Home Transportation McDonnell Transportation Plan Fundamentally Flawed by Doing Away with Key User Fee

McDonnell Transportation Plan Fundamentally Flawed by Doing Away with Key User Fee

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(UPDATE: Wow, Jim Bacon demolishes this monstrosity, writing “There is no way to sugar-coat this: McDonnell’s transportation-funding package would be an unmitigated disaster.” Yep. – promoted by lowkell)

Gov. Bob McDonnell just announced his transportation plan, which would do away with the gas tax while raising the sales tax. It may be fundamentally flawed, but give McD his due: he has proposed a bold idea, making Virginia the first state to do away with gas taxes – a user fee – and replacing it with general taxation, such as a Sales Tax.

Except for one problem: loading up the sales tax for transportation was never the intention! To the contrary, the sales tax was intended as the key funding source for EDUCATION, not for transportation.

As I wrote yesterday, the big issue in this session is: transportation vs education vs Medicaid, with McD now saying Medicaid might be more doable than he first thought. It is starting to emerge as predicted.

Question: Can the sales tax serve two masters, transportation and education? The answer is NO.

The user fee concept of a gas tax must not be totally abandoned or education loses in the long run.  

As I wrote last week, we needed a debate in the state this year on whether the most important user fee in the state – the state gas tax which was created to make sure users of the highways paid for this usage directly – still has a central role to play in funding transportation in the 21st century.    

The gas tax stood as a great innovation in the early part of the 20th century and led to Virginia having one of the best maintained road systems in the country.  But starting in 1986, with the passage of the Baliles 1/2-cent gas tax dedicated to transportation, the gas tax has become less important over time as a source of transportation funding.

BUT it still contributes in the vicinity of $850 million a year.

Governor McD now proposes to go the “whole hog” and eliminate the gas tax, replacing it with a general tax, about another 0.8% on the sales and use tax, bringing it to around 6% in round numbers.

Give him credit for a bold idea, being the first state to eliminate the gas tax is a potentially big national seller for an image.

But he is now putting both transportation and education ON THE SAME REVENUE SOURCE: The sales tax. Do we really want to do this? I think we need a real discussion in this state, as I have been saying for months now.

Can the sales tax serve two masters, transportation and education? I don’t think so. user fees such as a gax tax must play a role in transportation funding.

THE GOVERNOR MAKES A FUNDAMENTALLY FLAWED MISTAKE DOING AWAY WITH THE USER FEE CONCEPT OF A GAS TAX.

The gas tax may not be as powerful a tool as before in fairly apportioning the burden of maintaining and building roads. But it must have a place. Otherwise, THE BIG LOSER WILL BE EDUCATION IN THE LONG RUN. And that’s not acceptable.