Driving Through Fantasyland on Cruise Control
Dr. Tom Witt and his colleagues at WVU have issued an excellent (and sobering) report on the State Road Fund. While you may have already read comments by Dr. Witt and Transportation Secretary Fred VanKirk about the report, I believe that there is one paragraph that you need to read for yourself. It appears in the accompanying text box.
The state put the Road Fund on cruise control in 1984 when it was decided that only dedicated user taxes would have to carry the highway budget. It should be obvious that when you rank first in highway miles per capita and last in vehicle miles driven per capita that a user fee revenue system will not keep pace with expenditures.
A second flaw in cruise control budgeting is that WV Code ß11-14-5(3) exempts the stateís biggest fleet of vehicles, school buses, from paying motor fuel taxes. Big yellow school buses may not damage the roads the way coal trucks do, but buses wear out roads just the same as medium-weight trucks do. Perhaps even more, since we heavily salt bus routes in wintertime.
And the third flaw is our elected political class. They have found a lot of new uses for gasoline taxes other than repairing roads. The Courtesy Patrol and regional offices of the Department of Motor Vehicles have siphoned millions from the Road Fund. On a positive note, patronage jobs were created.
The elected political leaders will soon likely suggest to you that Road Fund user taxes need to be hiked. You will probably hear, "One more nickel per gallon is not much to pay for good roads!" Please, donít believe this come on. Throw your nickels in a wishing well if you want, but donít throw them at Charleston.
Once again: You cannot address the Road Fundís insufficiency of user taxes by increasing those same user taxes when you are first in road mileage and last in usage. Even if you raise taxes, higher taxes will further reduce driving and fuel consumption. A tax cut, on the other hand, would likely improve the Road Fund. And any tax cut would most assuredly benefit the general retail economy. Follow the nickels.
According to the WVU report, "A comparison of West Virginia highway financing with that of surrounding states as well as Delaware and North Carolina shows that West Virginia had the highest per capita highway user tax revenue among these states in FY 2000." West Virginiaís regressive tax code already punishes working people. Do we dare nickel and dime them into 50th place?
There was a time when the legislature and governor understood that user taxes alone could not balance the highway budget. The solution was a transfer from General Revenue. The General Revenue transfer addressed the fact that school bus fuel is exempt from tax. The General Revenue transfer also took into account two other important points. First, contractors, material suppliers, vendors, and their employees who are paid by the Road Fund pay business and income taxes which go into the General Fund. This is a bigger drain on the Road Fund than youíd ever imagine. And second, most jurisdictions around the nation earmark a portion of real estate taxes for the maintenance of county or township roads. The transfer tried to address the fact that, in our state, property taxes do not support local roads.
General Revenue Fund transfers did not make for a perfect system of funding the highway budget. But one thing they did do was to cause the legislature and governor to examine and prioritize annual spending. Once the highway budget went on cruise control, however, the #1 priority eventually became the Budget Digest.
The other side of the highway budget has to do with costs. In this space last May, I reported that a flag person was paid $30.01 per hour on highway projects. The flag person pay rate has since risen to $30.51 and wonít stop there. If paying a flag person more money than a nurse earns doesnít convince you that changes are needed, then there is no use discussing highway cost issues any further.
Addressing the problems outlined in "Future of West Virginiaís Highway System" will require decisive cost cutting as well as General Revenue Fund transfers. The decisions will not be politically popular. They never were, of course, and thatís how we ended up on cruise control in 1984.
David G. Allen, Clarksburg, WV
"Driving Through Fantasyland on Cruise Control" is part of a continuing series based on "The Road to Serfdom" by F. A. Hayek. David Allen served as Asst. Commissioner of the WV Dept. of Highways, 1985-86.
"Driving Through Fantasyland on Cruise Control" appeared in the January 21, 2005 issue of the WV State Journal.
Copyright 1990-2005 David G. Allen