(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.