Home Transportation My Advice to Cuccinelli and McAuliffe: Oppose the New Transportation Plan!

My Advice to Cuccinelli and McAuliffe: Oppose the New Transportation Plan!


(It’s kind of amusing that Paul Goldman has come to a similar conclusion as I have – oppose this transportation plan – but for almost completely different reasons. Of course, I’m looking at this much more from the perspective that it’s TERRIBLE public policy, while Paul’s doing “200-proof politics,” as he puts it. In short: Paul’s concluded this is bad on the politics, while I’ve concluded it’s bad on the policy merits. That’s two strikes against it right there, anyone care for a third? Heh. – promoted by lowkell)

by Paul Goldman

To say I am shocked at the details of the transportation plan agreed to by Senate and House conferees is an understatement. A couple of us who have done a lot of campaigns tried to game it out the past few days. I confess: Nothing like this ever came close to being on our radar screen.

Maybe Governor McDonnell is desperate enough for a deal to buy this one, after all he isn’t running in 2013. But my advice to Terry McAuliffe and Ken Cuccinelli: politically speaking, you would be wise to oppose it.

The original McDonnell transportation plan – basically swapping the gas tax for a sales tax – seemed to me to be a clever political play; not perfect, maybe not even all that good, but darn clever in an election year. There was risk in backing it in a gubernatorial election year. But with some tweaks to protect a loss in education and mental funding, and the very poor, I thought it was something Terry could embrace, maybe even Ken, although the K-Man might not be constitutionally able to give up his anti-tax image built up over many years.

As for Bill Bolling, he had been for it before he was against it. So, I figured he would simply be for it again. At least it was in the ball park; surely the elimination of the gas had a good political cover story so essential in an election year. That’s life, folks.

However, the governor’s original plan has now been discarded and replaced by the new Senate/House conferees plan. My reaction: Do these guys take Virginians to be total fools or just mostly so? This is a con job, an attempt to make it appear the gas tax has been eliminated.

 The governor’s argument – we need to go from a user fee based system to a different source of revenue to solve the transportation mess – is being followed. But as they say, the devil is in the details.

The gas tax hasn’t been eliminated: rather, it is being hidden, called something else. Instead of calling it a gas tax user fee, what we will now have a big new “wholesale tax on distributors” that will be passed on to consumers, and an even bigger “6% wholesale tax on diesel fuel,” which will be passed onto either consumers, or taken out of the hide of truck drivers and other workers in the transportation grid.

To make matters worse, the line in the sand drawn by the Senate on any shift in general

fund money from education and mental health and the like to transportation has been breached big time. The Senate said no more than $50 million a year could be switched. But this proposal does $200 million a year. $200 million; this is enough to fund scholarships for most of the A and B students in Virginia who are willing to stay in the state to go to school.

The Senate/House conferees have then added yet another new tax, raising the titling fee on motor vehicles by 33%, from 3% to 4%. Where did this come from? It is yet another new user fee, and a big one at that.

As for fixing the Internet Sales Tax discrimination, this plan says: if that doesn’t happen soon enough, then we will load on an additional 1.6% tax on the wholesale price of gas.

THE BOTTOM LINE POLITICAL POINT: Under this plan, it is very conceivable GAS TAXES, IN ANOTHER FORM, are going UP, NOT DOWN!

Or put another way: the governor, if he signs this bill, will in effect be REVERSING COURSE, embracing a user fee system is has said for weeks is broken, and cannot fix our transportation mess.

This is not speculation on my part. The governor’s original plan raised the sales tax to 5.8%. This Senate/House conferee plan raises it only to 5.3%, barely more than it is now. Yet both plans raise roughly the same amount of money in the aggregate. So, the math is self-evident: If you are getting far less from the sales tax in the Conferees plan, then the only way to make up the difference is by using the very type of user fee approach the governor has said for weeks now will not get the job done for Virginia.

