Category Archives: TSPLOST

Needs and Wants

The TSPLOST frenzy has moved into high gear as we approach the July 31 election. The “pro” side makes some compelling arguments. Compelling that is until you actually think about them.

Needs and wants: It is argued that all projects are beneficial. Ok, I’ll bite. Every project is beneficial. But, just because some proposal IS beneficial in some tangential way, it does not then logically follow that it MUST be funded. Finishing out my basement, remodeling the kitchen and buying a new car are all beneficial for me…but does that necessarily mean I MUST do these things? No, I prioritize those things that are most important. The “pro” side seems to mistake wants for needs. Needs are limited, wants are unlimited; therein lies the danger of confusing the two.

Broad, low taxes are easier to hide than narrow, high taxes: We are told we need more revenue because motor fuel tax receipts have fallen over the last few decades (due to increased fuel efficiency). So why is the obvious solution of raising the motor fuel tax not on the table? Because it is politically unfeasible to add 30¢ of tax to a gallon of gas (currently 47¢ total or 29¢ of GA tax). However, it apparently is politically feasible to slip in a 1¢ tax on every dollar of every sale (except for motor fuel and automobiles, of course, the two things that, you know, are actually correlated to road use).

How much should we spend on roads?: Another argument is that we are spending $1 per year on roads and since this is not “working” the only solution is to spend $2 a year. In this “more is better” argument how does one ever determine “ok, this is enough.” Why not $3? $8? By what non-arbitrary method can anyone determine the ideal amount? Some say define it as a % of the economy or of tax revenue. Oh, please. Do you buy food based on what percentage it is of your total income? (“ahh yes, I better be sure I spend 5% of my pay on food this week!”). No, nobody does that. Pulling arbitrary percentages out of thin air does not provide a rational basis for determining the proper cost of anything. Ok, so how can we know the proper amount? The same way other scarce resources are allocated in a market economy: prices. If we had a mostly private road system prices would rationally allocate monetary resources where they are most needed (just as it does for other goods – prices inform us that it makes more sense to build homes out of wood than out of titanium). Heavily used roads would receive more attention (due to higher toll receipts) than lightly travelled roads.

Jobs: This argument is more of the same old Keynesian fallacies about government spending creating jobs. $18 billion in increased taxes merely removes $18 billion worth of some jobs in order to create $18 billion in other jobs. Moving money from my left pocket to my right pocket does not increase my wealth. The Keynesians are quite fond of this resource shuffle that suggests moving checkers around the board increases the number of checkers. For example, they use this argument to claim that new roads foster growth of new businesses (the “if you build it, they will come” argument). Businesses do come, however they are simply diverted from where they would have otherwise gone. Moving stuff is not the same as creating stuff.

A permanent tax to maintain a permanent bubble: For those old enough to remember Carnac the Magnificent  – the answer is: “Politicians plead to prevent a crisis of massive unemployment in heavy construction.” The question: “What will the news headline be in 2022 when the TSPLOST is up for renewal?” This tax is the quintessential government bubble: turn on the tax spigot to fill the tub but once that spigot is turned off the tub quickly drains. Anyone who threatens to turn off that spigot is vilified as anti-<insert locality> and anti-job.

The pro side insists, “We must DO something!” Yes, we must. Perhaps that “something” should be to force those in government to reprioritize expenditures with the money they already get. Maybe we’re “short” on funds due to massive mismanagement. Should we reward those that have already squandered our money with even more money, because this time, this time they promise to get it right?

On July 31, vote NO on TSPLOST.

Cui bono?

I recently saw a pro-TSPLOST bumper sticker on a truck. I thought “that’s odd, why would average Joe Citizen be so impassioned about infrastructure policy that they would feel the need to advertise it on their vehicle.” Then as I passed the truck the reason became all too clear: a bright blue logo signified that this truck was owned by a road construction firm. Yes my friends, that company is a “rent seeker.” Rent seeking is that process that distinguishes the market entrepreneur (one who must compete in the free market for paying customers) from the political entrepreneur (one who gains an advantage over his competitors by lobbying the government to pass laws favorable to his line of work, such as regulations, licensing laws, or outright government purchasing.) The construction company in question sees the potential $18 billion that will be raised and they want their share of that pie.  If you want to evaluate the merits of any newly proposed program, simply ask “cui bono” (to whose benefit). If the answer comes back in the form of concentrated benefits (construction firms and those selling right of way) and diffuse costs (“it’s only a penny!”) spread among the taxpayers, then chances are it is a political boondoggle that will accomplish little at a greatly inflated cost and should be promptly voted down.

