By John Eltzroth
Why is Virginia in such bad shape that we are selling our roads to foreign corporations and filling 33 percent of our university seats with out of state students? Not so long ago we funded these public expenses with tax revenues and we had good roads and our local kids could get a seat at top Virginia universities. Roads and schools are not the only areas with shortfalls; parks, public safety, and social services are also tin cupping to keep minimum programs going. What’s going on?
Revenue for roads, schools, etc. comes from taxes which have remained about the same for several years. By that I mean that the percentage of the Virginia GDP that goes to the state budget has remained about the same, yet the public sector seems to need a larger percentage of the Virginia GDP. Are state cops, college professors, VDOT workers and DMV employees getting paid salaries disproportionate to a few years ago?
These questions were posed to our State Senator Dick Saslaw and State Delegate Marcus Simon at the Falls Church Chamber and GMBA joint luncheon Tuesday at the Best Western Hotel. Saslaw’s answer focused on the fact that Virginia gasoline taxes are about half that of other states. Fair enough, but that doesn’t account for the state’s need for a higher percentage of the GDP.
It turns out that road and university use has far outpaced the population growth. There are a lot more cars on the road for a lot longer time. There is a 21-percent jump up in vehicles per household and about a 40-percent jump up in the time all these people are on the road. Same story at Universities, in the twelve years from 1991 to 2009 college attendance went up by 21 percent. These figures are adjusted for population increase. This means that the old tax paradigm is not going to keep up.
The legislature’s scheme to pay for this expanded demand for services is not to overlay the general population with the costs, but instead to make the users pay for it.
In the case of roads, we already have the beltway and I-95 hot lanes and the Dulles Greenway and in 20 months: tolls on I-66 outside the beltway will cost Manassas to beltway commuters $6,000 a year. Tolls for the I-66 inside the beltway trip are additional, but at a more reasonable rate. So the user pays.
In education we are seeing this offloading of the cost in the increase of student debt. A good banker knows that the biggest borrowers are mortgagees and the second biggest borrowers are students struggling to pay for college. Again the user pays.
This is why Virginia’s universities are so interested in the out of state student. At UVa, a Virginia resident pays $15,722 tuition a year, compared to the out of State student who antes up $45,066.
Our state schools are now getting a much lower portion of their budgets from Richmond, forcing them to seek the higher revenue of out of state students.
Is this good public policy?
I don’t think so. It is essentially a highly regressive tax. Take the Manassas commuter. Per capita income in Manassas is lower than that of Falls Church. Instead of all of us paying a few cents more for a gallon of gas, we have decided to offload the cost onto a family that moved to where they could afford housing. That housing just got a lot more expensive. How about a 2017 graduate loaded with student debt? Let’s hope they can step into a reasonably paying job.
Some of this cost will fall on employers. The Manassas commuter will be forced to ask for a raise to pay the tolls. Nine of my employees live in Manassas. I see it coming; the $54,000 increase in payroll, just to get my work force to work. Dare I try to pass this cost to my customers? And the student? We already know that this area of lending is risky, and so to reduce that risk, the burden of a student loan endures even after bankruptcy.
User fees and tolls can be a very good influence. They make the user aware of the costs of providing these services, but when it comes to roads and universities we need to remember how important this infrastructure is to our success as a community, state and nation. An educated, mobile society has been a major contributor to the prosperity our country enjoys. It is extremely shortsighted public policy to limit these tools to an increasingly narrow segment of our society.
If we wish to continue as a successful society we must be certain that the fundamentals of education and transportation are accessible to all. Dick Saslaw, Marcus Simon and all your colleagues in Richmond; please craft a tax policy that looks to our future wellbeing.