The bottom line: The Senate/House proposal does raise a lot of new revenue for transportation, and to the extent we have a problem in that area, it might be the best one can get. The “least worst option” I have written about, in other words. But my column discusses 200-proof politics, not optimal policy. In some respects, the conferees’ plan ironically resembles the Senate conservative plan, which made no more sense before than it does now.

Politically, I think the conferees plan, with the right gubernatorial campaign, can be painted in the end as a Trojan Horse for simply a big tax increase for transportation: nothing more, nothing less, no bells, no whistles, no extra political points. Just basically your bread-and-butter package of higher taxes that will by November be seen for what it is.

If you count all the potential increases in taxes on gas that will be passed through to the consumer one way or another, I say this will raise the effective gas tax rate. Or quote the old line: A rose (in this case a thorn) is still a rose (or in this case a thorn) by any other name.

Since Cuccinelli and McAuliffe don’t have a vote: I say they should politely decline backing it. If they have the stomach for the fight, they should actively oppose it. At least we can insist on truth in packaging, right? If the governor wants to reverse course and tell Virginians he really is willing to take whatever he can get, then he needs to be honest about it. If not, then he needs to fight for his principles here.

Others more qualified can do the policy. As for the gubernatorial politics, I think the political play for Terry McAuliffe and Ken Cuccinelli is to oppose this proposal, not embrace it.  

  • demomatic

    Its worth noting that tying the gas tax to the price of gas (as a percentage) makes little sense. Logically you would want to do the opposite, by increasing the gas tax when the price of gas was low, and lowering it when it the price is high.

    Its also important to know that none of the Democratic gas tax indexing plans used this methodology, their indexing was to inflation, or the cost of road construction, or to the increasing net gas mileage of Virginia’s vehicles.

    The plan as is, would needlessly increase volatility of pump gas prices at a time that the price is already very volatile- its been up or down 90 cents over the past year.

    This could have massive unintended consequences, people already freak out when the price rises ten cents overnight- under this bill such price swings would be exacerbated.

  • Statement of Governor Bob McDonnell on Transportation Conference Report

    RICHMOND- Governor Bob McDonnell issued the following statement following agreement by a legislative conference committee on a comprehensive long-term transportation funding plan for Virginia. If passed by the full General Assembly, the bill will mark the first time since 1986 that Virginia has enacted a comprehensive transportation funding and reform measure.

    “It has been 27 years since we have enacted a long-term, sustainable, comprehensive transportation funding plan for Virginia. During those nearly three decades of inaction we have witnessed congestion worsen and the quality of life of our citizens decline.  Just this month, the Texas Transportation Institute released a new study finding that our growing immobility has made the Northern Virginia/Washington region America’s most congested area. Virginia Beach is America’s 20th worst. Richmond, the 60th. The inability of Virginians to move quickly around their neighborhoods and cities comes with a major financial price tag. The Institute estimates our congestion costs drivers in Northern Virginia $1400 a year. It costs drivers in Virginia Beach $877 per year and drivers in Richmond $581 per year. The bipartisan failure to address our transportation needs for almost three decades has cost every citizen of this state thousands of dollars, and countless hours of time that could have been spent at home and at work. This year, we have finally worked together, across party and regional lines, to fix this quality of life issue.

    On January 8th, when we launched our effort to fix transportation, we laid out three broad goals. First, we called for decreasing Virginia’s reliance on the steadily decreasing transportation revenue source of the gas tax. As cars get significantly better mileage, and more Americans choose more alternative fuel vehicles, it is an inescapable fiscal reality that the gas tax is no longer a dependable, long-term sustainable source of transportation revenue. The plan agreed to today achieves that goal. By eliminating the current form of gas tax in Virginia, the amount Virginians will pay at the pump will be reduced by an estimated 6 cents per gallon. That means Virginians filling up a 15 gallon tank will save .90 cents each time they go to the gas station. If they fill up once a week they will save almost $50 a year. In total, it is estimated that this change will save motorists $272 million in fiscal year 2014 alone.

