, and taxes that haven't been passed yet.  We should not tie in our state budget with any federal hooks that could change up or down without the state's control.  As NLS points out, why not just raise the sales tax to just 6% and avoid all that nonsense.  We shouldn't root for an internet tax on the entire country just so we can get a little cut of it.  This needs to go.

But, if anything, this is a good start.  Obviously this will pass the House of Delegates because Bill Howell has complete control of that chamber.  What will be more interesting is the state senate, especially Northern Virginia Democratic senators like Colgan, Petersen, and Marsden.  These three are largely considered moderate pragmatists, thought Petersen has always been in favor of raising the gas tax.  With Bolling on board, though who knows what mischief he is willing to inflict, I suspect this will once again come down to how Charles Colgan will vote.  The other quetion is downstate Republican senators like Ralph Smith and Bill Stanley; will they vote for a sales tax increase even if it is offset by the elimination of the gas tax?

What do you all think? 

Comments

[Thomas]

I don't understand why the Governor is not talking about trading this hike in a sales tax with some cut in the income tax!!! The sales tax hike by itself will disproportionately hit lower income Virginians

[Thomas]

The gas tax is invisible anyway. You can eliminate the gas tax, but it does not mean gas prices in Virginia will drop by 17-18 cents per gallon. The attendants will "adjust" the prices accordingly to take advantage of customers and score more profit out of their wallets by raising the price as close to the national average as possible.

[Fellow Patriots]

Its a $15 registration fee NOT $10.

[Evan]

Yeah, there are some problems with your summary Chris.

You say "I will take a .8% raise in the sales tax in exchange for a 17.5% elimination of the gas tax." But the gas tax isn't 17.5%, it's 17.5 cents/gallon, which, at $3.50 cent gas is a 0.05% tax on gas.

Plus, the $10 car tax hike is actually a $15 dollar increase in registration fees, not the personal property, or "car tax."

Past there, as Thomas points out, there's no reason to believe gas prices would come down with the gas tax elimination. Every gas station owner charges what the market will bear. That has nothing to do with their costs except inasmuch as they'll stop selling if costs exceed what they can charge. There's no reason to believe lowering the gas tax would lower gas prices a penny.

That said, good political analysis, and keep up the good work.

[Alice]

Evan, I'm not quite sure about the "...what the market will bear." comment. Isn't there some sort of... zone thing that gas companies have? In other words, if your station is in a certain zone, you can't charge less than a certain price per gallon. I'm not sure if it works the other way, too. (By that I mean, I'm not sure if their is a ceiling price.)