The Washington Post reports that Gov. Kaine's "latest effort [on raising revenue for transportation] appears to be doomed."
...House Republicans said Monday the governor's $1.1 billion plan has virtually no chance of passing their chamber, and some Senate Democrats vowed to rewrite it to include an increase in the state's gasoline tax.Del. David B. Albo, a Fairfax Republican involved in transportation negotiations, said Kaine's plan had a "0.000 percent chance" of winning approval.
And then there's this:
Minutes after Kaine unveiled his proposal, House Majority Leader H. Morgan Griffith (R-Salem) and Minority Whip M. Kirkland Cox (R-Colonial Heights) predicted it would not reach the House floor."I don't see anything positive in the governor's plan that makes it something that's likely to be considered," Cox said. "It's all tax, tax and more tax."
In other words, it's "my way or the highway" -- actually, the crumbling highway, collapsing bridge and overcrowded Metro train -- for House Republicans. Apparently, Messieurs Griffith, Cox, Albo et al. will vote for nothing that contains one penny of tax ("fees," now, they're a different story...), regardless of the form (gas tax, property tax, estate tax, grantor's tax, car tax, horse and buggy tax, you name it) or the purpose (transportation, schools, public safety, etc.).
That's it, that's the House Republicans hard-right, flat-earth, no-taxes-ever philosophy in a nutshell. And I say this as someone who has serious issues with Gov. Kaine's latest proposal. However, don't just declare it DOA, for god's sake, use it as a starting point for negotiations, work on it, tweak it, improve it! Simply throwing up your hands and saying "hell no!" is not responsible governance. Perhaps this is why Virginia Republicans keep losing elections? Pathetic.
P.S. As Senate Majority Leader Dick Saslaw (D) says, "If . . . that crowd just wants to stick their heads into the sand and pretend we don't have a problem and run this state into the ground, I can't physically force them to do this." Very true.
UPDATE: The Richmond Times Dispatch writes, "Posts on two closely read Democratic blogs, RaisingKaine.com and NotLarrySabato.typepad.com, were sharply critical of Kaine for relying on the sales tax, describing it as unfair to poor people." Frankly, that's typical corporate media oversimplification. In actuality, I discussed the fact - and it is a fact -- that the sales tax and the gas tax are both regressive (e.g., they hit lower income people harder, on a proportional basis, than wealthier people). I agreed with the Commonwealth Institute that if we're going to utilize regressive taxes to achieve public policy goals such as transportation, we should make an effort to offset the regressivity in other ways. I also stated my preference for a dedicated gas tax over a broad sales tax, just as the federal gas tax is dedicated to the Highway Trust Fund. Finally, let me just emphasize that I do not believe the answer here is to just throw up our hands and give up, as Dave Albo et al. want to do. The answer is to work at this until we get it right for Virginia. Isn't that why we send these people to Richmond?
In a memo dated February 25, 2008, the Virginia Secretary of Transportation predicts a reduction in Virginia's Six Year Transportation Construction Program of $1.1 Billion. The memo goes on to point out that since maintenance is always funded first, money will be diverted from construction to maintenance, and thus, the shortfall will cause a 44% reduction in primary, secondary and urban highway construction.As always, there are two sides of the story.
Others say that last year; by transferring taxes we already pay, the General Assembly pumped $300 Million per year into transportation construction. And for maintenance, the Assembly increased diesel fuel taxes, overweight truck fines and annual vehicle registration by $10, resulting in an additional $124 M. Given this historic infusion of money, there should be plenty of money.
What is the truth? Well the answer, as always, lies somewhere in the middle. So let's look at the facts on transportation maintenance and construction funding, using 2010 as our base year for analysis.
Transportation maintenance is funded by a series of taxes and fees. The largest is Virginia's Gas tax. It comprises approximately 50% of the total. The next largest are the Motor Vehicle Sales and Use Tax (25%), Motor Vehicle License Fees (14.6%), International Registration (4.1%), and a 1 cent/$100 on the purchase of a home Recordation Tax (1.2%). The remaining miscellaneous fees account for 5.1%.
Because of the Recession, estimates for this fund have been reduced. Virginia expects drops in Gas Tax Revenues of 4.6%, Motor Vehicle Sales Tax reduction of 7.9%, Recordation Tax reduction of 13.5% and Motor Vehicle Licensing Fees of 0.9%.
What this all means is that including the loss of $65M for Abuser Fees Revenues, In 2010, Virginia thought it would have $1.658 Billion for highway maintenance and will only have $1.515 Billion - a reduction of $143.6 M (an 8.66% drop in revenues).
