The transportation tax bill introduced by Gov. Bob McDonnell and passed by the General Assembly last week is primarily a 1 percent increase in the sales tax in Northern Virginia starting in July, .3 percent for the rest of the state. The .7 percent difference is retained exclusively in Northern Virginia for transportation projects in our area. Some other taxes apply, such as when a house is sold or car is purchased.
For the average Northern Virginia family, H.B. 2313 means about $15-$20 per month. Motorists who spend time idling in traffic could eventually come out ahead by saving this money and more by using less gasoline as a result of transportation improvements. Others might earn more by spending more time at their jobs and less time on the road.
Many people have asked whether we could have addressed our transportation problems without a tax increase. I’ve also asked this question many times. About one-fourth of the new money for transportation is coming from existing taxes. I wish it were more. Here’s why it’s not.
Since Gov. McDonnell was elected in 2009, General Fund spending directed by the legislature has been reduced by more than 10 percent taking inflation and population growth into account. (This doesn’t include, for example, the size of federal programs administered by the state or the number of students enrolled at public universities, which the legislature doesn’t influence directly).
The number of salaried state employees in state agencies has also been reduced. The state employee pension system has been reformed, and employee pay has been tied, in part, to how much of our tax dollars state agencies save. Many state boards and commissions have been consolidated or eliminated, and VDOT’s financing system also was reformed.
As a result, $6 billion was cut from what would have been spent during the last three years to keep Virginia’s budget balanced. At the same time, $3 billion has been borrowed for transportation, up to the General Assembly’s self imposed limit. Even so, Virginia still underfunds transportation construction and maintenance by about $1 billion per year, and Northern Virginia has America’s worst traffic congestion. With one exception, there isn’t $1 billion per year more of additional budget savings to be realized without weakening public education, public safety or our court system. And many of the most fiscally conservative budget cutters in state government — including me — believe this is true.
The one exception is the federal Medicaid program administered by the state on a 50-50 cost share basis with Washington. It provides means-tested services for low income citizens and the disabled, distinct from the federal Medicare program for seniors. It’s also the fastest growing item in the state budget.
Virginia’s Medicaid costs have doubled in ten years, but because it’s a federal program, it can’t be reformed without permission from Washington, which has been requested but not yet granted. Reforming Medicaid would not only save money, but it would better serve people in need. If Medicaid had grown only as fast as inflation and population growth during the last decade, Virginia’s budget would have more than 1 billion unspent dollars this year, and even more in future years. This would meet the transportation shortfall.
Whether it’s government, business or the family budget, when we come up short of cash, it’s usually due to the fastest growing expense. As I noted at a town hall meeting in early January, the governor’s tax bill will fund transportation. But when viewed in the context of the overall budget, it’s really a Medicaid tax — we’re simply backfilling the state budget because Washington hasn’t allowed Virginia to reform Medicaid and apply the savings elsewhere.
Significant transportation reforms and taxpayer protections are included in H.B. 2313. The money won’t be used to expand the size of government or create new entitlements. Funds for Northern Virginia will be directed to projects that are the best rated to reduce congestion using objective cost/benefit analysis, not spent on political pet projects. And there is a “kill switch” in the bill: If the money is misappropriated or directed to another part of Virginia, the taxes are automatically eliminated.
So here’s how I considered the choice: Wait and hope to get permission from the federal government to reform Medicaid, or pay a bit more now to put time back into our lives by spending less time in traffic. Moms and dads don’t get a second chance to redo the family dinners, kid’s sports events, or PTA and church meetings that they miss because of too much traffic. They tell me they are tired of waiting for congestion relief and believe the additional money is worth it. And when Virginia receives permission to reform Medicaid, I’ll introduce legislation to give the savings back as a tax cut.
Del. Jim LeMunyon (R-Dist. 67) represents parts of western Fairfax in the Virginia House of Delegates.