Skip to comments.Bob McDonnell’s Bad Transportation Deal (A terrible legacy for the State of Virginia)
Posted on 02/26/2013 6:38:12 AM PST by SeekAndFind
What is it with Republicans and transportation bills? The pork-packed 2005 highway bill, which included the infamous Alaskan Bridge to Nowhere, was the fiscal low point of the Bush-Hastert years, and now Virginia governor Bob McDonnell has decided that his legacy to the commonwealth will be a gigantic tax increase to fund billions of dollars worth of dubious transportation projects. Politics is about tradeoffs and compromise, inevitably, but this is a bad deal on most counts.
There are two ways to judge the deal Governor McDonnell has cut. For those who take the inerrantist Norquistian view that any tax increase is a bad tax increase, the package is self-incriminating: The statewide sales tax will rise from 5 percent to 5.3 percent, and the state car-titling tax will rise from 3 percent to 4.3 percent. (The more burdensome locally imposed annual personal-property tax on cars is unaffected.) There are some offsetting tax reductions, but the package is a net tax increase. That is enough to inspire categorical rejection in many conservative corners, and we have some sympathy for that view. The more complicated calculation requires evaluating the ability of Virginias transportation authorities to translate the new revenue generated by those tax increases into the execution of worthwhile projects that come out on the right side of a cost-benefit analysis. Success in that venture is far from assured the several hundred billion dollars invested in transportation under the 2005 bill has not produced spectacular results.
Governor McDonnell began his term with a series of audits of the operations of the Virginia Department of Transportation, which identified about $1 billion worth of available funding that the agency was not making use of, along with a host of inefficient financial and operational practices. Reforms were made, and Governor McDonnell deserves credit for the action. But the process of executing new public construction projects in Virginia particularly in the parts of the state contiguous to the District of Columbia means managing a complex collection of partnerships between state and local players, federal entities such as Amtrak, and D.C.-centered agencies such as the Washington Metropolitan Area Transit Authority, which manages the dysfunctional and money-losing operations of the Metro, the capital areas commuter-train and subway network. That is a lot of bureaucracy and a great many parochial political interests. Between the plan and the reality lies that undiscovered fiscal country from whose bourn no tax dollar returns.
There are a few sensible measures in the plan. Much of Virginias current transportation-revenue trouble comes from the fact that its original gas tax was instituted on a cents-per-gallon basis rather than on a percentage basis. Governor McDonnells aides estimate that the Virginia gas tax today is worth less than half of what it was when instituted in 1986, while the price of labor and asphalt has continued to climb. Covering the difference between the declining real value of the retail gasoline tax and growing expenses is in fact the main impetus behind the new program. Replacing the cents-per-gallon retail tax with a percentage on the wholesale side is a reasonable reform. Other measures, notably charging hybrid drivers an extra $100 per year and adding a 6 percent tax to diesel, are bound to be politically unpopular, and dont make much sense to punish drivers for choosing more fuel-efficient vehicles is to punish thrift. It would be far better to keep government out of the business of choosing consumers cars for them and let the market sort this out.
The McDonnell administration also is giving transportation projects access to general-fund revenues, whereas they previously had been restricted to funds generated by the gasoline tax and other dedicated-purpose taxes. Governor McDonnell claims this as a conservative victory, which it is only if we define that to mean something Democrats did not want to do. (Democrats preferred raising dedicated taxes to using general-fund revenue for transportation projects.) Dedicated revenues often amount to little more than accounting fictions, but they can function to constrain spending in the categories they cover. Governor McDonnells office says his plan ensures that transportation will be treated like the core function of government that it is, but experience teaches that governments inclination to spend money on such core functions is in effect limitless.
Republicans enjoy a majority in the Virginia house, but the state senate is evenly split. In order to secure Democratic support, Governor McDonnell has also agreed to set up a commission to study Medicaid expansion, a policy to which he professes himself adamantly opposed. The governors aides argue that the Republican majority in the state house effectively ensures that the commission is a firewall against Medicaid expansion rather than an enabler of it, but majorities are impermanent things. This is the sort of compromise that has a short life expectancy.
