Virginia Gov. Bob McDonnell (R) rolled out a transportation plan Tuesday. The plan will eliminate the gas tax and instead fund transportation through Virginia’s sales and use tax, which will increase from 5 percent to 5.8 percent with the new 0.8 percent going to transportation.
The governor’s communications director Tucker Martin explains:
The switch from the gas tax to the sales tax is essentially revenue neutral in its first year. And Virginia’s sales tax will remain lower than all of our neighbors and the District of Columbia.
This change simply ensures that transportation receives the new funding it needs in the years ahead by tying it to a mechanism that moves in tandem with economic activity and inflation. That is how every other tax (corporate income/personal income) works. That is what will make transportation funding sustainable again.
Right now Virginia’s transportation challenge breaks down like this: Virginia is sending $364 million a year from our construction account to our maintenance account. So instead of financing new projects, we’re having to use that money just to repair old roads. That crossover amount is anticipated to grow to $500 million by 2019. Long and short, Virginia needs new transportation funding to the tune of at least $500 million a year by 2019. This plan does that.
This plan generates $844 million in new, additional annual transportation funding in FY 2019. It eliminates Virginia’s crossover issue. It provides $3.1 billion in new funding for transportation over the next 5 years, including $1.8 billion in new funding for construction projects.
Martin calls this “creative, conservative governance at work.” Indeed, few could accuse McDonnell of not scouring the budget and cutting or holding the line on spending in an effort to find sufficient revenue for schools, roads and basic services. He has resisted other tax increases, which has contributed to a favorable job environment. But he is also honest that Virginia is not the state it was 10 years ago, and if it intends to be a growing magnet for business, it is going to have to pay for its increased transportation needs.
Predictably, liberals — with no real justification — claim it is not enough. Why? What wouldn’t get done under his plan? What would they want to do with another few hundred billion? They don’t say. On the right, fiscal conservatives holler that McDonnell has raised taxes. And here we get to some common sense: Fiscal conservatism is not merely never, ever raising taxes. (Is a blue-state governor more of a fiscal conservative because he sits on a preexisting heap of tax revenue?) It means assessing the size of government, the overall tax burden (in Virginia it is much lower than many surrounding states) and the reasonable needs of the people. It requires both judgment and prudence in guarding taxpayers’ money. (By contrast, the federal government has not even attempted serious spending restraint, preferring to rush to the taxpayers for more funding to keep the spend-and-borrow cycle going.) In McDonnell’s case he closed two budget shortfalls totaling $6 billion, and posted three straight budget surpluses totaling $1.4 billion, without raising taxes.
As a political matter, McDonnell risks the ire of the Republican base, but if he is going to run in the future for higher office, he’s got plenty of time to frame his entire record. However, the pol really in the bind is gubernatorial candidate Ken Cuccinelli, whom McDonnell is supporting. He has made his career as a hard-line conservative, cultivating the image of someone who doesn’t compromise his principles, which include never, ever raising taxes. At the rollout, Cuccinelli was careful to point out his current, limited role. (“During the process of looking at each alternative and debating its merits, it’s my job as attorney general to advise the governor and lawmakers of the legal intricacies of each proposal presented in this session, and I intend to be actively involved in doing just that.”) He praised McDonnell for “appreciate the governor taking the lead and putting some fresh and innovative ideas on the table.” He did not praise the plan on its merits.
So will he support the plan or attack the work of his most important backer? Does he have his own viable transportation plan that involves no revenue increase (hint: There isn’t one)? He isn’t going to able to get away with the sort of evasive generalities he expressed in the rollout. How Cuccinelli responds will tell us much about how he will run his campaign and whether he can capture the votes of critical suburban voters, who are among those most affected by Virginia’s inadequate transportation system.