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Virginia: Taxes and Transportation The Virginia General Assembly will soon be having a special session on taxes and transportation funding. Democrats and some Republicans are willing to support increases in taxes in order to fund transportation costs. Many Republicans are claiming that there should be no new taxes. As a conservative and Republican, I am generally opposed to increase taxes. I believe that the major problem is spending, not taxes and revenues. However, the problem is one which has been generated by both parties, and, thus, Republicans should not now cry foul.. Virginia underwent a dramatic spending binge beginning in the mid 1990's. Virginia's budget increased by about 52% from 1997 to 2004. During the same period that these budgets were being considered, the combined rate of inflation and rate of population increase during the period was about 24%. Thus, the State's budget during this period increased by more than twice the combined rate of inflation and rate of growth in the population. During most of this time a Republican was governor, and both houses of the General Assembly were controlled by Republicans. Much of the increase in fact occurred during Jim Gilmore's term as governor. Yet, until the 2002-03 budget, from 1997 the percentage increase in the budget of the Virginia Department of Transportation was less than the percentage increase in the overall budget. Instead, many new programs were being implemented. While these programs may be good, they should not be viewed as sacrosanct, especially when times are tight. Programs implemented or expanded in good times are hard to cut when budgets are pinched. Such programs then have as constituents the bureaucrats whose jobs depend upon them and those who become dependent upon the services. During much of this period not even the full amount of gas taxes, supposedly to be used for transportation funding, were used for transportation. The raiding of the transportation fund began during Governor Wilder's term and continued into that of Republican governors. In short, Republicans are as responsible for the problem as Democrats. Since members of both parties have contributed to the problem, I believe the Republicans have no rational argument against making some changes in taxes. There are two changes which I suggest. First, change the sales tax laws applicable to different types of transportation vehicles. The basic sales tax in Virginia is 4% with a 1% local option. The sales tax on boats is 2% with no local option and with a maximum amount subject to tax of $100,000. The sales tax on airplanes is 2% with no local option and no limit on the amount subject to tax. The sales tax on automobiles is 3% with no local option and no limit on the amount subject to tax. There is no rational basis for these distinctions. The distinctions are strictly political and are maintained primarily because of the strength of the lobbies for the different constituencies. If these three types of transportation vehicles were subject to the same taxes as general sales in Virginia, with the additional revenues being limited to use in transportation, including the local portion, then many of the transportation funding problems may be solved by this means alone. Second, if the change in the various vehicle sales taxes were not enough to solve the funding problems, then a modest increase in the gas tax, possibly an additional $0.05 per gallon, would be appropriate. However, this change should be secondary. The Republicans should insist upon two conditions for agreeing to raise taxes. First, there should be no future diversion of these designated funds to any purpose other than transportation. Second, in times when there are increases in revenues in excess of the combined increase in population and inflation, such funds should be set aside for use for core government services when times are tight, unless funding for new programs or additional excess funding for current programs is approved by a vote of 60% of both the Virginia Senate and the Virginia House of Delegates. These limits would likely be imposed by rules adopted by the two houses. Thus, getting around such rules may be fairly easy, but at least there would be some semblance of a commitment to restrain government spending. |
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