A long-term answer to Virginia’s transportation funding needs
By Robert F. McDonnell,
Virginia needs a workable, long-term solution to its transportation challenges. That is why this month I announced the “ Virginia’s Road to the Future ” funding and reform package to invest more than $3.1 billion in the state’s transportation network over the next five years. This plan will restructure Virginia’s archaic transportation funding sources and create a system that will grow with economic activity. It will also address the long-term deficiencies of the gas tax by making Virginia the first state in the nation to eliminate it.
According to the state Department of Transportation, Virginia needs $500 million a year in new revenue by 2019 to eliminate the unsustainable practice of borrowing money meant for new projects to fund the maintenance of existing highways. This plan will provide it. It will also generate $1.8 billion in new funding for road construction needed to help grow Virginia’s economy. It does all of this without raising taxes.
Over the past three years, Virginia has made bipartisan progress to improve transportation. Two years ago, we put the most new funding into transportation since 1986, a one-time injection that advanced some of our most-needed projects. More than $14 billion in projects are moving forward statewide because of that funding, including top priorities such as the Interstate 495 and 95 high-occupancy-toll lanes. But much more must be done.
Virginia’s current revenue does not add up to a safe and sustainable transportation network. In 1986, the state gasoline tax was set at 17.5 cents per gallon, but the General Assembly did not index it for inflation. As a result, that 17.5 cents in 1986 dollars is currently worth approximately 8 cents.
Years of partisan disagreement have left us without the necessary revenue to maintain our infrastructure and unable to fund desperately needed construction and expanded rail and transit services. The time for Washington-style kicking the can down the road has passed. We must do something now.
Our transportation package is a formula for solving this problem. It includes:
l Eliminating Virginia’s tax on gasoline, saving Virginians $684 million at the pump in fiscal 2014 and ending once and for all the state’s reliance on this declining revenue source. Simply increasing the gas tax, as some have advocated, would only increase everyone’s cost for filling up at the pump in the short term while forcing us to have this same discussion again and again in the future. Increased fuel-efficiency standards and additional use of alternative-fuel vehicles mean that this revenue source produces less money every year. Increasing the tax or indexing it would just be pouring money into a bucket with a hole in it. The revenue will just continue to decline. That’s not a theory; that’s the math.
l Retaining the 17.5 cents per gallon diesel tax because the majority of diesel fuel is purchased by interstate truckers subject to a multistate revenue-sharing agreement. In fact, 68 percent of diesel tax revenue in Virginia is generated by interstate trucking companies. By contrast, nearly 90 percent of vehicle miles in the state are traveled by Virginians, meaning the benefits of eliminating the gas tax will overwhelmingly flow to Virginians.
l Increasing Virginia’s sales tax by 0.8 percentage points and dedicating this revenue to transportation. The sales tax self-adjusts to changes in the economy because people buy more in good economic times and cut spending in challenging times. The sales tax is also a fair way to share the cost of funding transportation: Everyone benefits from Virginia’s transportation system, and everyone pays the sales tax.
l Increasing Virginia’s existing sales tax commitment to transportation from 0.5 percent to 0.75 percent over the next five years. The first $300 million generated from the change will be dedicated to Phase II of the Dulles Metrorail Project to reduce tolls on the Dulles Toll Road.
l Increasing motor vehicle registration fees by $15 and including a $100 alternative-fuel vehicle fee to offset lost federal gas tax revenue and help fund Virginia’s growing demand for passenger rail and transit.
l Collecting sales tax on Internet purchases and dedicating a portion of this revenue to transportation. This proposal would conform Virginia law to changes in federal law, contingent upon Congress’s adoption of the Marketplace Equity Act. The revenue will be dedicated to transportation, public education and localities. (If Congress doesn’t act and this funding remains unavailable, a possibility that some critics have noted, this plan still will provide more than $500 million in new annual revenue by 2019.)
No comprehensive plan will make everyone happy. Some will support certain elements, while disagreeing with others. That’s fine. To address Virginia’s transportation funding challenges, we must compromise. This compromise must include a small portion of general-fund revenue as well as new revenue.
This is a viable and sustainable plan. It represents the biggest reform to Virginia’s transportation funding system in generations. That is why groups from across Virginia, including the Virginia Chamber of Commerce, the Fairfax Chamber, the Hampton Roads Chamber, the Roanoke Chamber and the Richmond Chamber support it.
Virginians have waited too long for a long-term transportation funding solution. We can wait no longer. Virginians shouldn’t be forced to sit and wait in traffic while politics trumps effective governing. It is time to meet this challenge and build a transportation system that will support job creation efforts and economic growth. This plan does that.
The writer, a Republican, is governor of Virginia.
Read more on this issue: The Post’s View: McDonnell’s bold and paltry transportation plan David Alpert: The trouble with ditching the gas tax