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This story was updated on Feb. 21, 2013.

Negotiators from the House of Delegates and the Senate say they have reached an agreement on what could be a landmark transportation funding package.

Gov. Bob McDonnell (R) made transportation funding the centerpiece of the final General Assembly session of his term as governor and praised the forward movement of a transportation funding bill.

“It has been 27 years since we have enacted a long-term, sustainable, comprehensive transportation funding plan for Virginia. During those nearly three decades of inaction we have witnessed congestion worsen and the quality of life of our citizens decline,” McDonnell said in a released statement. “This year, we have finally worked together, across party and regional lines, to fix this quality of life issue.”

According to details released by McDonnell and House Speaker William Howell (R-Dist. 28), the compromise bill does not fully eliminate the gas tax, but does split transportation funding between a wholesale fuel tax and an increased sales tax.

McDonnell had advocated eliminating the gas tax in favor of a higher sales tax, a concept that won support in the House, but state senators instead wanted to reform the gas tax.

The compromise includes a 3.5 percent wholesale gas tax and an increase of three-tenths of a percentage point in the state sales tax, which would be dedicated to transportation funding. The sales tax would increase from 5 percent to 5.3 percent.

The wholesale tax on diesel would be set at 6 percent.

Along with other funding sources, like increasing the registration fee for hybrids and alternative fuel vehicles from $50 to $100, the bill would generate an additional $860 million per year, according to Howell.

“We are shifting Virginia away from its reliance on a diminishing revenue source toward a more stable and sustainable funding stream that will address our funding needs,” Howell said in a released statement.

The legislation also includes a local funding component for Northern Virginia and Hampton Roads, allowing localities in those regions to increase local taxes and use those revenues to fund local transportation projects.

Details released about the compromise bill Wednesday did not specify what revenue sources would be allowed in Northern Virginia or how much they could potentially generate.

Springfield Del. Dave Albo (R-Dist. 42) said the bill resulting from the conference committee is good news for Northern Virginia drivers.

“Northern Virginia has borne the brunt of the Commonwealth’s transportation challenges for the better part of the last 20 years,” Albo said in a released statement. “This plan will solve the problem by creating a new dynamic revenue stream and allowing Northern Virginia to keep more of its transportation dollars.”

Although the bill seems to have support from leading Republicans in both the House and Senate, anti-tax groups from around the state were quick to decry the proposed legislation and are rallying for its defeat.

Grover Norquist, president of the national anti-tax group Americans for Tax Reform, said the changes amount to a massive tax hike on par with the sales tax increase implemented during the term of former Democratic Gov. Mark Warner.

“Yet again, what could have been a sound, tax-neutral, pro-growth transportation funding proposal has been hijacked by a number of Republicans who join Democrats in believing that all transportation costs must be paid for by higher taxes,” Norquist said in a released statement.

The House and Senate must vote on the conference report this week, before the session ends on Saturday. Should it pass out of both chambers, McDonnell is expected to sign the bill into law.

kschumitz@fairfaxtimes.com