The TSPLOST is being sold to the public the same way every new government expenditure is sold to the citizenry: through FUD (fear, uncertainty, doubt). The fear of what will happen if we don’t pass it (roads will crumble, bridges will fall, kittens and babies will be slaughtered!) comes first, then uncertainty surrounding our future (how else can we build and maintain roads?) and ultimately the third leg of doubt is brought to bear (there’s no way anything else can work). The tenuous justifications for “regional” projects are laughably juvenile in their simplicity. The Project Sheets for the Constrained Project list were apparently assembled from the “TSPLOST” template found in Microsoft Word; only the titles and locations have changed. Miraculously all the projects “could assist in having a positive impact on the economic vitality for this region”, “improve access to jobs”, and “improve travel times for drivers.” Sounds grand, however these descriptions were used to describe the two projects for Morgan county: a 1 mile driveway (Stanton Springs parkway) extension and widening of a lightly travelled rural highway (441 south of I-20). Someone please explain to me how widening a road will enhance access to jobs? Is there some impenetrable Great Wall of Georgia that these new wider roads are going to get us around?  The sad part is that for Morgan county the two projects aren’t even fully funded by TSPLOST. The county will come up $24 million short after 10 years (see spreadsheet). Naturally we’ll need to extend the TSPLOST for ANOTHER 10 years when it comes time for renewal in 2022 else we will have to raise property taxes to make up for the shortfall.

Which raises a final point. It has been suggested TSPLOST will save money through reduced property taxes, however that math does not work. It was stated that county officials “hope” to lower taxes by 1 mil. Using the median home value in Morgan county (US Census) of $169,400 we find that would be savings of about $67. Using the median household income in Morgan county (same source) of $46,000 and the fact that people on average spend about 36% of income on sales taxable goods (food will be taxed under TSPLOST), that translates into an increased sales tax burden of about $165 per year or a net increase of $100 on average. Everyone that would like to reach into their pocket at Christmas and hand over $100 to the government, please raise your hand. Yeah, that’s what I thought. Property tax savings is a red herring. For the overwhelming majority of residents there will be a net increase in taxes. Who benefits? The public or the politically well connected?

On July 31, vote NO on TSPLOST.

What does that “L” stand for again?

On July 31, 2012 there will be a statewide vote on whether to adopt yet another 1¢ sales tax (bringing us to 8%! ) This new tax is known as the “TSPLOST” (Transportation Special Purpose Local Option Sales Tax – authorized by the 2010 “Transportation Investment Act”). This SPLOST tax is unique from all prior SPLOST initiatives in that it represents the first step toward loss of local sovereignty. The TSPLOST breaks Georgia up into 12 “economic development” regions. It is the aggregate vote within each region that determines whether the tax is implemented. This multi-county vote aggregation is unique in the history of Georgia as it violates the central tenant of “home rule” written into the Georgia constitution. This means simply that even if one county is 100% opposed, if all the other counties in a region (see map of region here) are for it, then the tax will be imposed in all counties for the next 10 years (even in the ones that did not approve it). This is a disturbing precedent toward slowly shifting political power away from the local level and towards a more centralized authority. We see the same trend today with the states versus the central authority of the federal government. The parallels are uncanny. Just as the states send money for education or highways to the federal government only to have it redistributed back to the states in a non-proportionate manner we will see counties sending TSPLOT money to the state only to have the state send back less to some counties and more to others (see this file for details). Now some might argue that unequal distribution of tax receipts is endemic to any taxing scheme in a region, whether it be city, county, or state. That is quite true. However using the fact that our current tax system is unfair is a poor justification to continue using that same system at a new level.

Those in favor of this new tax rely on the same old hackneyed Keynesian fallacy that somehow public works projects magically pump up an economy… by forcing the taxpayer to spend money on roads and bridges and bike paths (dubiously justified) when they would have otherwise spent it on other goods or services. Road construction companies will be doing quite well (an additional $19 billion over the next 10 years) to the detriment of all other businesses that will see a decline in sales of $19 billion. At best it is a zero sum game, the only difference being that with the tax we are saying we think the government is more properly suited to know how to spend our money and without the tax we are saying we should decide how to spend our money.

Ok, so by now you’re asking, “Ok, Mr. Smarty pants, how should we fund transportation infrastructure?” – Well, I’m glad you asked! Transportation more than any other government monopolized “service” is a user based service for which assessing a service use fee is easily implemented and justifiable (if you use it, then pay for it). There are a number of ways to do this and I’ll list them in increasing order of their effectiveness in terms of fairly assigning cost to usage: gasoline tax, annual odometer tax, general highway tolls, “tiered” highway tolls (i.e. pay more to drive in less congested lanes), fully private roads (where the desire for profit drives new PRIVATELY FINANCED road construction). Any of these options would be better than a general sales tax because those who are on limited or fixed incomes and who do not drive much are being forced to subsidize large businesses and freight carriers who disproportionately utilize the “public” roadways. Taxing activity directly related to road usage at least makes an attempt to fairly assign cost to those that are using them. It is a step in the right direction and it is the step we must take lest we continue sliding down the slippery slope of nebulous centralized taxation for anything that seems like it might be “good.” Vote for local control and fiscal responsibility and vote NO on TSPLOST.