GOV. ROBERT F. McDONNELL (R) unveiled his legislative agenda in Richmond on Wednesday night, but his speech to the General Assembly was notable for what it omitted. There was no mention of what officials have promised for months would be the last — and possibly most important — piece of his plan to plug the state’s yawning gap in transportation funding.
Sources tell us that piece, currently the subject of intensive negotiations among Republicans, involves indexing the state’s badly inadequate gas tax to inflation, or otherwise ensuring that it keeps pace with rising costs — something that should have been done a quarter-century ago.
With indexing or some similar strategy, Virginia would, over time, have access to hundreds of millions of dollars more annually to pay for transportation upgrades. Without it, the state will continue to fall further into an abyss of its own making.
The question is whether Mr. McDonnell can persuade his fellow Republicans not to regard indexing as a tax increase. By any rational calculation, they shouldn’t.
The gas tax, Virginia’s main source of transportation funds, was last raised in 1987, to 17.5 cents per gallon. Since then, rising prices have decimated the revenue it yields, so that the state will soon have no cash — not a dime — for new roads, rails and bridges.
The governor has been frank about the urgency of the problem. But he also has been hamstrung by his ill-advised promise not to raise taxes.
As alternatives, he has accelerated borrowing in the near term and proposed diverting a modest but gradually increasing sum from schools, public safety and health to transportation. But even by 2020, that diversion would yield just $300 million a year in extra revenue for transportation. According to most estimates, the state needs a minimum of $1 billion more right now — not eight years from now.
Depending on how it was structured and on the rate of inflation, indexing, or switching to a straight percentage sales tax on gasoline, could produce an extra $150 million to $200 million a year by 2016 or 2017 and more in subsequent years. It would probably increase the tax on gasoline by 3 or 4 percent a year, meaning an extra dime or two to fill up the tank in the first year.
Some Republicans may howl, including those who handed Grover Norquist the final say over state finances by signing a pledge to oppose higher taxes. But as things stand, Virginians are not paying anything close to the cost of the roads they are using. Within a few years, all transportation funds will be drained off just to maintain the existing, badly inadequate network. And indexing isn’t a new tax; it would simply enable Virginia to avoid falling further behind.
Last month, Mr. McDonnell announced $10 million in fee increases — for lost vehicle titles, late registration renewals and temporary drivers licenses — to cover costs at the Department of Motor Vehicles. “All we’re doing is making ends meet by making the revenues come in equivalent to the cost of running the DMV,” he said, sensibly.
Building and operating the state’s transportation network is no different. By leaving the gas tax untouched for 25 years, Virginia has fallen critically behind in its ability to move people and remain competitive. That has to end — better late than never.