Virginia governor proposes eliminating gas tax, other transport funding changes

[1995hoo]

Seems like a whole bunch of states (including my state of CO) need to relearn the lesson of why the Personal Property Tax became so unenforceable, and why many a state decided to get rid of it.

Personal property tax (similar to the real property tax on land and buildings, only for cars, boats, etc.) has nothing to do with the sales and use taxes on online and other retail sales under discussion here.

Virginia has personal property tax, on cars among other things.  Localities have had some issues with getting 100% compliance, but enforceability wasn't high among the tax's major problems that led to its partial (and failed attempt at full) elimination for cars.

FWIW, it was never supposed to be a 100% repeal–rather, the original plan was to repeal the tax on the first $20,000 of assessed value and the vehicle's owner would be responsible for the full tax on assessed value above that amount. In 1997, when Gilmore ran for governor on this plank, $20,000 bought a lot more car than it does now. Of course, as you correctly note, various provisions were included in the repeal law that required certain fiscal circumstances to exist in order to allow a 100% repeal on that first $20,000, and those circumstances have never been realized and therefore the tax rollback stalled at somewhere around 70%.

Gas Tax:  Grab a map and you see what Virginia is up to.  Well positioned to grab lots of out of state customers.  Wytheville, just for one example, already does land office type crowds every day.

....

The potential problem, of course, is that out-of-staters who just buy gas wouldn't be paying anything in Virginia tax unless they buy something else. That's one reason why the idea of not imposing the sales tax on gas in lieu of the gas tax makes me scratch my head a bit. This is all assuming, of course, it makes financial sense for someone out-of-state to pop over to Virginia to buy gas. At some point you run up against the issue of the gas you burn to do that costing more than the amount you save. Some people display no sense at all in how far they drive.  I know a fellow who tries to drive down to Woodbridge to buy gas whenever possible (from my house, that's a little over 10 miles each way; from his it's closer to 20 miles each way). Aside from the fact that gas isn't as much cheaper down there as it used to be, suppose you're saving 15¢ a gallon but you then use a gallon and a half in the round-trip 40-mile drive. On a 15-gallon fillup you'd save $2.25. If you use a gallon and a half to make the drive, you're losing money (if a gallon is $3.30 in Woodbridge, you just spent $4.95 on the gas you used to "save" $2.25). Obviously if you have another reason to go down there it's a different story, and I'm not factoring in things like grocery-store gas-point discounts.

[hbelkins]

...and I'm not factoring in things like grocery-store gas-point discounts.

Aren't those illegal in some states? A few years ago I bought gas at the Kroger in South Charleston, WV. Inserted my Kroger card and was surprised that I didn't get a 3 cent discount. I haven't paid attention to see if my Sheetz card gets me a discount at the new Sheetz locations along the I-64 corridor, and I usually stop at the Sheetz in Milton at Exit 28 on my way to or from destinations in the northeast.

Pennsylvania is quite unusual with its alcohol laws.  Wine, spirits, hard liquor, etc can only be purchased in state stores.  Beer can be purchased in many places for takeout, but only in small quantities...40 oz bottles, 6 packs & 12 packs for example.  There's a limit of 192 oz of beer one can purchase at any one time.  I commonly buy 18 packs here in NJ, which would be a prohibited purchase in PA.  Surprisingly, those small purchases can be made in a number of places...even Pizza Hut can sell takeout beer...but not supermarkets and gas stations for example, unless there's a separate area just for selling beer.

If you want larger quantities, such as a case, you have to go to a distribution center.

Hasn't Sheetz had a long-running "conversation" with the Commonwealth of Pennsylvania over beer sales?

I was astounded to walk into the Walmart Supercenter out near PA 60 and US 22/30 a few years ago and find no beer for sale.

[1995hoo]

...and I'm not factoring in things like grocery-store gas-point discounts.

