November 15, 2011 — Virginia's economic prosperity will soon come under threat unless its highway and transit systems are solidly funded. Legislators must examine the options and begin to make hard decisions.
That is the heart of the message presented by a longtime state transportation analyst in the current issue of the Virginia News Letter, published by the University of Virginia's Weldon Cooper Center for Public Service.
It has been almost a quarter of a century since Virginia last invested major new long-term funds in long-term transportation needs, writes Bob Chase¸ president of the Northern Virginia Transportation Alliance, a business and citizens' advocacy group. Since then, the state has added 2 million residents and almost 3 million vehicles.
In the article, "Virginia's Transportation Funding Crisis," Chase points out that Virginia is one of the most prosperous states in the nation, ranking seventh in per capita income in 2010, and is also a relatively low tax state.
Despite the state's many economic advantages, failure to improve the transportation system, especially more adequate roads, "will cost Virginia its economic competitiveness," Chase warns.
Not only is the highway network in need of expansion in certain areas, but much of the current infrastructure is deteriorating, he writes. "More than 27,000 lane miles of Virginia secondary roads have substandard pavement."
A separate problem is that the cost of repairing or replacing some 1,700 structurally deficient bridges in Virginia is nearly $4.7 billion.
Since 2002 more than $4 billion in state and federal funds originally intended for construction have been diverted to maintenance, Chase writes. Simply maintaining the roads requires more resources than are available in Virginia's Highway Maintenance and Operating Fund. Legislative inaction has resulted in annual raids on the Transportation Trust Fund for construction just to pay for maintenance.
While automobiles and trucks move the vast majority of daily trips, public transit and rail are also are important options, Chase points out. At a time when public transit and passenger rail ridership are increasing, state and local revenue shortages are forcing hard choices such as cutting routes and service levels to purchase replacement vehicles and meet other basic needs.
Gov. Robert F. McDonnell's transportation initiatives have been positive steps but he has acknowledged that much more is needed, Chase notes. Among options for improving transportation, these are some that Chase cites that state leaders might consider:
• Increase the state gasoline tax
"Increasing the state's 17.5 cents per gallon gasoline tax is an obvious and fundamental part of any solution. The case for a gasoline tax increase is overwhelming," Chase writes. Virginia's gasoline tax is the nation's ninth lowest. Today's cars get much better mileage than in 1987. Adjusted for inflation, motorists are driving more and paying less in taxes.
• Increase the state sales tax
At 5 percent, Virginia's state and local retail sales is the nation's fifth lowest. The sales tax is one of the few current transportation revenue sources that actually grow substantially with the economy. A 1 percentage point increase would generate an additional $1 billion or more annually.
• Increase the motor vehicle sales and use tax
If a consumer buys a television or tool shed, the state sales tax is 4 percent. However, the tax on new or used cars is 3 percent. Why?
• Increase the individual income tax
All Virginians benefit from better transportation, and a tax tied to income and dedicated to transportation would ensure that everyone helps pay for an improved statewide network. An alternative would be a small income tax surcharge.
• Build up the State Infrastructure Bank
The Virginia Transportation Infrastructure Bank is a key part of McDonnell's transportation program. Its initial capitalization goal was $1 billion, but thus far the General Assembly has authorized only $283 million. The bank is a revolving fund for loans and grants. Over time, loan repayments will be reinvested in new projects.
Supplemental sources of transportation funding could include a vehicle miles traveled – or VMT – tax; expanded tolling; and more public-private partnerships, Chase writes.
"It's time for Gov. McDonnell and state legislative leaders to level with the people of Virginia as to the severity of the commonwealth's transportation funding crisis," Chase writes. With its economic strength, Virginia "can afford to adjust and dedicate some of its tax rates to improve its surface transportation network and still retain its competitive edge.
"Better transportation benefits everyone, and everyone needs to contribute more to the solution."
About The Virginia News Letter
The Virginia News Letter is devoted to Virginia public policy issues. Authors are drawn from the Cooper Center, elsewhere at the University of Virginia, other public and private higher education institutions in Virginia, and non-academic experts in the state. Each issue features an article by a different author.
The online newsletter is issued six to eight times per year. John L. Knapp, senior economist in the Cooper Center's Center for Economic and Policy Studies, is the editor, and Robert Brickhouse is a consulting editor.
REPORTERS: Bob Chase can be reached at 703-883-1830 and email@example.com
The article can be accessed here.