The Virginia General Assembly has approved a transportation funding package that had been the centerpiece of Gov. Bob McDonnell’s (R) legislative agenda this year.
The bill changes how the gas tax is administered, increases the state sales tax to dedicate funding to transportation and includes local funding mechanisms for Northern Virginia and Hampton Roads.
The General Assembly has been struggling for more than a decade to resolve the state’s transportation funding challenges. House of Delegates Speaker William Howell (R-Dist. 28) called the passage a “truly historic moment.”
“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 last week, after House and Senate leaders announced an agreement on the legislation. “This year, we have finally worked together, across party and regional lines, to fix this quality of life issue.”
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 bill that ultimately passed does not fully eliminate the gas tax, but does split transportation funding between a wholesale fuel tax and an increased sales 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 legislators’ estimates.
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.
“Make no mistake — this is a compromise piece of legislation. Neither Republicans nor Democrats achieved exactly the kind of solution that they wanted,” Howell said in a released statement. “But this moment shows why Virginia is so fundamentally different from the rest of the country: in a time of crisis and need, we came together and worked in a bipartisan fashion to find a solution. We did not stick our heads in the sand. We did not duck the tough decisions.”
Anti-tax groups brought a last-minute lobbying push to fight the transportation bill due to its reliance on new taxes. Attorney General Ken Cuccinelli, the Republican nominee for this year’s race for governor, was among those opposing the bill that was agreed to in a House-Senate conference committee.
“I have always believed—and continue to believe—that raising taxes should be the last resort in public policy,” Oak Hill Del. Jim LeMunyon (R-Dist. 67) said in a letter to constituents explaining his support for the bill. “I take no joy in telling you that with respect to transportation funding, we are at the last resort. But I believe enacting this imperfect legislation is better than any alternative to address Northern Virginia’s transportation problems.”