Aren't those illegal in some states? A few years ago I bought gas at the Kroger in South Charleston, WV. Inserted my Kroger card and was surprised that I didn't get a 3 cent discount. I haven't paid attention to see if my Sheetz card gets me a discount at the new Sheetz locations along the I-64 corridor, and I usually stop at the Sheetz in Milton at Exit 28 on my way to or from destinations in the northeast.

Beats me. When we buy groceries at Giant we get 1 point per dollar spent (except on certain items, mainly beer and wine–understandable–but also milk for some reason). 100 points gets you a 10¢-a-gallon discount at participating Shell stations. Sometimes they have special promos–the other day I had a coupon that if you spent $50 at Giant you got an extra 300 gas points, so once my grocery tab reached $40 I made sure to get $10 more of stuff I would have bought in my next grocery trip since the coupon was going to expire. Filled the tank yesterday and redeemed 500 gas points, so I got 50¢ off per gallon ($3.269 instead of $3.769 for 93 octane). That adds up....I put in just over 14 gallons, so that's a $7.00 discount. Too bad it wasn't a weekend, because then I could have had Ms1995hoo come to the gas station with me and pull her car up to the same pump at an angle so we could fill both cars on the same gas points.

But since Giant are a DC/Baltimore-area chain, the gas points don't apply at all Shell stations. Can't use them in Florida, for example. (There is a different, unrelated chain of Giant grocery stores in Pennsylvania. The Giant Center in Hershey, where the AHL's Bears play, is sponsored by the other Giant chain.)

[froggie]

Trust Funds and all of that:  Every state does that.

But a few also put Constitutional protection on it.  Minnesota does.  I believe Alabama does as well.

[kphoger]

Re:  Use tax

Geez, I don't even know what the sales tax is where I live, so I'm definitely not going to keep track of what the tax is at every other location I buy things at throughout the year.

[froggie]

This got mentioned in my Twittersphere today:  TollRoadsNews went into a generally negative opinion on McDonnell's plan.  And also noted that while Connaughton was all about toll roads last April, the Governor's plan this week was notably silent on new toll roads.

[cpzilliacus]

This got mentioned in my Twittersphere today:  TollRoadsNews went into a generally negative opinion on McDonnell's plan.  And also noted that while Connaughton was all about toll roads last April, the Governor's plan this week was notably silent on new toll roads.

Maybe because of all of the flak that was fired at McDonnell over the proposal to toll I-95 in Southside Virginia, combined with the many negative comments from Northern Virginia over the propose U.S. 460 toll road?

[J N Winkler]

Trust Funds and all of that:  Every state does that.

But a few also put Constitutional protection on it.  Minnesota does.  I believe Alabama does as well.

This is a point which few commenters on this thread seem to appreciate:  that raids on fuel tax revenues are not necessarily an argument against having a rule of dedicating them to highways or transportation.

In Kansas we have had fuel tax revenue diverted to the general fund as a budget-balancing measure, typically with a promise to repay the raided funds at some point in the future.  I do not know, however, if hypothecation is a constitutional provision.  At one point (1947, the date of Labatut's road-related essay collection) it was, but I don't trust the applicability of this information to present conditions because we had a major round of constitutional reform in the 1970's.

Upthread, CanesFan27 says NC has raided fuel tax revenues for general budgetary purposes, but again I don't know if NC has hypothecation in the constitution.

The question which has to be investigated, I feel, is this:  in states where hypothecation of fuel tax revenues is constitutionally protected, are there raids; if so, are raids accompanied by promises to repay the raided funds; and if so, have the funds in fact been repaid; if not, what mechanisms are available to compel repayment?

In Kansas the most recent controversy over constitutionally mandated spending has revolved around education.  The Kansas constitution requires that K-12 education be funded at an adequate level.  In the early noughties, after a round of attempts to balance the state budget by cutting per-pupil state aid, several school districts in Kansas filed suit against the state and eventually got a favorable decision from the Kansas Supreme Court.  In Kansas the Legislature does not have absolute parliamentary sovereignty, so it had to abide by the decision.  We are still dealing with the budgetary blowback, but so far no-one has suggested striking out the adequate-funding clause; instead, the fix currently being shopped is to mandate that "adequate funding" is whatever the Legislature says it is, in any given budgetary cycle.

