The Republican-controlled House of Delegates in Richmond has passed a bill (HB3202) increasing transportation funding by $1.5 billion per year. Of that, $1 billion comes from higher taxes and fees; the remainder is from the General Fund surplus.
Fairfax County residents have been hit hard by real estate tax increases. Since 2000, real estate taxes for the typical Fairfax County homeowner have doubled, from about $2,400 to $4,800. Over that period, the supervisors raised real estate taxes an average of 10 percent per year.
Also, in 2004, the Virginia General Assembly enacted a $1.4-billion tax increase. Not a penny of that was allocated to the transportation. More increases in taxes and fees are unacceptable and unnecessary.
Republican legislators should heed the Fairfax County Republican Committee, which last summer voted overwhelmingly to adopt a resolution opposing higher taxes and fees for transportation.
Republicans believe, correctly, that they must pass a transportation package to get re-elected this November. However, raising taxes weakens the Republican Party.
Virginia Attorney General Bob McDonnell recently observed that overthe last decade, state spending has increased 6 percent per year, which is double the increase in inflation and population. He also says that during the most recent two-year budget cycle alone, the General Assembly approved these funding increases:
» K-12 education by 19 percent,
» higher education by 22 percent,
» public safety by 15 percent,
» mental health by 21 percent,
» the Chesapeake Bay by 38 percent.
While Virginia transportation spending has trailed population growth, spending for K-12 education has increased 10 times faster than enrollment — even after adjusting for inflation. Additional transportation funding should come from existing General Fund tax revenues.
The Virginia budget is split into two almost-equal parts: the General Fund and the Non-General Fund. Traditionally, education, welfare, and public safety have been funded from the General Fund, which derives its revenue from fast-growing income taxes, sales taxes, taxes on insurance premiums, and lottery and ABC profits.
The Non-General Fund, which has traditionally funded transportation, generates its revenues from taxes and fees earmarked for specific purposes. Taxes earmarked for transportation include mainly state and federal gasoline taxes but also sales taxes on car purchases, car titling and registration fees, and 10 percent of general sales taxes.
General Fund taxes grow with the economy and have allowed school and welfare spending to soar. However, non-General Fund gasoline-tax revenues are stagnant since they are 36 cents on the gallon and do not increase with the price of gasoline. In fact, when the price of gasoline increases, people buy more fuel-efficient cars and actually buy less gasoline, thus depressing gasoline-tax revenues.
The result is a structural imbalance that has enabled education and welfare spending to increase far faster than enrollment and population, while transportation spending has lagged.
General Fund revenues have exceeded projections. The 2004 General Fund surplus was $324 million. The surplus for 2005 and 2006 was $2 billion, in addition to the $1.4 billion tax hike. The estimated surplus for the current fiscal year is $330 million.
The General Assembly is making no effort to restrain General Fund spending. What better way to bring discipline to the General Fund than to have school and welfare spending compete with transportation for General Fund surpluses?
However, the education establishment does not want to share General Fund revenues with transportation. It finds an ally in Republican state Sen. John Chichester, chairman of the Senate Finance Committee. Last year, Chichester successfully blocked an attempt by the House of Delegates to spend $700 million of the General Fund surplus on transportation.
Moreover, the transportation funding process is backward. Legislators are asking taxpayers to pay more without saying what we will get in return. There is no commitment to complete specific projects. What protection is there against pork-barrel spending?
Does Virginia even have a coherent transportation plan? For example, Metrorail to Dulles will cost $6 billion including interest, and probably more. It will then require large operating and capital subsidies. Would it not be wiser to spend that money building and improving roads and bridges?
Six billion dollars is still a lot of money. The eight-year Springfield Interchange project costs $676 million. The new Woodrow Wilson Bridge, one of the largest construction projects in the nation, costs $2.4 billion.
First, we need a visible transportation plan that specifically states what will be built to alleviate congestion. Then, if more transportation dollars are needed, they should come from the General Fund.
Arthur G. Purves is president of the Fairfax County Taxpayers Alliance.
