A tanking national economy has left many American drivers anxious to sell off their gas-guzzling SUVs. But some highway experts see an unexpected paradox in the rush to rethink the idea that big is better: Cashing out on SUVs may leave the Virginia Department of Transportation and other highway departments just plain out of cash.
Indeed, highway officials say the issue is so serious that failing to fix it soon could lead to a major funding crisis.
The truth is that big just may have been better — a lot better — when it came to paying for the state's once-SUV-clogged arterial network of asphalt. That network now suffers anemia as drivers shift to smaller cars and fewer road trips.
Like a smoker addicted to nicotine, “VDOT is addicted to the-worse-fuel-economy-the-better,” says George Hoffer, a Virginia Commonwealth University economics professor who specializes in transportation. The state must act soon to adopt new methods of paying for its roads, he adds.
It starts with understanding the fairly basic math used to figure transportation funding. In 1986, a forward-thinking Gov. Gerald Baliles broke campaign promises and pushed his political party's patience by undertaking a major overhaul of the state's transportation plan. Along with proposals to ensure a world-class transportation system and better means of maintaining it, he also developed a plan to pay for it with a 17-and-a-half-cent tax on every gallon of gas purchased.
In 1986 — and even into the last decade — that was good money for highway construction and maintenance, as long as drivers inadvertently compensated for a lack of tax increases by driving bigger cars with bigger gas tanks. In effect, Hoffer says, consumer largess between 1995 and 2008 made up for government's shortsightedness.
“It enhanced revenues without a commensurate increase in cost to the highways,” Hoffer says. Because SUVs weren't that much larger or heavier than their counterpart cars, they didn't create much of an increased wear and tear on roads. So the state collected more taxes without incurring increased costs.
This artificial cost-of-living increase with a sort of self-imposed tax on consumers “was a boon for the highways,” Hoffer says.
VDOT spokesman Jeff Caldwell adds a second factor to the state's transportation-funding woes: Drivers are buying fewer cars, which in turn means fewer tax dollars from car titling and registration.
“We're looking at a $2.6 billion revenue shortfall based on these two things,” Caldwell says, expressing an accepted belief in industry and government that the trend toward better fuel efficiency and fewer car sales “is considered to be a long-term one.” That means the funding problem is long-term, too.
Caldwell cites two key presentations delivered to state highway administrators in the summer and fall of last year that illuminated the looming funding crisis.
The first of those studies, presented in September, cited the same artificial-inflationary mechanism on which Hoffer bases his defense of the SUV: Fuel prices between July 2004 and the same month four years later increased 103 percent, causing consumers to pause at the pumps.
Because they were pumping less — and often were driving more-efficient cars that went further on less — and because the state still was receiving that same 17.5 cents per mile for each gallon, VDOT watched the needle drop toward empty.
The presentation acknowledged VDOT's peculiar need for gas guzzlers, expressing deep concern that “there has been a significant move to smaller vehicles over the past three years that is expected to accelerate.”
Now it's critical that state lawmakers find the answer to how best get VDOT off the gas-tax drug it currently needs, Caldwell says.
“We've got to come up with a new funding mechanism for transportation,” Caldwell says. Ideas include a per-mile tax for drivers; converting free roads to toll roads; and converting high-occupancy-vehicle lanes in Northern Virginia to high-occupancy toll lanes, in which drivers pay on a sliding scale depending on peak and off-peak travel times.
Hoffer pooh-poohs the suggestions of toll roads and high-occupancy toll lanes. Instead, he advocates a method that better accounts for the wear and tear caused by individual drivers.
Hoffer's idea is to mandate GPS-based systems in cars so drivers “would get a bill just like your cell phone bill once a month,” Hoffer says, with the bill broken down into a fixed fee for license plates, a per-mile fee that would adjust based on usage, and a third fee that would add or deduct cost based on travel during on- or off-peak travel periods. The fees would more fairly reflect actual use and would be accountable to inflationary factors, he says.
Whatever the solution to avoiding a total transportation crash, there's worry that it may be too late to swerve.
The second clarion-call presentation to VDOT last year was by Jack Basso, chief operating officer of the American Association of State Highway and Transportation Officials. At the time Congress had only just avoided running out of money in its National Transportation Highway Trust Fund. Basso plainly laid out the flaws in attempts to fix the funding system without changing the approach to the problem: “We just put a Band-Aid on a hemorrhage,” he concluded.
The hemorrhage continues, Caldwell says, and again is about to reach crisis stage for Virginia: The federal fund “will go insolvent if Congress doesn't take action before they leave town for their August recess,” he says, warning of “a major crisis” for VDOT because most of its state funding for the year is already exhausted.
With many Virginia drivers seeking to permanently park their SUVs, Caldwell says the state's license to drive may expire sooner rather than later. S