An enterprising policy architect could suggest a constitutional "adequate funding" clause for state highways, with adequate funding being defined as that required to achieve target floors for LOS, pavement condition, bridge quality, etc. within a given period of time while maintaining network extent within certain limits by county and statewide (in other words, no "dumping" troublesome roads and bridges).

[J N Winkler]

This got mentioned in my Twittersphere today:  TollRoadsNews went into a generally negative opinion on McDonnell's plan.  And also noted that while Connaughton was all about toll roads last April, the Governor's plan this week was notably silent on new toll roads.

So McDonnell's idea is a "seppuku plan"?  We should be so lucky!

[cpzilliacus]

...and I'm not factoring in things like grocery-store gas-point discounts.

Aren't those illegal in some states? A few years ago I bought gas at the Kroger in South Charleston, WV. Inserted my Kroger card and was surprised that I didn't get a 3 cent discount. I haven't paid attention to see if my Sheetz card gets me a discount at the new Sheetz locations along the I-64 corridor, and I usually stop at the Sheetz in Milton at Exit 28 on my way to or from destinations in the northeast.

Beats me. When we buy groceries at Giant we get 1 point per dollar spent (except on certain items, mainly beer and wine–understandable–but also milk for some reason). 100 points gets you a 10¢-a-gallon discount at participating Shell stations. Sometimes they have special promos–the other day I had a coupon that if you spent $50 at Giant you got an extra 300 gas points, so once my grocery tab reached $40 I made sure to get $10 more of stuff I would have bought in my next grocery trip since the coupon was going to expire. Filled the tank yesterday and redeemed 500 gas points, so I got 50¢ off per gallon ($3.269 instead of $3.769 for 93 octane). That adds up....I put in just over 14 gallons, so that's a $7.00 discount. Too bad it wasn't a weekend, because then I could have had Ms1995hoo come to the gas station with me and pull her car up to the same pump at an angle so we could fill both cars on the same gas points.

A few comments:

(1) One "feature" of Maryland's ABC laws severely limits chains that want to sell alcohol in Maryland to one beer/wine license per county or independent city.   That means that there cannot be more than one Giant and one Safeway (and one Sheetz and one 7-11 and one Royal Farm and one WaWa [you get the idea]) in each county with a license to sell beer and wine (in other words, it is a scheme to protect smaller beer and wine or liquor store owners).  It also meant that in order to get a second TGI Friday's in Montgomery County (off of U.S. 29), we literally had to lobby the General Assembly to write an exception into those state ABC laws, which we did - one anti-ICC Delegate was not so pleased when I testified in favor of the proposed amendment, though it passed anyway (this was some years ago, before ICC construction had started).

(2) The Giant discount at Shell stations (and the [rare] Giant Food gas stations) is a nice feature.  I can only name two Giant Food gas stations in Maryland - one on the northbound side of Md. 650 (New Hampshire Avenue) - across the road from a shopping center with a Giant, about 2 miles south of Md. 200 (ICC) - and one in Lusby, Maryland, in far southern Calvert County off of Md. Route 2-4.  I know there are others, but those are the only ones I have seen.  It's nice to be able to get 40¢ or more off of 25 to 30 gallons of Diesel fuel - this past week, I got almost $14 off at a Shell station.

But since Giant are a DC/Baltimore-area chain, the gas points don't apply at all Shell stations. Can't use them in Florida, for example. (There is a different, unrelated chain of Giant grocery stores in Pennsylvania. The Giant Center in Hershey, where the AHL's Bears play, is sponsored by the other Giant chain.)

