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.

  • http://www.bluevirginia.us lowkell

    might even turn out to be a net negative, plus as an added bonus it raids the general fund and screws hybrids and electric vehicles. What’s not to like…er HATE?!?

    P.S. The dead giveaway that this plan sucks is that Bill “ALEC” Howell endorsed it, as did Ken Kookinelli. That’s all you need to know.

  • http://www.bluevirginia.us lowkell

    contained in this fact sheet, it appears that about 1/3 of the money in his plan comes from revenues Virginia may never see, as they depend on Congressional action. Good luck with THAT! LOL  Another $811 million comes from raiding the General Fund, aka screwing over education (the year of the teacher? try the year of SCREWING OVER the teacher!). Then there’s $66 million from taxing alternative fuel vehicles, which makes no sense at all. This plan is truly awesome…if you’re a masochist, perhaps.

  • loudoun independent

    I thought you guys would be happy with eliminating such a regressive tax like the gas tax, and replacing it with something far more progressive, like the sales tax.

    I guess if a Democrat had proposed it, you’d be on board. Go figure.

  • quetzalmom

    The gas tax taxes those who use the roads most. The cost of transport of goods and service is already incorporated into the price charged to the purchasers of those goods. If revenue is not enough to pay for the roads those goods travel, increase the gas tax and the the portion that should be assessed to non-drivers will trickle down upon them.

  • Jim B

    Easy to see why a republican should never be in charge of government. Besides anti tax their next thing is cut spending. Why does my little county now have two high schools, increase in population. So how do you cut spending unless you can convince people to live somewhere else.  

  • Va Breeze

    Unbelievable-do these guys have a clue in the Governor’s mansion?

  • sonofkenny

    You drive a gas guzzling SUV and suddenly you can do so far more cheaply…

    You drive a fuel efficient hybrid or electric vehicle, you are suddenly charged and extra $100 to use the roads.

    You are poor and you suddenly have to pay more in sales taxes so those that drive gas guzzling SUVs can drive more..

    Good plan there Governor !