News item: Virginia Transportation Secretary Shannon Valentine says Gov. Ralph Northam may ask the General Assembly to raise gas taxes to pay for new roads.
Whoa, wait. Where did this come from? We just had an election. Did anyone run on a platform of raising gas taxes? We thought the election was all about how people felt about President Trump and new gun laws. Now you tell us you want to raise gas taxes. Why does this feel like a bait-and-switch? Or should we have just assumed that by electing a Democratic General Assembly, we’d get some tax increases, too? (Republicans would gleefully say “yes,” and they wouldn’t be wrong). Here’s the thing: We’d have the same problem — not enough money for roads —even with a Republican legislature and our options wouldn’t be any better.
Roads are expensive, and states don’t have many ways to raise that revenue. They can either raise taxes (usually gas taxes) or they can institute tolls. And you saw earlier this year just how popular the idea of tolls on Interstate 81 was — that’s why the General Assembly ended up voting to raise gas taxes along the I-81 corridor instead.
Now, though, we’re looking at even more gas taxes. Is there no end in sight? Actually, yes, there is, but you might not like that, either.
The problem is that the gas tax is an increasingly unreliable way to fund roads, and has been for several decades now. Cars are getting better gas mileage — so drivers wind up paying less in taxes yet drive the same number of miles. In 2000, a Toyota Camry averaged 23 miles per gallon, which generated $82 per year in gas tax revenue. By 2019, the Camry was up to 34 miles per gallon — and down to $55 in gas tax revenue. Big picture: From 2016 to 2018, drivers in Virginia drove 3.2% more miles yet gas tax revenues fell 0.4%, according to the Commonwealth Transportation Board. That may seem a small sliver of a single percentage point, but it translates into $30 million over two years, which means somebody’s road isn’t getting fixed. “We actually are making a little less money on the gas tax than we were in 1977, even though the vehicle miles traveled have gone up about 70% since then,” an analyst with the University of Virginia’s Weldon Cooper Center for Public Service said last fall. You don’t need to be an accountant to figure out that math doesn’t add up well. But the price of building and maintaining roads sure hasn’t gone down.
Looking ahead, this problem will get worse, not better. If you’ve been to Northern Virginia lately, you’ve likely seen rows and rows of electric car-charging stations. Those cars may be good for the environment, but all those drivers are effectively getting a free ride — they’re not paying for the roads they’re using. At the moment, the percentage of electric cars on the road is small — but those numbers are only going to rise. In 2016, there were 2,155 electric vehicles sold in Virginia. In 2017, those numbers edged up to 2,932. In 2018, though, they jumped to 6,375 — an increase of 117%. In all, 1.67% of Virginia vehicles are now electric. How high will those numbers go? Nobody really knows, but here are some useful comparison points. In California, almost 8% of the vehicles are now electric. Last year, nearly half the new cars sold in Norway were electric. The United States may never go the route of Norway but even a small change percentage-wise will add up to millions of dollars of gas tax revenue that goes away. How will we pay for roads then? For what it’s worth, Norway relies on tolls. As Valentine — a former Lynchburg state legislator — told a meeting of Northern Virginia officials earlier this week: “Virginia’s transportation [funding] system is simply not sustainable the way we are going.”
WTOP, the Washington radio station that first broke the news, goes on to report: “The state will likely need a decade-long funding bridge from something like a gas tax increase in order to get to a longer-term future that might rely on tolls or other fees specifically tied to the number of miles someone drives or the types of roads they use, Valentine said.” Sounds like tolls are coming someday whether we like them or not — along with an entirely new system of taxation to pay for roads. There are no easy answers here, and no winners. Gas taxes are regressive. The lower you are on the income scale, the bigger the percentage of your income that goes toward the gas tax. Put another way: Drivers in affluent Great Falls — with a median household income of $298,074 per year — will feel the effects of a gas tax increase a lot less than drivers in Hurley, where the median household income is $21,125. Yet those drivers in Hurley probably have to drive a lot longer to get to work than people in Great Falls (at least in miles, not necessarily in hours, depending on how traffic on the Capital Beltway is during rush hour). Even a system that taxes people based on the number of miles they drive falls harder on people in rural areas than metro areas. Don’t expect much sympathy from a Northern Virginia-dominated General Assembly on this point. Last year, a state senator from Arlington who was in Blacksburg for a legislative committee meeting at Virginia Tech asked: “How do you get around? Is there a Metro?” Nope. No Metro here. Would you like to build us one?
In the 1980s, Virginia abandoned relying on gas taxes entirely and started siphoning some sales tax revenue (another regressive tax) to transportation. Don’t expect anyone to suggest the state use income tax revenue (the only progressive form of taxation) for roads – not tax-averse Republicans who especially loathe the income tax and certainly not the Democrats who now represent the richest parts of the state. (Look! Bipartisanship!) Like we said, there are no easy answers here, not for Virginia or for any other state.
Our problems aren’t unique. Governing magazine reports that since 2013 at least 30 states have raised taxes somehow to generate more money for roads. And some states rely a lot more on the gas tax than Virginia does. The Tax Foundation reports that 34% of the state’s transportation funding comes from gas taxes — the rest from tolls, license fees or, mostly, federal funding. That ranks Virginia 36th — meaning 35 other states rely more on the gas tax than we do. In North Carolina, 64% of transportation funds come from gas taxes. Only Hawaii, at 71%, ranks higher. Perhaps that’s why North Carolina’s roads are better than ours are. You get what you pay for, even if there are no easy ways to pay.