Give Virginia's Republican Gov. Bob McDonnell credit for shaking things up. His proposal to eliminate the Commonwealth's gas tax in favor of an 0.8 percent increase in the sales tax definitely got people's attention. Slate's Will Oremus called it the "Dumb Idea of the Week." The Greater Greater Washington blog called it "insane." The Washington Post editorial board called it "bold and paltry."
McDonnell wants to replace the Commonwealth's 17.5 cents per gallon gas tax (that's on top of the 18.4 cents per gallon federal tax) with a combination of higher sales taxes, increased vehicle registration fees, and new fees on alternative fuel vehicles. The math is suspect. The new taxes and fees barely add up to half of the estimated $1 billion per year needed for Virginia's infrastructure. How the rest of the money gets raised is a mystery, although McDonnell has a few ideas. Collecting out-of-state sales taxes? Streamlining the bureaucracy of VDOT? Hmmm. There is, indeed, a lot to poke fun at.
Regardless of the plan's merits, McDonnell's statement about the antiquity of the gas tax shows a clear-eyed vision of the problems confronting infrastructure and an attempt to confront them outside the box. He said, "If we stick to the same old means of funding transportation, we will find ourselves having the same debates and facing the same revenue shortfalls over and over again as inflation slowly eats away at the gas tax, cars get better mileage to meet CAFÉ standards and more alternative fuel vehicles hit the streets."
People with far more liberal political leanings than McDonnell have no quibble with him on that statement. True, they would probably prefer to see a user fee based on vehicle miles traveled (VMT) rather than a reliance on sales taxes. But let's pause for a moment and appreciate the moment: Liberals and conservatives alike agree that the gas tax is passé. Isn't that the first step toward finding a better way?
What are the merits of McDonnell's plan, even if the numbers don't quite add up? Is a sales tax an appropriate place to gather revenue for roads and transit? Does it make sense to add fees to alternate fuel cars? Part of McDonnell's plan involves reworking the transit funding formula. What is at risk there? What does the state stand to gain from tinkering in transit? If the plan is truly a Hail Mary pass, as suggested by the Washington Post, does it have any inherent value?