Politically, the bill is problematic. Attorney General Ken Cuccinelli, the conservative favorite to replace the outgoing Governor McDonnell, is fiercely opposed to the transportation plan and its tax increases, while his likely Democratic opponent, former Clinton henchman Terry McAuliffe, favors it. Cuccinelli is now put in the position of running against the Republican governor and the Republicans in the state legislature as well as the Democrats. Cuccinelli and McAuliffe are currently in a dead heat in the polls, and he could have used an assist from his party rather than another hurdle. It is harder to gun as a small-government conservative when your party is enacting large tax increases. Cuccinelli might make hay of that by running as an opponent of bipartisan tax-hikers.
Virginia does indeed suffer from serious traffic congestion, particularly in the northern part of the state, where the bloated work force of the ever-expanding federal government lolls in the D.C. suburbs like the worlds most contented occupying force. But the cure for Big Government in Washington is not Big Government in Richmond, and Governor McDonnell should know as much. It is no secret that he is testing the presidential waters for 2016, and we suspect that he felt some pressure to produce a hallmark bill after the failure of some of his better ideas, such as privatizing Virginias ridiculous state-run liquor soviet. The resulting legislation must be regarded by conservatives as a black mark on the governors résumé. What remains to be seen is not whether this is a bad deal but how bad a deal it is.
If the GOP nominates McDonnell, Scott, Christie or Rubio, it cam look forward to another defeat in 2016.
With the GOP increasingly acting like a Lite Democrat, who needs it? Voters will prefer the real Coke over the pretend one.
VA is going to get a Democratic Governor this November, no thanks to McDonnell.
And that lib dim gov will be Macauliffe....one of the most smarmy, disgusting, back room corrupt dealers in politics...
Well done, GOPe....
McDonnell, Bolling, Albo, Lemunyon, et. al. are RINOs who see the writing on the wall and want to stay relevant. No surprise here. The only thing left is for McDonnell to veto the voter ID bill on his desk.
The housing boom is still going on in Maryland too. It turned Howard county (SW of Baltimore) from solid Red to solid Blue with endless new housing developments and road projects, and its new citizens just love tax increases.
This is the flaw in Thomas Sowell’s unlimited land development views, when teamed with endless Fed spending, OH, and lots of immigration.
They vote for bigger government and higher taxes.
In spite of all the claims made that Republicans want to cut government spending, it simply is not true. People want the pork brought home to their area, no matter what they say they want. All the Chamber of Commerce types get misty eyed when somebody talks about government money coming their way. Every state, city, and town has an economic development department that attempts to plan the local economy and pick winners and losers in business. Face it, if Americans really wanted smaller government and less spending, we would have it by now.
“Government is the great fiction through which everybody endeavors to live at the expense of everybody else.” ~ Bastiat
Well done, GOPe...."
You said it. I cannot, for the life of me, fathom WHY that crook is ahead of Ken Cuccinelli in the polls. And I certainly can't imagine him as governor of this state.
We might as well get used to it, especially once Bolling announces he's running as an independent.
Yes. that’s going to happen.
I don’t even recognize this state anymore.
In think McDonnell has a point when he argues that, without spending more on transportation, Virginians will be paying even more due to the costs of congestion — the value that travelers place on their time, higher gas bills, more wear and tear on their cars, land use restrictions required by clogged roads, and increased insurance rates due to increased likelihood of accidents.
The needed revenue should have been raised entirely from the users, via the gas tax or tolls. And some of the mass transit spending will not be cost effective. But Virginians could not wait for years for the perfect bill to get passed.
Virginia has run budget surpluses for a few years now. Out of those surpluses, only a very small percentage was targeted to roads. If roads were that important, shouldn’t more of those surpluses been directed at roads? How about directing some of that rainy day fund to roads? (I have basic philosophical issues with the rainy day fund.)
That just shows the ruling elites are not interested in actually solving the perceived problem. They are interested in their next election, their power and their own wallets. In that order.
The GA has refused to use general funds to cover roads - at least maintenance could reasonably be part of the general funds.
I am sick of the first reaction to any perceived problem being raise taxes, fees, fines and tolls. McDonnell ‘audited’ VDOT and magically found $1.2B (I think - it was a whole lot of moolah, regardless of the exact amount). We all know that the appropriation act is chock full of payola, graft and corrupt use of OUR money. They need to cut other areas in the budget before coming to us and extorting more money from us - especially in the middle of a recession. How stupid can they possibly be?
I am so angry about the transpo/medicaid expansion bills that I could spit nails.
He'll veto that for sure. I am so disgusted with him - there are no words.