R. Creigh Deeds

Deeds's Transportation Proposals

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Sunday, October 11, 2009

R. Creigh Deeds has not offered specific proposals to fund transportation improvements. In an op-ed piece published last month in The Washington Post, Deeds said that "all options for funding will be on the table." He said, "I'll sign a bipartisan bill with a dedicated funding mechanism for transportation -- even if it includes new taxes." He has said in subsequent interviews that to be more specific is to risk torpedoing the delicate process of bringing lawmakers together toward consensus.

There is little detail to analyze in Deeds's plan, but one option worth scrutinizing is an increase in the gas tax, which Deeds has supported in the past. Now set at 17.5 cents a gallon, the tax generates the bulk of the revenue -- less than $900 million a year -- that Virginia spends on road construction.

Those who support increasing the gas tax say it is an appropriate source of revenue for road and rail improvements because the money comes from those who use the state's transportation network. It flows into the state's transportation trust fund, not the general fund, so there is no risk of mingling resources such as sales or income tax receipts, which go into the general fund and pay for such core services as schools, universities, the prison system and mental health programs.

But the gas tax now generates only about $46 million a penny. That means the rate would have to more than double, to about 40 cents a gallon, to generate $1 billion ar year (a figure often cited by Republicans and Democrats as the minimum amount of new revenue needed for roads and rail). That makes it hugely difficult politically to push through a General Assembly that is loath to raise taxes.

Further, the amount the gas tax generates is falling for several reasons. First, fuel consumption is dropping because of less driving and the increased prevalence of more fuel-efficient cars. And second, the gas tax is tied to gallons sold, not price. That means that revenue from the gas tax have not risen as the cost of gas has. The reverse is true, too -- plunging gas prices don't affect gas tax receipts. But the trend line of the cost of gas over the past 25 years has been up, of course -- and not so with gas tax receipts.

-- Amy Gardner

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