Unlocking Gridlock

A Five-Part series on improving transportation without raising taxes ". . . hold us accountable." – Governor Gary Locke

Part 5: A New Funding Package

Since the beginning of the legislative session, lawmakers have lamented that transportation is a mess – too much congestion and not enough money to fix the problem. But before legislators begin to create the infamous "revenue package," they should refine the mission of the Department of Transportation (DOT), create meaningful performance measures and allow performance audits of DOT, implement cost-savings measures, and restructure DOT. Only after these steps are taken should the legislature create a "revenue package" for any transportation shortfall that still exists.

A "revenue package" can be built in more ways than one. Legislators seem to be stuck in a rut of creating revenue through only one method – increased taxes and fees. The Blue Ribbon Commission on Transportation (BRCT) proposed eleven new taxes and fees ranging from an increase in the state gas tax to an odometer tax. The BRCT proposals alone could cost the average Puget Sound driver at least $355 a year!

Rather than taking the easy route (easy for government, hard for working citizens) by raising taxes, state and local governments should consider creating revenue through the methods below and dedicate the money to congestion relief.

1. State and local governments should sell their interests in assets that do not serve core functions of government.

If owning an interest in a facility serves a core government function, government should consider the cost savings of privatizing the facility’s operations.

However, if the facility does not serve a core government function, government should sell its interest. One-time revenue will be generated by the sale of the facility and recurring revenue will be realized from property, sales, and business and occupation taxes.

In 1998 and 1999, more than 60 airports were sold or leased to private owners worldwide. Using an industry rule of thumb that ties the value of the airport to the number of passengers it serves each year, our own Seattle-Tacoma International Airport could bring in almost $2 billion.

Some facilities state and local governments should consider selling or privatizing:

• Safeco Field
• Seahwaks stadium
• Seattle Convention Center
• Boeing Field
• Sea-Tac International Airport

2. Minimize the federal role in transportation.

Currently, Washington state citizens send 18.4 cents per gallon of gas tax to the federal government. Congress directs how this money is spent and how much to send back to the state (along with all the strings attached to "federal aid"). Washington state is guaranteed to get back at least 90 percent of the excess money it sends to D.C. The process of sending unnecessary money to the federal government only for it to turn around and send the money back causes bureaucratic overlap and diminishes the purchasing power of the gas tax.

The Federal Highway Administration and the General Accounting Office have concluded that core federal highway programs (such as interstate maintenance and federal lands programs) could be funded with a gas tax of less than 3 cents per gallon.

The federal gas tax should be lowered to the portion necessary to fund core federal transportation programs. The state legislature may then decide whether to adopt the portion eliminated from the federal gas tax as a state gas tax.

Keeping the money in the state eliminates the congressional practice of setting priority projects and upsetting state priorities. Turning this portion of the federal gas tax into a state tax would also eliminate costly federal requirements, increase the purchasing power of gas tax dollars, and keep more transportation money in the state without placing a greater tax burden on the citizens.

3. Privatize the ferry system.

The ferry system is in desperate financial trouble. The BRCT recommends raising the ferry farebox recovery to 90 percent of its expenditures within the next 20 years. Rather than looking for ways to increase efficiency and drive down ferry operating costs, legislators want to raise fares on passenger-only ferries.

The state’s monopoly on ferry transportation is costly. It’s time for legislators to introduce competition into the ferry system by allowing private companies to operate ferries. The present system should be privatized and other private companies should be allowed to bring in their own boats to transport cars and people across the Puget Sound. The state can then sell the Eagle Harbor maintenance facility and use the revenue to build and improve roads.

4. Examine the Sound Transit Light Rail Project.

Sound Transit recently announced that it would need an additional 3 years of taxes and time to complete its light rail project. In light of that revelation, lawmakers from east King County have introduced legislation that would allow voters to re-evaluate whether the Sound Transit project should continue.

A comprehensive review resulting in cancellation of the light rail project could free up hundreds of millions of dollars in funding that could be used for congestion relief in the Puget Sound area.

5. Sales tax generated from automobile and other private transportation-related sales should be used to fund new roads.

There is no reason for transportation sales tax revenue to be used for non-transportation purposes. It makes sense for state and local governments to take the sales tax generated from automobile sales or car repair and dedicate it to the roads these cars drive on. This action would result in over $1 billion in revenue.

This is not intended as a comprehensive list of ways to raise revenue. It illustrates that there are other ways to build a "revenue package" besides the conventional approach of higher taxes. Until the above proposals are considered, lawmakers and agency officials cannot say they’ve squeezed the fat out of the system and are running at maximum efficiency.

Prepared by Amanda Jarrett, Research Analyst (360) 956-3482 or ajarrett@effwa.org

Evergreen Freedom Foundation P.O. Box 552, Olympia, WA 98507 Phone: (360) 956-3482, Fax: (360) 352-1874 Email: effwa@effwa.org