Graham proposes regional gas tax hike for WMATA

Yesterday, Councilmember Jim Graham introduced a bill to raise the gas tax and provide a dedicated funding stream for transit, if and when Maryland and Virginia join DC in passing the tax regionwide.

The bill would add a 10¢ surcharge and dedicated all of the revenue to WMATA. However, it would not take effect until other funding jurisdictions (basically, Virginia and Maryland) follow suit.

Virginia is extremely unlikely to pass any such measure right now, though when they redraw districts, Northern Virginia may gain enough seats to make this a possibility. It’s also possible that an ultimate bill could let Virginia find a different revenue source in exchange, though gas taxes are better applied evenly across the region so that people don’t simply go to the lower-tax jurisdictions to buy gas.

A 2005 blue-ribbon commission also recommended creating a dedicated tax revenue source, but it recommended using a sales tax, or as second choices, an ad valorem (proportional to value) property tax, payroll tax, or a “property access fee,” charged per square foot to commercial and federal property located near Metrorail and, to a lesser extent, Metrobus.

They recommended against the gas tax or a parking tax because they “would have to be at a relatively high amount to produce the needed revenues, and would have significant to severe problems in implementation.” The report doesn’t conclusively justify these conclusions, however. It appears that the panelists didn’t want to compete with highway needs. (Page 36)

That panel also considered congestion charges and “land value capture,” which would give WMATA a portion of incremental growth in property taxes on properties near Metrorail. They decided not to pursue either because the congestion charge is complex and the land-value capture would grow too slowly. I’m not sure that excludes either from being considered today. (Page 30)

One risk of any funding source is its stability. In a bad economy, most taxes all decline, depriving transit systems of money just as many people depend on them even more. Other cities with dedicated taxes lost significant revenue for their transit systems, whereas in the Washington area, governments at least committed to keep their funding constant.

At a recent WMATA Board meeting, federal Board member Mort Downey raised these concerns about dedicated funding, and also noted that in many cases local governments scaled back their contributions to transit when dedicated taxes grew, then weren’t able to restore them when the tax revenue plummeted. (Ironically, Downey was the staff director for the report in his capacity at PB Consult.)

Of the measures considered by the panel (not including congestion pricing and land value capture), the “property access fee” is the most stable, followed by parking and property taxes, though property taxes declined considerable this year. The gas tax is the least stable, given volatility in oil prices and future changes in fuel efficiency, but it has public policy benefits. (Page 34)

Various taxes also have different regional impacts; the access fee puts the greatest funding burden on DC, while the gas tax puts the least. (Page 122)

The report also notes the large role the federal government plays in Metro’s ridership and expenses. 10% of trips start or end at the stations adjacent to the Capitol or at the Pentagon (though I’m not sure if that counts Union Station passengers who aren’t going to the Senate), and many of the highest ridership days involve events on the Mall.

Therefore, the report recommends the federal government pay a “transit access fee,” similar to the way GSA pays into the Downtown BID for its properties inside the BID boundaries just like private buildings do, or the way it pays WASA for water service.