    Second, we made clear that future transportation funding in Virginia must be much more closely tied to the existing sales and use tax, which tracks economic activity. The agreement reached today does that by matching a reduction in gas taxes with an attendant, slight .3%  increase in the sales tax, with the new revenue going to transportation. This change in funding mechanisms will allow future transportation revenue to grow in tandem with the economic prosperity of the Commonwealth. Every Virginian relies on and benefits from our transportation system. Tying transportation funding to a tax that every Virginian pays is a common-sense move. In addition, the sales tax is a less regressive tax than the gas tax.

    Finally, we stated that transportation is a core function of government. The responsibility of state government to provide for roads and rail is equal to our responsibility to provide world-class schools for our children and public safety in our communities,. That means transportation must be treated like a core function of government, and it must share in our growth in general fund revenues to a greater extent than currently structured. This conference report will generate almost $200 million per year in year five in new general fund money for transportation, and nearly another $200 million in new general fund money from collecting the existing state sales tax under an anticipated federal law. This is a recognition that transportation is vital to the future prosperity and economic well-being of the Commonwealth, and it must be treated as such. It makes transportation a priority in Virginia’s budget.

    The statewide component of this plan is revenue neutral in the first year for nearly all Virginians. This innovative tax reform bill provides critically needed new funding for our transportation system through the utilization of tax reform and the general fund.  The bill also includes regional self-help provisions that have long been sought by legislators and local government officials in Hampton Roads and Northern Virginia, the two most congested regions of the Commonwealth.

    In my State of the Commonwealth Address, I said we must not end this session of the General Assembly until we had fixed transportation. This bill accomplishes that. I also promised that in any comprehensive plan there would have to be, by simple legislative necessity, components that not everyone would like. That’s the nature of a comprehensive piece of legislation that must pass a diverse legislature. This bill certainly, depending on the philosophy of each individual legislator, does that. But the important thing is we now have the comprehensive transportation funding plan that has eluded Virginia for 27 years. Now it is time to vote.

    As the conference report heads to a final vote in the General Assembly, this is our collective opportunity to join together, as Republicans and Democrats,  to solve one of Virginia’s most intractable and longstanding problems. This is a moment to find common ground and get results for the people of Virginia. It is why they have sent us here. Not to argue and posture, but to cooperate and solve problems. With the approval of this transportation plan we will strengthen Virginia’s economy, help create thousands of good paying jobs, and improve the lives of every Virginian in every city and county. I urge the members of the General Assembly to approve this bill. Following that vote our office will conduct a thorough legal and policy review, as we do with any piece of legislation, and make any amendments we may deem appropriate.”

  • McAuliffe Statement Urging Passage of Transportation Compromise

    Virginia gubernatorial candidate Terry McAuliffe issued the following statement on the transportation funding compromise:

    After years of political and literal gridlock, the General Assembly conferees have produced a plan that would provide funding to improve our transportation system and keep Virginia competitive.  This proposal is not perfect but more inaction is not an option. Inaction on transportation has meant that our families have been stuck in traffic, companies have seen their products delayed and the Commonwealth has seen our competitiveness reduced. Virginians expect their leaders to pass a mainstream solution now.

    This proposal is not perfect. For example, I do not support the diversion of General Fund resources because of the potential future impact on education, healthcare and public safety. However, Virginians are demanding that we compromise to find a mainstream solution and that compromise will necessarily be imperfect for both sides.  

    Virginia simply cannot afford to miss this opportunity to make substantial progress on transportation. If we want the Commonwealth to be the best place for business and jobs of the future, we need to have a transportation system that is modern and efficient.

    I applaud Governor McDonnell, Lt. Governor Bolling and leaders of both parties in the legislature for working hard to find a solution. I am urging members of the House and Senate to support this mainstream compromise.