The Transportation Construction Budget is funded by a similar source of taxes and fees. The largest is the portion of the Sales & Use Tax that is put toward construction, which comprises 47.8% of the total construction budget. The remaining sources and their share of the total revenues are as follows: Motor Vehicle Sales Tax (18%), Auto Insurance Tax (11%), Gas Tax (9%), Interest (3.8%), Recordation Tax of 2 cents per $100 in value (3.1%), Motor Vehicle License Fees (1.7%), Rental Car Tax (2.6%), and remaining miscellaneous fees (3%).
Again, because of the Recession, there is a predicted drop in transportation construction revenues in 2010 of $56.8M (a 4.5% drop).
Thus, in 2010, Virginia will be receiving a total $200.4 M less transportation construction and maintenance revenues than it expected.
So here are the two sides of the debate:
1. Those who believe this is a catastrophe are calling for a statewide tax increase.
2. Others say that this is the normal cyclical cycle. And that these numbers all assume that this recession will last for six years. They state that all of these revenues will increase over the course of time and that this predicted shortfall is a "sky is falling" number.
What is the truth?
Well it seems to me that the truth is somewhere in the middle.
When one looks at the VDOT chart, all revenues - even expecting a continuing recession - are expected to increase over the next 6 years. And the revenue sources that track economic activity do quite well. Motor Vehicle Sales and Use tax is predicted to go up 14%, and Sales Tax revenue increases 29%. (Note, the VDOT chart must be predicting a housing slump for a full six years because Recordation Taxes only increase 1% in their chart).
The funding sources that do not track economic activity, however, remain flat. This is because they are flat fees on an item, and do not increase as price increases. Most notably among these are Motor Vehicle License Fees ($X per auto) which is estimated to increase only 1% over the next six years. The Gas Tax (17cents per gallon) fares much better. It increases 10.1%, but this is still only 1/3 of the sales tax growth. These two sources make up 64.6% of the Maintenance Fund and 10.7% of the Construction Fund. Note that these do not increase with price. The Gas Tax is on a per gallon basis, not on the price of gas, and the Motor Vehicle Fee is on a per car basis, no matter how much the car is worth.
To make things worse, given that transportation construction inflation is said to be between 10-14% per year, having such large part of the Transportation Budget tied to these flat revenue sources is a big problem. Secondly, Virginia adds 200 lane miles per year in new roads. In summary, every year there are more roads to maintain and they get more and more expensive to maintain and build.
So the good news is that 35.4% of the Maintenance Budget 89.3% of the Construction Budget will increase when the economy turns around. The bad news is that 64.6% of the Maintenance Budget and 10.7% of the Construction Budget increases at a rate must less than population and inflation, and lane miles for maintenance keep increasing.
So in conclusion: (1) Things are not nearly as bad as VDOT claims and new taxes are not needed; (3) But it seems that the State must do something to make Gas Tax and Motor Vehicle License Fees track the economy and inflation or we will be forever short of transportation funds.
Humm is there support to index the gas tax perhaps???
I don't get it. Half of this he's blaming the economy for less tax revenues right now (which is true) and then saying that once things pick up again we'll be ok because we'll have our funding back. Problem with that argument is that funding is NOT ok regardless of the overall economic situation. We weren't properly funded the past few years when things were better economically and we won't be properly funded (assuming the current revenue base) after the economy turns around.
The other half he's says the "historic" $124 million infusion should be plenty of money.
The third half he's saying that we need to do something about some of these taxes and fees to make them "track the economy and inflation". I have no idea what he's getting at with this. Should we bump up that 17.5 cents (in late 80's dollars) to today's value to map inflation? That would be a pretty juicy tax increase Dave - I thought you were against such things. Or maybe because the economy is dipping we should lower the tax? But what happens when the economy recovers? Big tax increase?
I'm glad to hear that he's open to new ideas but I'm highly skeptical that his new ideas are anything more than than the standard flat-earth "tax cuts fix everything" approach.
I thought it was good to provide another side to show that things aren't as bad as some would have us believe
He admits that the truth is somewhere in the middle
Remember the business as usual crowd (more revenue for more of the same) is strong
There is plenty of jockying going on by both sides. It shall be very interesting
Maybe a scaled down version of what Kaine is proposing perhaps. Although getting a statewide anything through is going to be nearly impossible.
However, as we all know status quo hurts NoVa because maintanence always has priority and will continue to steal from any dollars available for new construction