Lawmakers rev up for session on transportation

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RICHMOND Interstate 95 runs north and south; Interstate 64 goes east and west. If only Virginia’s system for funding transportation were that simple. 

Legislators returned to Richmond last week for a special session on transportation.

Their prime objective was to figure out how the state should address a growing road-maintenance deficit of $388 million that is expected to more than double by 2014. 

By law, maintenance of roads and highways takes priority over new construction projects. If there isn’t enough maintenance funding to cover the costs of upkeep, the state is legally required to transfer the money from the construction fund. As a result, construction projects throughout the commonwealth have been delayed indefinitely. 

Bob Chase, president of the Northern Virginia Transportation Alliance, an advocacy group that calls for more funding for transportation projects in the region, says the delays are costing the state millions of dollars. 

“If the General Assembly restores the funding in the next month or two, the cost will be minimal. The longer the delays, not only do the projects take longer to complete, but the costs of those projects goes up,” Chase said. 

That’s because funding sources for transportation, whether taxes or fees, have an 8 to 10 percent annual inflation rate, but the cost of construction materials such as concrete and steel rises at 10 to 12 percent a year. 

“Every year, the gap gets bigger and bigger, even when the economy turns around,” said Delegate David Albo, R-Springfield. 

Gov. Tim Kaine and the General Assembly attempted to fix the deficit problem in 2007 by passing House Bill 3202. It raised fees on certain driving offenses and created two regional authorities with the power to collect taxes for transportation one in Northern Virginia and one in Hampton Roads. 

But those revenue mechanisms have since unraveled: In March, the General Assembly repealed the “abusive driver fees” because of complaints that they discriminated against Virginians (the fees did not apply to out-of-state drivers). And the Virginia Supreme Court declared the regional authorities unconstitutional, forcing the state to refund the taxes collected by the agencies. 

The General Assembly was unable to develop a transportation-funding solution before its regular session ended March 13, so legislators voted to hold a special session on the issue. Kaine said last week that he plans to call the session for mid to late June. 

In the meantime, legislators and other policy makers are trying to untangle the Gordian’s knot of Virginia’s transportation problems. Three general approaches have emerged: a statewide tax, private investment and a revision of last year’s attempt at raising revenues.

A Statewide Tax 
Virginia has not raised its 17.5-cents-per-gallon tax on gasoline since 1986, and the commonwealth ranks relatively low among states in retail and car taxes. This is the argument that many Democrats, including the governor, are making. They say raising the tax on gas a penny or increasing the sales tax half a percent may be the fairest way to fund the state’s transportation needs. 

According to Virginia’s secretary of transportation, every 1 cent increase in the motor fuels tax would generate $59 million, while every percent added to the motor vehicle sales tax would generate $200 million. Moreover, every half percent added to the current 5 percent general sales tax would generate $1 billion. 

Bob Chase of the Northern Virginia Transportation Alliance believes the best solution would be a gas or sales tax applied statewide. 

“What’s needed is an infusion of a minimum of $400 million a year into statewide maintenance, and that needs to be in a form from a revenue source that is sustainable and that will grow over time,” Chase said. 

But opponents argue that Virginia should keep taxes low and that raising them is self-defeating. They say the more taxes the state imposes, the less people are inclined to spend, thus causing tax revenues to level off. 

One of those who oppose a statewide tax is Patrick McSweeney. He was the lead attorney for the plaintiff in Marshall vs. Northern Virginia Transportation Authority (not to be confused with the Northern Virginia Transportation Alliance), the state Supreme Court case that removed the power to tax from the newly created transportation authorities. 

“When you have a big slush fund, everybody has to get in on the act,” McSweeney says, “It depends on where the political power is; it has nothing to do with transportation priority.”

A Private-Sector Solution 
A bust of Teddy Roosevelt rests on a bookcase in McSweeney’s meeting room. It represents the attorney’s belief in free-market innovation. 

“If we dispelled the notion that the state is the ultimate payer for all of the demands that the public makes in the form of transportation, things would start happening immediately. There would be investors, entrepreneurs, just as there was when we deregulated communications,” McSweeney said. 

He believes that transportation infrastructure should be a private venture and that new roads should be paid for the localities that want them instead of by taxpayers across Virginia. 

McSweeney maintains that transportation can be funded without tax increases by encouraging more investment and by imposing the costs of specific projects on those who will directly benefit from them. 

“I think we would have more money to spend on transportation if it was left to the private sector and you didn’t have the political log jam in Washington and Richmond,” McSweeney said. 

An obvious mechanism for a private company to make a profit from road construction is by charging tolls, but opponents of such an option say paying tolls is about as unpopular as raising the gas tax. 

Chase says the private sector’s role should be limited. At most, he says, private-sector solutions can meet only 20 percent of the state’s transportation demands.

“You can’t toll every neighborhood street or main street most transportation authorities can’t be done that way. And if you did, no one could afford to use the system,” Chase said. 

McSweeney believes that tolls are best suited to major highway construction and that secondary roads, those within and between subdivisions, should be paid for by developers, not taxpayers at large. 

“We need to abandon the idea that wherever you build it, it will be publicly financed. The burden of internal road maintenance is the responsibility of people who live there,” McSweeney said. 

His recommendation is to make secondary roads the responsibility of counties and cities, instead of the state.

Same Idea, New Approach 
Republicans in Northern Virginia and Hampton Roads find themselves in a dilemma. On one hand, they are members of a party that traditionally resists increasing taxes. But on the other hand, they live in heavily congested areas with constituents demanding more money for transportation. 

That may be why Delegate Albo thinks last year’s approach needs to be revisited. 

“All we need to do is fix the bills, by going back to the version that left the House and Senate,” he said. 

Albo says Kaine caused the problems that doomed last year’s HB 3202 by amending the bill. It was the governor’s amendments, Albo said, that exempted out-of-state drivers from the driver fees and that rendered the transportation authorities unconstitutional. 

The authorities’ boards were made up partly of elected officials from other governmental entities. In Marshall vs. NVTA, McSweeney successfully argued that because voters did not directly elect members to the boards, the authorities therefore were unconstitutional. 

“I think that was their biggest fault, and that’s wh
at we won our lawsuit on,” McSweeney said. 

Albo’s district in Northern Virginia is among the most heavily congested areas in the state. He believes that because of the region’s special needs, localities must be able to raise revenue for their own roads. He opposes what most Democrats are advocating a statewide tax. 

“As long as people who want a statewide tax demand that the money from Northern Virginia be sent somewhere else, you will not have a single Republican vote up here,” Albo said. 

Part of last year’s compromise, Albo says, is that Republicans agreed to a tax increase, but only if those revenues remained in the region that raised them. Now that the Democrats control the Senate, hashing out a similar compromise may be more difficult.

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