Guest column10/23/08

Oct. 23, 2008

The T-word blocks policy debate

By Jack Hoffman

With a little less than a month to go before the election, it looks like we’ll go through another campaign cycle without an honest debate about taxes — in particular, taxes to pay for Vermont’s crumbling infrastructure. We seem to have arrived at a point where political leaders believe it’s more dangerous to utter the T-word than to neglect services government is expected to provide.

Vermont was forced to close two unsafe bridges this summer. We’re all dodging potholes on our way to work — and paying higher repair bills when we miss. The leading candidates for governor all acknowledge the obvious: We need more money in the transportation budget.

But none is willing to address the fundamental problem with the way Vermont raises money for our transportation system. None seems willing to have a forthright discussion, apparently because it necessarily means talking about new or different taxes.

The two major party candidates are proposing a deficit swap to prop up the highway budget. Both want to shift expenditures from the Transportation Fund to the General Fund — in effect, pay for certain expenditures out of the left pocket instead of the right. But that’s a phony argument because there isn’t enough money right now in either pocket.

The projected gap between General Fund revenue and obligations for fiscal year 2010 is already over $100 million. Shifting costs to the General Fund only makes that gap bigger.

The problem for Vermont’s Transportation Fund is that revenues decline as the price of oil rises and people buy less. Vermont taxes motor fuels by the gallon. Whether gasoline is $1 a gallon or $4, the state collects only 20 cents. The tax on diesel is 26 cents a gallon. In the last five years, gasoline tax receipts have dropped 7.5 percent and diesel revenues are down 10 percent. Meanwhile, according to the latest information posted by the Agency of Transportation, the price of asphalt has risen 123 percent in the last year.

The candidates acknowledge the problem and recognize that higher gas prices result in less tax revenue. But they don’t go to the next step. Not wanting to utter the word “tax,” they won’t even initiate a conversation about necessary changes to Vermont’s tax structure. Clearly, we’ll never get caught up on highway and bridge maintenance with costs growing and revenues shrinking.

The governor has said we need more help from the federal government. That is certainly true. We have huge infrastructure problems in this country that require a federal response, and we could have addressed many of them with the money we poured into Iraq or the recent bailout. But if we were honest about funding the war or the bailout, we would have raised taxes to pay for them rather than pass the bill on to future generations. To ask the federal government to pay for our roads is really to ask Congress to raise taxes so Vermont doesn’t have to.

There is nothing in Vermont’s Constitution that requires elected officials to sacrifice services in order to avoid raising taxes. In fact, it appears to say just the opposite.

In Article 9, the Constitution says, “… and previous to any law being made to raise a tax, the purpose for which it is to be raised ought to appear evident to the Legislature to be of more service to community than the money would be if not collected.”

It’s hard to see how deteriorating roads and bridges are providing more service to the community than a properly funded maintenance program. But it appears we won’t get a forthright discussion about paying for transportation during the election season unless voters demand it. There are still a few weeks left. Vermonters can tell candidates that simply promising “no new taxes” doesn’t answer the question of how we’re going to fix our roads.

Jack Hoffman is the senior policy analyst of the Public Assets Institute, a non-partisan, non-profit organization that supports democracy by helping citizens understand and keep informed about how their government is raising and spending money and using other public assets