Transportation should get much of state surplus

Oh, what a relief it is for Virginia to be facing a budget surplus instead of a shortfall, which has been the case for the last several years. The issue now at hand, however, is what to do with the buckets of unexpected dough.

What’s for sure is that the $700 million to $1 billion surplus should not be spent to boost existing government programs or create new ones. On this, many agree, most notably Gov. Mark Warner, a Democrat, and Republican legislative leaders like House Speaker Bill Howell, his Appropriations Committee chair, Vince Callahan, and Senate Finance Committee chair John Chichester.

These guys know that plowing the largess into programs will only necessitate big cuts if – when? – the currently booming economy falters. Each wants to avoid repeating mistakes of the past. The notion, therefore, is to spend what many believe is anomalous growth on one-time construction projects, such as roads and bridges, college buildings, water treatment plants, and the like.

Among these kinds of options, a consensus seems to be emerging for using a healthy chunk of the surplus for Virginia’s cash-starved transportation program. For a handful of years now, road-, bridge-, and tunnel-building costs, not to mention rail and other mass transit needs, have been escalating. A crisis is now upon us.

Looking only at our highway budget, you’ll see that it’s generally broken down into two parts: maintenance and construction. The fill-in-potholes half is increasingly eating away at the build-new-roads half. In a few years, maintenance demands will completely swamp construction needs and will take over the road-and-bridge budget.

Warner, Howell, and Callahan – each hailing from traffic-clogged Northern Virginia or its environs – have suggested on separate occasions that transportation should get many of these general fund dollars. The presumptive Republican and Democratic nominees for next year’s gubernatorial race, Jerry Kilgore and Tim Kaine, also have called for a lot of the projected surplus to be used for transportation.

Chichester, however, doesn’t want to see road and transit needs gobble up money that otherwise would go to secondary schools, colleges and universities, public safety, health care, and other core services.

You see, the state’s general fund, which is built mostly on sales taxes and personal and corporate income taxes, pays for much of government’s day-to-day operations, while roads and rail are predominantly underpinned by gas taxes and specially earmarked federal dollars. Chichester wants to preserve the general fund for its traditional uses.

But is it correct that general fund dollars are not used for transportation? While that’s often the argument, it’s really not the case.

Let’s not forget that in 1986, Gov. Gerald Baliles, a Democrat, and the Democratic-dominated General Assembly raised the state sales tax by a half-penny, dedicating the revenue to transportation. When that sales-tax increase was enacted, Virginians generally didn’t blink because they knew it was dedicated to improving their roads and bridges and they saw the new construction in their own communities.

Let’s also remember that since 1989, the state has plowed some $40 million a year from recording taxes on home and land purchases – which otherwise would go to the general fund – into transportation improvements to the U.S. 58 corridor running across Virginia’s southern border, with yet another $40 million going annually to the rest of the state. (In Northern Virginia, for example, its portion of these funds supports that region’s transportation bond program, while Chesapeake uses its take to pay off debt incurred to build the Oak Grove Connector.)

Further, until the 1990s, the Virginia Port Authority, which falls under oversight of the secretary of Transportation, received substantial sums from the general fund for both operations and capital improvements. Today, however, no general-fund dollars support our ports; they’re paid for by those who use them: ocean carriers and importers and exporters.

Diverting to transportation that money traditionally spent on schools, public safety and health care is not a preferred option. But doing so this year – by some substantial amount – will ensure that politicians hold true to pleas that the surplus be spent only on one-time capital needs. And there arguably are no capital needs greater than in transportation.

By some estimates, Virginia needs about a half-billion dollars more each year to begin meaningfully addressing its legitimate transportation needs. Allocating a big part of the nearly $1 billion surplus to be realized over the next two years – well, whatever’s not eaten up by Medicaid and other obligations – to roads and such is admittedly only a one-time cash infusion. But it does help with undisputed here-and-now road and transit needs while giving pols another year to fashion a politically palatable longer-term solution.

Virginia’s economy is booming. Investing substantial general fund dollars in roads, bridges, and rail – even in a temporary kind of way – will help keep it booming.