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VBT Reacts to "New" Transportation Funding |
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Now that the Assembly is over, you may be hearing regular statements from Virginia's elected officials about the $848 million in transportation spending approved by the 2005 General Assembly accompanied by claims that it represents an unprecedented one-time infusion of new dollars for Virginia's transportation needs. While this session did make progress, the news isn't quite that good and there is danger that use of that higher number will lull people into thinking the problem is solved.
Before, during and after the General Assembly, Governor Warner, Speaker Howell, Senator Chichester and numerous other leaders in the House and Senate repeatedly acknowledged that the actions taken at the 2005 Session would not solve the transportation funding crisis. It is critical to remember these actions are only a first step.
Solving Virginia's transportation funding crisis requires increased long-term sustainable sources of funding for transportation and, at best, only $131 million of the funds approved by the General Assembly fall into this category. The recent VTRANS 2025 report on unmet challenges concluded that Virginia needs at least $925 million more annually. The 2005 General Assembly actions took us about one-sixth of the way toward that goal.
The understandable tendency of the elected officials to put the best light on their actions simply puts more pressure on Virginians for Better Transportation to re-double its efforts. We have to make the public understand that the investments approved at the 2005 Session, while laudable, only put a small dent in Virginia's unmet transportation funding needs and that decisive action is required at the 2006 Session.
HOW THEY GET TO $848 MILLION
Here is the breakdown on the $848 million figure.
The first thing everyone has to remember is it covers two years, not one.
The largest portion, $477 million, represents growth in existing revenue sources - the sales tax, gas tax and federal funds mainly. They result from an improving economy and a new calculation of the federal transfer. Every dime of this would have come to the transportation budget even if the legislature had stayed home. That is not new money. Some of it is one-time funding.
Back that out and we have about $371 million in funds made available by actions of the General Assembly.
Of that $371 million, the largest portion is the transfer of $240 million in cash from the general fund surplus. That is a nice chunk of change and does represent "new" money, but it also is very unlikely to be repeated.
The next largest portion is the transfer of proceeds of the insurance premiums tax on motor vehicle policies. This $108 million was originally promised to transportation in the 2000 General Assembly session, but went back to the general fund starting in 2001. Whether or not this represents "new" money is debatable. Initially it has been targeted to pay down debt. Whether or not it represents real progress and is ever spent on new construction projects depends on the willingness of future governors and legislatures to leave it alone.
Finally, the one source of indisputably "new" money that should also continue to flow to transportation is the dedication of the car rental tax to the new rail project fund. That represents a bit more than $23 million a year.
So, only $131 million or 15 percent of the $848 million in General Assembly actions have the potential to continue as annual additions to the transportation revenue stream. That is about 3 percent of the $4 billion annual transportation budget, or less than 3 cents on the gasoline tax.
HOW THAT MONEY IS SPENT
The General Assembly also designated how most of this money will be spent. Don't expect to see a corresponding $848 million boost in the next six year plan for roads, mass transit or other forms of transportation.
The largest portion ($364 million) will be used to pay off debt. Much of that -- $256 million - will be used to pay off completed projects! Paying off those deficits will free money for other projects, which is a good thing. As previously noted, another $108 million will be applied to retiring the federal revenue anticipation notes (FRANS), also very positive.
The next largest portion, $141 million, actually goes into the formula for the Transportation Trust Fund to be spent on new projects, etc. The rest, $343 million, is earmarked as follows:
---$75 million for capital investments in mass transit.
---$97 million for maintenance.
---$75 million for partnerships with local government.
---$50 million to stimulate public-private partnership projects.
---$23 million for the new rail fund.
---$20 million for rest areas along I-64 and I-95.
---$2.4 million for DMV's computer system.
The creation of separate funds for rail projects, local government projects and public private projects represents the real innovation of this session. But all three demonstrate that the state is looking for someone else to share the cost and responsibility for solving our transportation problems. And only the rail fund has a steady revenue source. You have to assume that without new long-term, sustainable funding to support these requirements, they will either go unfunded in the future or drain money from the rest of the transportation program.
SOME OF THE IMPLICATIONS
If there was little long-term progress on transportation funding from the recent General Assembly, did we at least avoid bad news? Unfortunately not!
For the first time, as mentioned above, the budget directs that $97 million in federal highway funds be spent on badly needed maintenance projects, many of them long deferred. While funding for maintenance is welcomed, it has been the federal money keeping the construction program from a total shutdown. This use of federal funds for maintenance is a warning sign that such a shutdown is coming rapidly.
The House and Senate remained deadlocked over finding some way to put a fence around the transportation program. The Senate killed the House's proposed constitutional amendment to prevent future raids on transportation funds for other purposes. The House rejected a Senate-passed law to protect the funds as actually meaningless, since the annual budget bill routinely overrides laws on the books. Many people will remain reluctant to accept tax or fee increases for transportation if they worry the money will be diverted.
The House refused to go along with a Senate-proposed study that would have reported its recommendations on long-term funding in time for the 2006 session. The House wanted a report in 2007, an election year for both House and Senate. There will be no formal study. Instead, legislative committees may conduct informal inquiries, but they won't have the weight of a formal Joint Committee of the House and Senate.
For more information about the transportation funding crisis facing Virginia, click info@itstimevirginia.org
Our mission: Virginians for Better Transportation (VBT) is a diverse and expanding advocacy group working to implement statewide, multi-modal transportation solutions through increased, dedicated and sustainable funding and responsible business practices. VBT is conducting a public awareness campaign to educate Virginians about the Commonwealth's transportation funding challenges and the essential role transportation plays in the quality of life of all citizens. It's time for a comprehensive, long-term solution.
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