Transit Money Transfers at Issue
By Steven Ginsberg
Washington Post Staff Writer
Monday, January 23, 2006
Five times Virginia leaders have taken money from the state's transportation trust fund. All five times they said it was the only way to deal with a sinking economy. And all five times the moves slowed efforts to improve Virginia's road and rail network.
Timothy M. Kaine (D), Virginia's new governor, says he is determined to prevent a sixth withdrawal and has proposed passing a state constitutional amendment that would prohibit such cash transfers. He also says he would approve new spending for transportation only if he could be sure none of it would be diverted to other services.
But the stand that helped elect Kaine in November is getting a mixed reception among some Virginia leaders who see transportation improvements as vital to the state's future. They say that, although it is important, locking up transportation funds shouldn't get in the way of raising more money.
"I don't think Northern Virginians are likely to get held up on the intricacies of an amendment," said William D. Lecos, president and chief executive of the Fairfax County Chamber of Commerce. "They're going to say: 'What did you do?' We've always said you can't wait to do the rest of the necessary improvements until [the amendment passes] because, in essence, it's a point for delay."
The amendment also could set up a fight with some lawmakers who are allies in Kaine's efforts to raise more money for new projects.
Sen. John H. Chichester (R-Northumberland), who backs a plan that would raise more than $1 billion a year in new revenue, has argued that the money should remain available for the next emergency, or at least be accompanied by a similar measure regarding the state's general fund, the main source of funding for other services, such as education.
"If you're going to lock one, you ought to lock the other," Chichester said. "A constitutional lock on either, however, I perceive as a cluttering of the constitution."
Chichester also said a lock has the potential of tying legislators' hands in years to come.
During his address to the General Assembly last Monday night, Kaine called on members to "join me in making plain to all Virginians that dedicated transportation funds will only be used for transportation." He added that "Virginia needs a constitutional amendment to protect transportation dollars permanently."
Virginia's transportation trust fund, established in 1986, consists of money drawn from taxes and fees -- gas taxes; a portion of the state sales tax; tolls; and driver's license, vehicle registration and other fees -- that pay for highway, transit, port and airport expenses.
Transportation has its own bank account because projects cost so much and take so long to build that it makes sense for them to have a dedicated, stable funding source.
But because the trust fund maintains such a healthy balance -- Virginia's is projected to be about $900 million -- it tempts lawmakers when the economy goes sour.
Maryland leaders have dipped into that state's trust fund during economic downturns six times since 1984, said Erin Henson, a Maryland Department of Transportation spokeswoman.
It's happened twice during the administration of Gov. Robert L. Ehrlich Jr. (R), for a total of $315 million. Henson said the money transferred in 2003 and 2004 will be repaid by 2010.
It's happened repeatedly in Virginia since 2002, when Gov. Mark R. Warner (D) used $317 million from the fund to help offset a state budget that was billions in the red. Warner promised that the maneuver wouldn't slow construction, and he took out a special loan to repay the fund immediately.
But the moves created a $38 million-a-year gap in transportation funds, according to state officials. State lawmakers replaced that amount each year until a budget surplus allowed them to repay the loan in full last year, but the uncertainty and the timing of the payback slowed projects.
"It affected the amount of money distributed to districts," said Thomas F. Farley, who was the Northern Virginia administrator for the Virginia Department of Transportation until he retired in 2004.
Farley added that Virginians would repay a far greater amount than was taken from the fund because costs, particularly for buying land, have risen dramatically.
"Time is money," he said. "Every dollar lost was potentially a project that couldn't begin."
In the next three years, the state transferred a total of $61.7 million, said Neal Menkes, a fiscal analyst for the Senate finance committee. Menkes said the five transfers, including one from the early 1990s, totaled $588.9 million.
Warner's actions, which were approved by the General Assembly, had another impact: They made some leery of raising more money for transportation projects.
That view helped sink ballot proposals in Northern Virginia and Hampton Roads later that year that had asked voters to raise taxes to pay for billions in transportation improvements.
"The perception by many Virginians is a lack of confidence in the Department of Transportation and the General Assembly," said Sen. Thomas K. Norment Jr. (R-James City). An amendment "creates a very vivid commitment by the legislature and the executive branch that we will not put our hand in the transportation trust fund cookie jar to pay for non-transportation expenses."
John Milliken, Virginia's transportation secretary during the early 1990s, when $173 million was taken from the fund to balance the state's budget, said it was necessary to use the money then, but he now supports a constitutional amendment because the state has since established a rainy day fund to tap during economic crises.
"There are just too many other demands that if we want to keep it segregated, we have to have a way to do so that can't be breached," Milliken said.
Staff writer Rosalind S. Helderman contributed to this report.
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