Wednesday, February 27, 2013

Yes, Virginia, there is a transportation funding bill

What to make of the new transportation funding bill passed by the Virginia legislature?  Some thoughts:
1. Yes, it’s messy and complicated, but that’s to be expected of any revenue measure requiring bipartisan support.  And it does raise revenue!
2. It’s much better than the governor’s original proposal, which would have completely eliminated the motor fuels tax as the main source for transportation funding.  As I noted in earlier remarks (here), that would have done away with the “user pays” principle and potentially subjected transportation funding to becoming a participant in the annual scrum for general fund appropriations.  The bill as passed explicitly retains a nexus to use through imposing a new, indexed excise tax on gasoline and diesel fuel – the functional equivalent of the motor fuels tax, although at a somewhat lower revenue level.
3. There is still too much emphasis on the sales tax – both a dedicated piece and a transferred piece – for my taste.  No good can come of taking money from schools and hospitals.
4. An important piece of good news is that the measure was a genuine bipartisan bill and got a number of Republican votes, despite the official disapproval of Grover Norquist!  One can hope that this may be a sign that other legislatures may look at real needs and try to come up with real resources to meet those needs in a nonideological way.
5. I agree with critics that there may be significant problems in how the funding provided in the bill actually gets spent.  Virginia is obviously very conflicted on this issue.  (On the subject of priorities, see Greater Greater Washington’s analysis here).
6. What’s up with the $100 fee on electric vehicles and hybrids?  Virginia, which previously enacted a $50 fee on EVs, now plans to increase the fee and extend it to Priuses and other hybrids.  Why?  It’s not entirely clear.  The governor’s original proposal made a rather convoluted argument about EVs not paying federal motor fuels taxes (he would have been applying an increased tax on EVs while relieving taxes on gasoline-powered vehicles).  I guess it makes more sense now (using the "equity" argument) with a gas tax back in the plan.  The annual revenue (estimated to begin at $10 million a year) may also have been persuasive to legislators.  Still, there has been pushback and the governor has said he will review the fee issue.
After all the drama in getting a bill enacted, the whole thing now faces the possibility of being thrown out, at least in part, by state constitutional issues (see story here)!  We’ll have to see how the Virginia experience affects what happens in other capitals.  Should be fun to watch!

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