The $360 Million Mirage
It's time for Republicans in Richmond to get real about transportation.

Sunday, July 6, 2008

VIRGINIA LAWMAKERS are locked in partisan battle over a rescue package for the state's badly underfunded transportation network. In Richmond, where a special legislative session transportation resumes Wednesday, all is pessimism: Virtually no one who understands the scope of the problem believes that the legislature is likely to do enough to buttress the state's basic infrastructure and economic future. In the Republican-controlled House of Delegates, it's not even clear that Speaker William J. Howell (R-Stafford) will allow a full debate on the merits of various bills. Against that gloomy backdrop, it is worth examining the stakes of a game that has already cost the commonwealth dearly.

Take Northern Virginia, the most globalized, vital and economically resilient portion of the state. Using numbers generated in fiscal 2005, the Northern Virginia Transportation Authority estimated two years ago that the region needed $700 million annually in new revenue to build an ample system of roads and rails. Adjusted for inflation, the need has grown to $800 million to $1 billion annually. Compare that with the Republican proposal: a nominal $360 million a year in new funds, almost all of it in taxes and fees that the region would impose on itself. (Never mind that highway funding is traditionally a state responsibility in Virginia.) That's less than half what's needed, but it's not inconsequential. Yet the closer you look at that number, the more it's a mirage.

Right off the top, subtract $70 million to $80 million annually. That's the amount that will be drained from the construction budget for the region as a result of the state's underfunding of its separate maintenance fund. (By law, maintenance deficits are plugged using money earmarked for construction.) Over six years, the state would skim some $525 million from the region's construction funds in order to pay for upkeep, meaning that any new funds would be replenishing a very leaky barrel.

Here's another squishy aspect of the GOP approach: Two-thirds of the "new" money for Northern Virginia is based on giving the region's local governments the power to raise real estate taxes on office buildings and other commercial property. In fact, local governments already have that authority; the legislature granted it last year. But the effect of that is to pit jurisdictions against each other, making each loath to undercut its competitiveness by taxing businesses more heavily than its neighbors. Little wonder that so far, just two of the region's nine jurisdictions have raised that tax -- and they've done so moderately.

Virginia's roads network is facing meltdown. Fixing it means new statewide funding to patch the maintenance deficit as well as regional packages for Northern Virginia and Hampton Roads. If Republicans can't stomach doing both this year, they should at least get real about the regional packages now and brace themselves for revisiting the issue until the problem is solved.