With many states awash in federal pandemic stimulus funds, the temptation for short-term political gain is too powerful for many lawmakers to resist. Hence the wave of tax breaks, many of which confer the biggest benefits on people whose wallets have grown fatter over the past two years.
A case in point is Virginia Gov. Glenn Youngkin (R), who campaigned on a platform that included many tax cuts, including those that would drain money for state and local transportation projects. In the commonwealth, which spent decades trying to dig itself out of a funding hole of its own making, those cuts have a special resonance.
From more than a quarter-century, from 1986 to 2013, Virginia’s roads and rails buckled amid rapid urban and suburban growth for which frozen revenue streams were increasingly, then severely, inadequate. No state but Alaska went a longer stretch without raising its gas tax, as inflation and more fuel-efficient vehicles shrank the purchasing power of the state’s per-gallon levy by more than half. The results were predictably dire: A quarter of Virginia’s bridges were considered obsolete; more than a fifth of road surfaces did not meet federal standards. Maintenance and repairs sponged up dollars so fast that had lawmakers not acted, no money would have been left for new construction or even to unlock federal matching grants.
It was ultimately a Republican governor, Robert F. McDonnell, who, in 2013, signed into law a tax increase that bowed to the reality that Virginians were not paying for the roads, rails and bridges they were using. Since then, things have improved, thanks partly to further legislative steps to ensure smooth transportation funding sources.
Mr. Youngkin spent those years as a private equity executive. He would be wise to review the history. By proposing now to slash transportation funding, he would put a sizable dent in the progress the state has made. Specifically, the governor and his GOP allies would scrap a 1 percent grocery tax levied by localities, which produces $135 million annually for road repairs and maintenance. The state Senate rejected a separate proposal to suspend for three months the state’s gas tax of roughly 27 cents a gallon, which would slash revenue by more than $400 million. Mr. Youngkin still hopes to revive it.
Mr. Youngkin defends the tax cut, which has contributed to a legislative impasse in enacting a new state budget, by citing soaring gas prices and a transportation fund surplus of more than $1 billion over the coming two years. But surpluses run their course; transportation needs are ongoing. The gas price savings for most motorists, a few dollars weekly, are modest.
Mr. Youngkin is not an isolated case. Maryland Gov. Larry Hogan (R), using similar arguments, pushed through a one-month gas tax holiday, with bipartisan support, sapping transportation revenue by $94 million — which supposedly will be covered by the relief-funds-fueled budget surplus.
Popular gestures, to be sure. But at what price?