Monday, July 27, 2009

Get your money for nothin' and your roads for free

As was inevitable, transportation has become a major issue in the race for governor.

Democrat Creigh Deeds, apparently emulating Richard Nixon in 1968, has a secret plan to fix the transportation problem, which he’ll tell us more about after he’s elected. He has said he wouldn’t rule out a tax increase, which means he’s thinking about the problem in slightly more realistic terms than Republican Bob McDonnell.

McDonnell, to his credit, has come up with a detailed transportation plan. Unfortunately, like most of the Republican plans over the last five years, there’s not a lot of real money in it. Like Dire Straits, McDonnell plans to get his money for nothing.

Because McDonnell’s plan is another GOP “all gain, no pain” plan. It contains a lot of real debt, $4 billion in bonds, and a lot of theoretical money to service that debt.

The plan recycles some ideas that House Republicans have floated over the last several years.

Among them is devoting increased revenues from the Port of Virginia to transportation needs in Hampton Roads and increased revenues from Dulles Airport to needs in Northern Virginia. The problem with this idea is it puts the cart before the horse. Revenues at the port and the airport are not increasing at this point. They are decreasing. The original argument for fixing the transportation network into and out of the port and airport was that it would lead to increased traffic and revenues. It’s disingenuous to now claim that we’ll use these non-existent, theoretical revenues to pay for transportation fix now. This is the “Field of Dreams” school of economic planning, “if you build it they will come.”

Similarly, the McDonnell plan suggests using a portion of the theoretical revenue derived from leasing natural gas and oil drilling rights off Virginia’s coast to fund transportation improvements. There are several things wrong with this proposal. First, no one knows yet if there are significant, economically viable, exploitable reserves off the coast. Again, McDonnell is spending money he hasn’t found yet. Also, “Drill, baby, drill,” is an odd mantra for someone, like McDonnell, who is from Virginia Beach, because Virginia Beach’s economic welfare could be jeopardized by drilling. While Republicans argue, correctly, that drilling technology has been vastly improved, the technology doesn’t have to be better, it needs to be perfect before you consider drilling off the coast of Virginia Beach.

Because it will only take one oil spill to kill the beach’s tourism industry. Lastly, if there are significant recoverable reserves off the coast that Virginia can benefit from, I’m not sure spending them on transportation is the right way to go. I’d prefer to take a cue from Alaska and to say that those resources belong to the people of Virginia and to have the state cut each of us a check for our share of the proceeds.

Perhaps the strangest idea in the McDonnell plan to charge tolls only on the northbound lanes of I-85 and I-95 at the North Carolina border. My first thought when I read the plan was “What does Bob have against North Carolina?” Virginia has interstate highway borders with Maryland, the District of Columbia, West Virginia and Tennessee as well. Where are their “entrance tolls?” And are entrance tolls a good plan for a state with a significant tourism industry like Virginia? Is that the message we want to send to potential visitors? How long before North Carolina reciprocates? Would these tolls be an illegal restraint on interstate commerce?

The only one of these questions I can answer is the lack of tolls for drivers southbound out of Maryland and the District. A lot of those folks are commuters from Northern Virginia. McDonnell doesn’t want to get on their bad side because his chance of becoming governor is dependent on doing better in vote-rich Northern Virginia, where he was raised, than recent Republican statewide candidates.

McDonnell also proposes raising the speed limit on more interstate highways to 70 miles per hour and adding High Occupancy Toll (HOT) lanes in Northern Virginia. Currently only the stretch of I-85 from just south of Petersburg to the North Carolina line has a 70-m.p.h. speed limit. While there a few other stretches of interstate – I-81 between Roanoke and Bristol, I-64 between the I-81 interchange and the West Virginia line – which might be suitable for the increased speed limit, this won’t reduce congestion overall in Virginia. Increasing the speed limit isn’t going to make the perpetual gridlock around the Beltway or the bottleneck at the Hampton Roads Bridge Tunnel move any faster. Also it increases gasoline consumption at a time when governments should be encouraging conservation. HOT lanes have slightly more promise but the current HOV lanes in NoVa and Hampton Roads haven’t solved the problem.

By far the best idea in McDonnell’s plan is to privatize the state’s ABC stores and use the resulting savings for transportation. I’ve written before about privatizing the state liquor monopoly. I don’t think McDonnell is going about it right. He envisions a straight privatization, which, while it’s in line with Republican philosophy, doesn’t create the maximum return for the taxpayer. Instead, the state should go to a quasi-private system in which the state still controls the number of liquor stores allowed and auctions off the rights to operate for a certain amount of time. In addition to the savings on leases for stores, personnel and inventory envisioned by the McDonnell plan, this would give the state a large one-time cash boost from the proceeds of the initial auction and periodic smaller boosts as licenses come due for re-auction. It would also appease moralists on both the right and the left who worry that private liquor stores would boost consumption overall or in targeted minority communities, respectively. If the state continues to control the number of outlets, which should initially be set at the same number currently operating in each jurisdiction, those fears should be addressed. (By the way, there’s absolutely no evidence to suggest that Virginians drink less because the state operates the liquor stores.)

McDonnell probably hopes voters will focus on his new plan, whatever its perceived flaws, instead of his role in creating HB 3202 two years ago. As attorney general, McDonnell was one of the lead negotiators on this Republican-planned package that raised a host of taxes and fees through regional authorities in Hampton Roads and Northern Virginia. It was unpopular and ultimately ruled unconstitutional by the Virginia Supreme Court, despite the arguments of attorney general’s office.

McDonnell still must be credited with bringing a plan to the table. His surprisingly nimble campaign has beaten Deeds to the punch again, as it did in proposing to re-open the state’s interstate rest stops, an unpopular move by Gov. Tim Kaine’s administration. Deeds was forced to agree with McDonnell that the rest stops should be re-opened.

At last weekend’s first gubernatorial debate at the Homestead, Deeds tried to pattern himself as a Mark Warner Democrat and distance himself somewhat from Kaine. In fairness, Deeds is closer ideologically to Warner than to Kaine. But, so far, he’s shown himself nowhere near as effective a campaigner. Warner ran an aggressive campaign, he took it too Republican Mark Earley and then incumbent governor Jim Gilmore. So far, Deeds is running a “me too” campaign. That likely won’t be good enough to get the job done, when the rubber hits the road.

Bookmark and Share