Robert F. McDonnell

McDonnell's Transportation Proposals

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Sunday, October 11, 2009

Robert F. McDonnell issued a 20-page transportation plan promising to generate $1.5 billion a year for the next 10 years for road and rail improvements. Close inspection, however, shows several overstated funding estimates and other ideas with little chance of happening. The highlights:

-- Sell Virginia's 330 state-run liquor stores ($500 million). These one-time proceeds would be offset by the permanent loss of about $100 million in annual state revenue from operating the stores. And there is no evidence that selling the stores would generate that much money. McDonnell cites a state study that suggested saving $500 million through 16 potential efficiencies. Selling the liquor stores was just one of them.

-- Dedicate 30 percent of future state revenue associated with the Port of Virginia ($300 million annually). Port business declined last year and is likely to do so more dramatically this year. Also, McDonnell is talking about sales-tax receipts on goods that pass through the port, not a tax on port business itself. It would be difficult to measure the taxes collected in Arlington County or Abingdon on imported goods. Also, such revenue now flows into the state's general fund to pay for schools, public safety and other services.

-- Divert 75 percent of future budget surpluses ($86 million annually) and a portion of future growth in state revenue beyond 3 percent a year ($150 million a year). Again, these ideas would divert money otherwise headed to pay for schools, mental health and other services. The cost of such programs grows each year, often because of federal mandates. To take away growth in revenue could leave a hole in the state budget. Also, over the past 10 years, state revenue growth has averaged 3.19 percent a year and has exceeded 3 percent in only five of those years, making such growth unreliable. Similarly, state surpluses are hard to predict, making it difficult to produce a reliable annual number for programming road projects.

-- Toll drivers along Interstates 95 and 85 at the North Carolina border ($50 million annually). This would require the approval of the Federal Highway Administration, which hasn't happened in modern memory except when the money was to be dedicated to improving the road to be tolled or the toll was only to be on new, high-occupancy lanes without affecting the existing corridor.

-- Dedicate 80 percent of new state revenue from offshore drilling ($132 million annually). Most estimates say it would take seven years to generate revenue once drilling is allowed. That presumes the legislature would allow it, which it has not.

-- Speed up $3 billion in borrowing through bonds authorized in 2007 and authorize $1 billion more in bonds. According to state budget and transportation officials, this would cost at least $300 million a year in debt payments. With a budget shortfall of more than $1 billion to contend with, Virginia would have to cut elsewhere to take on that debt.

-- Amy Gardner


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