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transportation projects in those regions.

A long-planned widening of Lee Highway

Failure of the referenda could result in alter-

(U.S. 29), for example, had been estimated to

cost $85 million.27 The project was dropped by

ations to Virginia's transportation funding

formulas, thus steering more dollars to areas

the Virginia Department of Transportation

of exploding growth. That would be to the

earlier this year. But the northern Virginia

detriment of rural areas."22 In other words,

sales tax referendum includes the project but

Clement said that if the referenda do not

earmarks only $25 million for the job.

pass, more state money will have to be devot-

Another example is $350 million debt to be

ed to northern Virginia and Hampton Roads.

issued for a Dulles corridor railroad line. That

But if the referenda do pass, more state

is only about one-tenth of the funds needed to

money can be spent in rural areas.

complete such a project. Once those projects

The problem was even recognized by the

are started, residents can expect the state to

Washington Post, which editorialized that "sup-

come back and demand further tax hikes.

porters of the [tax] increase emphasize that it

Overall, about 40 percent of funds to be

is not to be a bailout of the state; the legisla-

raised in northern Virginia would go to mass

tion authorizing the referenda prohibits

transit rather than highway improvements,

Virginia from cutting the amounts allocated

thus not reducing congestion directly, if at

A recent investiga-

to Northern Virginia for road construction.

all. For example, the Dulles Toll Road is not

tion by the Virginia

That may prove hard to police."23

generally congested now, but a new Dulles

Furthermore, there is no guarantee that

rail line could spur further development

state auditor found

the increased sales tax revenues will be fully

along the corridor and add to congestion,

that VDOT grossly

used for higher transportation spending, on

not reduce it. Money would also be devoted

mismanages its

net. Indeed, the state seems to be going in a

to new rail cars for the Metro and Virginia

reverse direction with the recent diversion of

Railway Express. Rather than burden north-

$3.3 billion budget.

half a percentage point of the current sales

ern Virginians with tax increases, users of

tax, which had been used to fund transporta-

those services should pay a greater share of

tion, to nontransportation purposes. In

their own transportation costs.

2002, $317 million will be diverted.24 The

Another concern is the pro-tax political

funds are to be replaced with further

effect that would result from passing the

issuance of debt instruments called federal

sales tax increase referenda. Voter support for

reimbursement anticipation notes (FRANs),

reducing congestion may be mistaken as sup-

thus increasing burdens on future taxpayers.

port for higher tax levels. As a result, the leg-

islature may be more receptive to tax increase

7. Passage of the Referenda Would Spur

proposals in the future if the referenda are

Demand for More Tax Increases Later

supported. Besides, the general sales tax was

The state has a habit of understating the

hiked from 4.0 percent to 4.5 percent for

future costs of transportation projects to get as

transportation in 1986. Taxpayers were told

many started as possible, as noted by the state

then that the tax increase would solve traffic

auditor.25 After projects are well under way, the

congestion problems. But it turned out that

true costs become evident and the state

the tax increase simply fueled added growth

demands more cash from taxpayers. The feder-

in state spending.

al government plays a similar game with

8. VDOT Should Be Reformed before Its

national defense procurement. In Virginia, the

Budget Is Increased

proposed sales tax increase and related debt

issuance may create the demand for future tax

A recent investigation by the Virginia state

increases after underfunded long-term projects

auditor found that VDOT grossly misman-

ages its $3.3 billion budget.28 As the Washington

are begun. After all, Governor Warner is saying

Post summarized, the auditor "has drawn a

that the higher taxes will be just a "downpay-

ment on gridlock improvements."26

devastating portrait of poor management,

7