WASHINGTON, D.C., February 22, 2013 – With overwhelming support from establishment Virginia Republicans, a modified version of Gov. Bob McDonnell’s monstrously irresponsible transportation plan passed in the House of Delegates on Friday. The Competitive Enterprise Institute (CEI) expressed dismay that such a dangerous proposal moved one step closer to becoming law. With 34 members of the state’s Republican House delegation voting aye, the measured carried by 60-40 in the lower chamber. The transportation plan:
• Abandons the gasoline excise tax of 17.5 cents per gallon and replaces it with a wholesale sales tax on gasoline of 3.5 percent and diesel of 6 percent. This dangerous tax provision risks destabilizing transportation revenue and funding in the state, as the fuel prices can fluctuate wildly and bear little relation to transportation construction and maintenance costs;
• Relies on congressional action to pass the Marketplace Equity Act, which would allow Virginia to levy an online sales tax. However, if Congress fails to pass the Act, the new wholesale sales tax on gasoline will rise from 3.5 percent to 5.1 percent.
• Increases the sales tax from 5 percent to 5.3 percent and increases the share of the sales tax directed to transportation. This wrongheaded provision violates the longstanding user-pays/user-benefits transportation funding principle, one which has guided fiscal conservatives for three generations in the United States;
• Prohibits new tolling on I-95 south of Fredericksburg. This provision is perhaps the most nonsensical, as all-electronic tolling arguably offers the fairest and most efficient mechanism for funding roads;
• Creates a $100 annual license tax for alternative fuel vehicles. This provision is arguably the least bad of the entire bill, although tolling can resolve the problem of hybrid-driver tax avoidance; and
• Increases the car titling tax from 3 percent to 4.3 percent. While ostensibly user-based, this is a comparatively inefficient tax and a poor proxy under the user-pays principle.
Marc Scribner, CEI’s Fellow in Land-use and Transportation Studies, who previously noted the flaws in the governor’s plan, had urged the governor and lawmakers to stick to sound transportation policy principles.
Instead, Gov. McDonnell and his allies in Virginia’s GOP leadership directed their troops to abandon anything resembling a fiscally conservative position. Scribner had the following comments:
Today’s passage of the transportation compromise bill highlights the lack of seriousness and general dysfunction that is now plaguing the Virginia legislature under supposedly conservative leadership. Not only does today’s vote effectively destroy Virginia’s reputation as a transportation policy innovator—something that was well deserved thanks to the thoughtful work of legislators and administrations from the mid-1990s to the early 2000s—it shows quite clearly that Gov. McDonnell and Speaker Howell are enemies of both sound public policy and fiscally conservative principles.
It is worth noting that a slight majority of House Republicans opposed passage, but nearly 80 percent of Democrats voted in favor. It is clear to all—perhaps excluding Gov. McDonnell and Speaker Howell—this is a painfully left-wing piece of tax-and-spend legislation.
Virginians deserve better. While Gov. McDonnell may believe his Frankenstein’s monster of a transportation law will cement his future candidacy for higher office, Virginians will not be fooled by the ignorant spendthrifts who have seized the leadership of the Virginia Republican Party and their duplicitous actions leading up to this vote and their ultimately caving to the left. Gov. McDonnell is fast proving himself to be the Charlie Crist of the Mid-Atlantic—honoring no principles other than those he perceives will bring political gain.