By Paul Goldman
Once again, today we have another Washington Post editorial that makes them feel good. But, has their strategy become part of the problem on transportation instead of the solution?
To wit: the Washington Post says that Virginia will need an estimated $100 billion in additional transportation funding over the next twenty years. They cite no Blue Ribbon Commission source, which even Creigh Deeds, their endorsee for Governor, said was necessary before even he, the first Democrat to try and run on a pro-tax platform, would agree to sign such an increase.
Moreover, I presume, given the standards of finance, that the $100 billion figure is based on the construction cost of the materials, labor, etc, and thus doesn’t include the financing costs. Moreover, does the $100 billion include an inflation factor, or does it reflect only the construction cost in current dollars?
Naturally, these are important variables, as the financing cost of these projects if bonds are used could easily turn the $100 billion into $200 billion.
However, let’s assume it is a straight $100 billion and that we are going to pay in cash for all the roads, no bonds, go back to the Pay As You Go method.
Accordingly: For analysis purposes, assume we would need 5 billion new dollars every year for twenty years. The Post knows the taxes to be increased would be either the gas and/or sales taxes, which are considered regressive, falling hardest on the poor and middle class. Yet, right now, Senate Democrats fear losing even bigger in two years if they readjust the top tax bracket back to the boom times under Clinton for millionaires!
Moreover, let’s examine this $100 billion number ($5 billion per year for 20 years). A one-cent increase in the gas tax raises $50 million per year, give or take. Thus, the Post says Virginia leaders, to do the right thing, need to raise the gas tax by 100 times that amount – $1 per gallon (since Kaine tried the sales tax route and got nowhere, let’s leave that alone for now) – to get the job done.
Let’s be serious — even the most pro-tax legislatures wouldn’t dare dream about a 10-cent-per-gallon increase in the gas tax, let alone a $1-per-gallon one. And even a 10-cent-per-gallon increase would only raise $500 million per year, or barely 10% of the money needed to do what the Post said is vital.
Now, in the for-profit college world, a 10% graduation is actually very good for some of those places: but generally speaking, if only score ten out of a hundred on a problem, that really isn’t doing a whole lot.
Meaning: By the Post’s own numbers, they created a dynamic that says no Governor, no GA, no one can possibly do what is necessary or even close.
Let me put the $100 billion dollar figure in perspective this way. Virginia has about 1/40th of the national population. President Obama’s stimulus plan had maybe $400 billion in infrastructure spending. So assume Virginia’s share was $10 billion.
That means the Post is saying that for a Governor and General Assembly to be addressing this problem in a responsible fashion, Virginia has to raise enough taxes and tolls to fund the equivalent of one Obama Stimulus package every two years for the next two decades!
I ask you: Does throwing out the $100 billion number help or hurt at this point?
Instead, I say again: The smart strategy is to forget talking about the money and start focusing on coming up with the vision, the 2050 Transportation Vision that lays out what the state will need to be all it can be. A wish list of $100 billion isn’t a plan.
A better approach: Once you can get some form of bipartisan agreement on the vision, on what VA needs to do, then you at least have the chance of having the kind of discussion needed to fix the problem.
So I say, let’s give Governor McDonnell a retail-only ABC privatization plan that meets the revenue and other criteria [it can be done although the Big Liquor interests will not like it] if he will agree to be the first Republican Governor to form the kind of top draw heavy hitter Blue Ribbon Transportation 2050 Commission needed to get a bipartisan vision.
Without such a Commission, no bipartisan transportation fix is possible. So the sooner the better that we set one up, at least in terms of real leadership.