Actually, I believe that Giant (a/k/a Giant Eagle) chain in Pennsylvania is also owned by Royal Ahold, but the cents-off cards issued by the Md./Va./D.C./Del. Giant chain does not work at the ones in Penn's Woods.

[oscar]

Actually, I believe that Giant (a/k/a Giant Eagle) chain in Pennsylvania is also owned by Royal Ahold, but the cents-off cards issued by the Md./Va./D.C./Del. Giant chain does not work at the ones in Penn's Woods.

The Giant chain in the D.C. area is run as part of the Boston-based Stop & Shop chain, which uses the same logo.  My Giant loyalty card was accepted at the Stop & Shop in Plymouth MA, and I think I even earned gas points on that transaction (but I don't know if my Giant gas points could be used in Stop & Shop territory). 

Royal Ahold has other grocery chains, but they aren't as integrated with the flagship Stop & Shop operation as Giant in D.C., and I never was able to used my Giant loyalty card at those other stores.

BTW, one fantasy I have is being able to replace all the loyalty cards in my wallet with a single "disloyalty" card, granting discounts to the most price-sensitive customers willing to jump from one store to another depending on price. 

[deathtopumpkins]

My Giant loyalty card was accepted at the Stop & Shop in Plymouth MA, and I think I even earned gas points on that transaction (but I don't know if my Giant gas points could be used in Stop & Shop territory).

I think if Stop & Shop took your loyalty card they'd probably honor your gas points too, at least at one of the Stop & Shop gas locations, which there are more and more of scattered around the state (though the only one I can locate off the top of my head is along US 1 southbound in Danvers).


It surprises me that Shell gives Giant gas discounts though, considering that when I lived in Virginia, they honored Kroger gas discounts, and IIRC there are Krogers in the DC area as well, so it strikes me as odd that one gas station would accept gas discounts from multiple stores.

[cpzilliacus]

It surprises me that Shell gives Giant gas discounts though, considering that when I lived in Virginia, they honored Kroger gas discounts, and IIRC there are Krogers in the DC area as well, so it strikes me as odd that one gas station would accept gas discounts from multiple stores.

I am not aware of even one Kroger story within 100 miles of the U.S. Capitol dome in any direction.  Closest one to D.C. I have ever seen is on U.S. 301 north of I-295 in Mechanicsville, Va.

[SP Cook]

Aren't those illegal in some states? A few years ago I bought gas at the Kroger in South Charleston, WV. Inserted my Kroger card and was surprised that I didn't get a 3 cent discount.

Hasn't Sheetz had a long-running "conversation" with the Commonwealth of Pennsylvania over beer sales?

I was astounded to walk into the Walmart Supercenter out near PA 60 and US 22/30 a few years ago and find no beer for sale.

Kroger - Kroger breaks itself up into about 20 "Kroger Marketing Areas".  More or less the same thing as which central warehouse they are filled out of.  Each might as well be a totally different company.   Your central Kentucky card would go back to Cincinnati, the South Charleston station is tied to Roanoke.  BTW, this also determines (and some guys say this is why they do it this way) the union status of the stores, as the government treats each as a seperate business and some areas have a union-free majority and keep it out, while the company as a whole would not do so.

Pennsylvania beer - State do things, and can under the 21st Amendment, with alcohol that would otherwise be totally illegal.  Pennsylvania's alcohol laws are crazy, but a lot of states, like the Maryland example cited above, have goofy deals that, really serve to protect vested interests more than control alcohol, such as limits on the number of liscensees per area.  IIRC, New Jersey does this, Maryland, Kansas, lots of places.  No legal way a state could do that with any other product (there are only 3 gas stations allowed per county, etc) because of the Equal Protection Clause, but they can regulate alcohol any way they want.  People think that strict alcohol regulation is a Southern thing, but really you see complex regulatory schemes all over, while many southern states, while they have the "local option" (voters have to approve alcohol sales in the first place) then operate on a "shall issue" basis (everybody who qualifies can have a permit, no numerical limits).

