Virginia soon could say goodbye to its gas tax in favor of higher general sales taxes, if Gov. Robert F. McDonnell is successful in his final attempt to generate significant new revenues for transportation.
At a press conference Tuesday afternoon, McDonnell (R) unveiled a transportation proposal he says will generate more than $3 billion for transportation over the next five years.
“Transportation is a core function of government. Children can’t get to school, parents waste too much time in traffic, and businesses can’t move their goods without an adequate and efficient transportation system,” he said.
His proposal is to eliminate the state’s gas tax, which is 17.5 cents per gallon, because it is a declining source of revenue as vehicles become more fuel-efficient.
In exchange, he proposes a 0.8 percent increase in the state sales tax that would be dedicated to transportation. He also proposes dedicating an additional 0.25 percent of revenues from the existing 5 percent state sales tax to transportation.
Virginia would be the first state to eliminate its gas tax, according to McDonnell.
He also proposes a $15 increase in vehicle registration fees and a new $100-per-year fee for vehicles that do not use gasoline and therefore do not pay federal or state gasoline taxes. Revenues from these fees would be dedicated to rail and transit projects.
McDonnell also wants to provide up to $300 million in funding to complete the Dulles Metrorail extension, which would come from the sales tax revenues.
Several Republican legislators, including Centreville Del. Tim Hugo (R-Dist. 40), appeared with McDonnell and indicated their support for his proposal.
“This is not a patchwork solution. This plan allows us to make the critical investments in our infrastructure that will keep Virginia competitive in a global, 21st-century economy,” said House of Delegates Speaker William Howell (R-Dist. 28) of Stafford. “Simply, this is about jobs.”
Democrats, who historically have opposed diverting state general fund revenues to transportation, appear to be lukewarm, at best, toward McDonnell’s proposal. In the past, Democrats have argued that putting current state sales tax revenues into transportation harms schools, social services and other state priorities.
In a statement, Fairfax Sen. Chap Petersen (D-Dist. 34) called the elimination of the “user fee” for roads, the gas tax, “a startling turn of events” and said he plans to oppose it.
House Minority Leader Del. David Toscano (D-Dist. 57) of Charlottesville said in a release Tuesday that the governor’s proposal has “too many moving parts” to reach a judgment yet.
“Our test will be twofold,” Toscano said. “First, does the plan raise sufficient revenue, both in the short term and long run, to meet our transportation needs. Second, does the proposal take away from critical portions of the budget ... that are essential to the viability of our economy and the protection of life quality.”