Southwest Virginia Dodges a Bullet

Well, the transportation financing deal agreed to by Governor Tim Kaine could have been a lot worse. It will raise the tax on diesel fuel, which means the cost of doing business here in Southwest Virginia just got higher (how many job losses will result?...). Car purchase fees are going up as well. But all in all ...

Here's the gist of it:

Kaine solves road block [and if you believe that ...]
Republicans say they're likely to sign off on the compromise plan April 4
By Michael Hardy and Jeff E. Schapiro, Richmond Times-Dispatch Staff Writers

Gov. Timothy M. Kaine yesterday announced a deal with Republicans on a $3 billion transportation fix, an issue that threatened to derail his administration and imperil lawmakers in the fall elections.

Kaine's long-awaited revisions include additional bonds -- up another $500 million from $2.5 billion -- as well as new sources of cash to finance them. He also retooled regional remedies for Northern Virginia and Hampton Roads.

Members of the Democratic minority credited Kaine with finding a substitute for what he and they considered its most offensive feature: using almost $200 million a year for schools, human services and police to repay bonds to build roads.

Kaine is recommending, with Republican consent, to finance the bonds with $137 million to $170 million a year from the tax Virginians pay on their motor-vehicle insurance. That transferred cash too comes from budget dollars for schools and other vital services. (link)

Here's why we should support this compromise (let's call it The Kaine Mutiny Surrender):

● It meets all the demands that our courageous Republican delegates have been making the last two years with regard to financing. As Lieutenant Governor Bill Bolling put it in a press release:

"I am pleased that the Governor’s amendments endorse every key provision of the transportation plan previously adopted by Republican legislative leaders. By agreeing to the basic structure of the Republican plan, and by abandoning his demand for massive statewide tax increases, the Governor has helped us move one step closer to finding a solution for Virginia’s long term transportation needs."

● It utilizes the General Fund for financing after all (the Democrats' biggest bugaboo) as well as considerable bond debt.

Bolling: "I am also pleased that the Governor appears to have abandoned his opposition to the use of existing general fund resources for transportation. In fact, by some estimates his amendments may increase the amount of general funds going to transportation."

● It does not contain the massive tax increase that the Democrats and Chichester pushed (on income, gasoline, sales, etc.).

Attorney General Bob McDonnell in a press release: "The Governor has maintained the important reforms in land use decisions and the delivery of transportation services. He has abandoned his previous request for a large, statewide tax increase. He has added to the Republican plan to use more bonds and surplus revenues to fund transportation."

● Taxes will be levied on those who need their roads fixed. The state will require regional taxation in Northern Virginia and in Hampton Roads (where the local economy can easily withstand the blow) to pay for the costly upgrades the citizens there desperately need.

● The hero of the moment, Speaker William J. Howell (R-Stafford), in yet another press release, provides a summation:

“With the Governor’s announcement today of his proposed changes to House Bill 3202, Virginia is now another step closer to enacting landmark legislation this year that will comprehensively address its transportation challenges well into the future.

"Throughout this process, leadership and compromise have been key components to achieving progress. In January, House and Senate Republicans united and unveiled our initial proposal, which formed the foundation and basic tenets integral to a comprehensive transportation plan.

"In February, the House of Delegates approved the conference report on that bill by a strong, bipartisan vote of 64-34 and the Senate of Virginia did so by a vote of 21 to 18, advancing this far-reaching proposal to the Governor. Today, Governor Kaine added his assistance to our advances by agreeing to compromises on several important points and returning his proposed amendments.

“First, the Governor has agreed with the General Assembly’s position that utilizing significant General Fund revenues for transportation – a core service of government – is both prudent and fiscally responsible. Although our legislation designated a specific dollar amount to this purpose, the Governor’s decision to rededicate an existing General Fund revenue source, the Recordation Fee, works similarly. Ultimately, that legislative commitment will provide a substantial increase in overall transportation funding. If current growth trends remain, this General Fund source can be expected to provide $182 million annually for transportation within a decade.

“The Governor’s decision to stay within the structure of the legislation – eschewing his previous positions to insist upon massive statewide tax increases without regional components – is a very positive development. The fact that, for the first time, he has demonstrated a commitment to a judicious use of the Commonwealth’s AAA bond rating is certainly welcome news to those of us who have advocated this reasonable and widely accepted approach for many years."

The only menacing part of this legislation as proposed is in the fact that the Governor wants to use 2/3rds of the existing budget surplus for road repairs. That means that (a) you're not going to get it back in the form of a refund or a reduction in your tax rate, as should have been done, and (b) you can expect these guys - about a year from now - to be pleading poverty, ruination, and impending doom if we don't raise taxes - again - to alleviate the ... (fill in the blank) ... problem.

So it's not perfect. Taxes are going up. But, had Kaine and the Democrats (and Chichester and Potts and ...) gotten their way, we'd be seeing an even greater acceleration of business exodus from our area. That, at least, won't occur.

So let's celebrate. Embrace compromise. Feel the love.