Here in WV, liquor by the drink and beer and wine by the drink and at retail all operate on a "shall issue" basis.  Anybody who qualifies can get a liscense.  Liquor retail is a complex limited thing.

[SP Cook]

The potential problem, of course, is that out-of-staters who just buy gas wouldn't be paying anything in Virginia tax unless they buy something else.

Correct at the margin.  But then you have to figure in the other taxes the business pays, (franchise taxes, B&O taxes, gross receipts taxes, permits, liscenses, corporate income tax, etc) and the taxes paid by the employees (income tax, perhaps even a move from unemployment (tax burden) to employment (taxpayer) , etc) and then the "rollover" effect of those wages and profits, respent in the local economy.

And while driving too far just to save a few pennies is not a wise economic decision, you have to consider, first, the effect of pass through traffic.  On any trip, my standard practice is to always plan is to always take advantage of gas price differences among the states.  For example, if I was to drive to Florida, I would fill up in Virginia, then try to make it through NC without doing so, then fill up in SC twice, and then on the Georgia side of the GA/FL line.

Looking at Virginia, first you have a lot of "pass through" traffic with a number of very busy roads, including I-95.  Then you have the DC metro area.  How much % of the DC metro population is in Virginia?  Maybe 30%?  Can't be much more than that.  So you would have, at the margin, to provide services, including roads, to only 30% of the population, but would be selling 80 or 90% of the gasoline, as everyone actually in DC or who actually works in DC, and very many people living and working in Maryland, could buy in Virginia with only a few minutes of detour, or none at all.

[1995hoo]

It surprises me that Shell gives Giant gas discounts though, considering that when I lived in Virginia, they honored Kroger gas discounts, and IIRC there are Krogers in the DC area as well, so it strikes me as odd that one gas station would accept gas discounts from multiple stores.

I am not aware of even one Kroger story within 100 miles of the U.S. Capitol dome in any direction.  Closest one to D.C. I have ever seen is on U.S. 301 north of I-295 in Mechanicsville, Va.

Yeah, no Kroger in the DC area. Not disagreeing there may be a closer one in Mechanicsville, but the closest ones I know of are in the Charlottesville area. The two newest chains to move into the DC area are Wegmans and Harris Teeter. I prefer both of them to Giant, but the gas points add up too quickly to ignore (especially with two cars that require super) and until 2014 Wegmans is too inconvenient. In 2014 a new one is opening near our neighborhood.

[cpzilliacus]

I posted a link to a Baltimore Sun editorial about transportation funding in the Maryland thread. Since it prominently mentions what has been proposed in Virginia, I am posting a pointer to it here.

[1995hoo]

The point that underlies that Baltimore Sun piece is that they give McDonnell credit for suggesting something that should spark debate on the issue, regardless of whether they agree with his proposals. I think that's the most important point of all. Regardless of whether his plan passes, I think it's hard to dispute that there is a fundamental problem with the current transportation funding mechanism and that it's not susceptible to easy, sound-bite answers. The general public seems no longer to have the patience for issues that require serious thought and drawn-out debate, but I hope the General Assembly members (in both states!) are able to overcome the public's lack of interest.

[cpzilliacus]

The point that underlies that Baltimore Sun piece is that they give McDonnell credit for suggesting something that should spark debate on the issue, regardless of whether they agree with his proposals. I think that's the most important point of all. Regardless of whether his plan passes, I think it's hard to dispute that there is a fundamental problem with the current transportation funding mechanism and that it's not susceptible to easy, sound-bite answers. The general public seems no longer to have the patience for issues that require serious thought and drawn-out debate, but I hope the General Assembly members (in both states!) are able to overcome the public's lack of interest.

Agreed.  I don't think McDonnell's plan is sound at all, especially given the huge funding gap that needs to be dealt with in Virginia (and his (in hindsight) very dishonest campaign commercials touting the huge amount of transportation funding to be had painlessly by selling the Virginia ABC stores, something that his friends in the Virginia General Assembly were not the least bit interested in).

