Tax Increases Rejected as Virginia Transportation Standoff Continues
The Virginia House of Delegates rejected a Democratic plan to raise several taxes to pay for transportion. The proposal was the same as one earlier passed by the State Senate, except that one tax passed by the Senate (a small gas tax increase) had been removed. (Many of the taxes contained in the plan, like a grantor’s tax, were worse for the economy than a gas-tax increase. The governor’s version of the grantor’s tax would have ripped off Northern Virginians. Jim Bacon sums us the politics).
As the Washington Examiner notes, Virginia’s state budget doubled over the past decade, but transportation has been shortchanged. Social service spending and public employee benefits have mushroomed, while roads and rail systems continue to deteriorate.
The Examiner points to a sensible transportation solution proposed by Delegate Bob Marshall that will surely be blocked by the State Senate: shift 3 percent of the state’s large budget from other expenses to transportation. This is certainly feasible: former Governor Doug Wilder managed to shave off a larger percentage of the state budget’s general fund in the early 1990s, enabling him to balance the state’s budget during a budget crisis without raising taxes.
Moreover, shifting the money would address a structural imbalance in the Virginia state budget, which favors social-service frills over basics like investment in transportation. In 2004, Virginia governor Mark Warner, who had earlier raided the state’s transportation trust fund to pay for other government expenses, got the legislature to raise taxes by incorrectly claiming that the state would otherwise run a deficit. Not one penny of the tax increase was used to pay for transportation expenses. Instead, it was spent on other things. As moderate legislator Vince Callahan noted at the time, when legislators get a “big pot of money,” they “spend it all,” rather than using it to pay down government debt.
This is a typical problem in state legislatures, which seek to curry favor with public employee unions. The Yankee Institute cites a Wisconsin legislature study that found that even amidst budget crises, all 50 states increased their already-generous public employee benefits and pensions in the 1990s, at enormous cost to taxpayers.
Virginia public employee unions constantly claim that more money must be “invested” in social programs and education (in practice, that means bigger salaries for public employees). But Virginia public employees already receive substantial salaries. For example, Arlington, Virginia teachers have average base pay that exceeds $70,000 per year, and fringe benefits of around $30,000 per year. In many northeastern states, compensation is higher still. Teachers are far from being the best-paid public employees. Nevertheless, the Yankee Institute notes that “according to the National Compensation Survey, school teachers make more in wages and benefits than private sector engineers, architects, and computer scientists — at the same time keeping their ten weeks of summer vacation.”