And I don't like the cowardly little plan to toll a short section of I-95 in Southside Virginia, which has the lowest AADTs along all of Virginia's portion of the route.

[agentsteel53]

Pennsylvania beer - State do things, and can under the 21st Amendment, with alcohol that would otherwise be totally illegal.  Pennsylvania's alcohol laws are crazy, but a lot of states, like the Maryland example cited above, have goofy deals that, really serve to protect vested interests more than control alcohol, such as limits on the number of liscensees per area.  IIRC, New Jersey does this, Maryland, Kansas, lots of places.  No legal way a state could do that with any other product (there are only 3 gas stations allowed per county, etc) because of the Equal Protection Clause, but they can regulate alcohol any way they want.  People think that strict alcohol regulation is a Southern thing, but really you see complex regulatory schemes all over, while many southern states, while they have the "local option" (voters have to approve alcohol sales in the first place) then operate on a "shall issue" basis (everybody who qualifies can have a permit, no numerical limits).

indeed, lots of states do silly things with alcohol.  try getting beer of greater than 3.2% ABV in Utah, for example.

[hbelkins]

People think that strict alcohol regulation is a Southern thing, but really you see complex regulatory schemes all over, while many southern states, while they have the "local option" (voters have to approve alcohol sales in the first place) then operate on a "shall issue" basis (everybody who qualifies can have a permit, no numerical limits).

Here in WV, liquor by the drink and beer and wine by the drink and at retail all operate on a "shall issue" basis.  Anybody who qualifies can get a liscense.  Liquor retail is a complex limited thing.

Kentucky is a local option state. A few cities and counties around here are holding elections in the next little bit.

The number of licenses granted here is generally based on the population of the city or county.

[Sykotyk]

Actually, I believe that Giant (a/k/a Giant Eagle) chain in Pennsylvania is also owned by Royal Ahold, but the cents-off cards issued by the Md./Va./D.C./Del. Giant chain does not work at the ones in Penn's Woods.

Giant Eagle is an entirely different company than Giant.

[cpzilliacus]

Washington Post op-ed: Bob McDonnell's Virginia road tax evasions

Virginia Gov. Bob McDonnell's new transportation plan has one great merit: It gives him and his Republican allies in the state legislature a sliver of political cover to support a major, necessary tax increase while insisting they're doing no such thing.

Admittedly, it's the tiniest of fig leaves. McDonnell is employing multiple evasions to maintain that the scheme isn't an overall tax hike.

The governor wants Virginians to overlook the fact that the plan would add nearly $2.4 billion to sales taxes and vehicle fees they'll pay over the next five years. (He also would divert $800 million of existing revenue, for a total of nearly $3.2 billion for roads and transit.)

[Bitmapped]

Actually, I believe that Giant (a/k/a Giant Eagle) chain in Pennsylvania is also owned by Royal Ahold, but the cents-off cards issued by the Md./Va./D.C./Del. Giant chain does not work at the ones in Penn's Woods.

Giant Eagle is an entirely different company than Giant.

Giant Eagle is completely unrelated to Giant (Royal Ahold).  There are two different Giant's owned by Royal Ahold - Giant of Landover, MD and Giant of Carlisle, PA.

[cpzilliacus]

Actually, I believe that Giant (a/k/a Giant Eagle) chain in Pennsylvania is also owned by Royal Ahold, but the cents-off cards issued by the Md./Va./D.C./Del. Giant chain does not work at the ones in Penn's Woods.

Giant Eagle is an entirely different company than Giant.

Giant Eagle is completely unrelated to Giant (Royal Ahold).  There are two different Giant's owned by Royal Ahold - Giant of Landover, MD and Giant of Carlisle, PA.

Thank you for pointing that out.  Funny that Giant of Landover (Royal Ahold) has sold one or more of its stores in Maryland to the Giant of Carlisle.