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Transportation Compromise Moves Forward, Gains Critics

The bill aiming to build consensus around Bob McDonnell's plan to bring $3 billion to transportation projects met with mixed reviews.

By Whitney Spicer
Capital News Service

Critics of the transportation funding compromise reached by legislative negotiators say the plan would place a huge burden on Virginia taxpayers.

The Virginia House of Delegates Friday passed House Bill 2313, which would raise about $900 million a year for transportation and transit projects.

The 98-page compromise must win approval the Senate before it can be signed into law by the governor. The legislative session ends Saturday. 

The new plan, which was hammered out by a 10-member conference committee over the past week, would potentially raise close to $900 million a year in transportation revenue.  It could be the first transportation funding overhaul in Virginia since 1986 if it passes this week.

The compromise would:

  • Raise the state’s sales tax from the current 5 percent to 5.3 percent.
  • Add a 3.5 percent motor fuel tax at the wholesale level and a 6 percent diesel tax. 
  • It would eliminate the state’s 17.5-cent-per-gallon gasoline tax.
  • Create regional authorities in Northern Virginia and Hampton Roads that could raise funds independently to spend on transportation.

The transportation agreement also includes an Internet sales tax that would generate revenue for the state of Virginia under the Marketplace Equity Act. According to the transportation conference report, 57 percent of Internet sales tax revenue, or $183 million a year, would go toward transportation.

A clause in the agreement provides a contingency if Congress fails to pass the Marketplace Equity Act by January 2015. In this case, the wholesale tax on gas would rise from the proposed 3.5 percent to 5.1 percent.

“It deals with the economic engines of our state,” said Delegate Vivian Watts, D-Fairfax. She said the plan would ease congestion in Northern Virginia and Hampton Roads.

Eliminating or Reducing Gas Tax Central to Debate

McDonnell hopes to wean Virginia off the gas tax, which he says is a declining revenue source because of more efficient cars.

“When we launched our effort to fix transportation, we called for decreasing Virginia’s reliance on the steadily decreasing transportation revenue source of the gas tax,” the governor said. “The plan agreed to today achieves that goal.”

According to McDonnell, the new plan would reduce the amount that Virginians pay at the pump by an estimated 6 cents per gallon. He said this would add up to almost $272 million per year saved by motorists.

But Democratic Sen. Richard Saslaw of Fairfax said the transportation compromise would not accomplish that goal.

“They haven’t really eliminated the gas tax at all. They’re just collecting it in a different manner. No one should be fooled by that,” said Saslaw, the Senate Democratic leader.

Attorney General Ken Cuccinelli was among the growing number of conservatives who spoke out against the compromise, saying it "contemplates a massive tax increase."

“In these tough economic times, I do not believe Virginia’s middle-class families can afford massive tax increases, and I cannot support legislation that would ask the taxpayers to shoulder an even heavier burden than they are already carrying, especially when the government proposes to do so little belt tightening in other areas of the budget.”

Grover Norquist, president of Americans for Tax Reform, claimed the transportation bill would raise taxes by $6.1 billion over the next five years.

Members of Loudoun's General Assembly delegation were not in agreement about the bill.

Del. Thomas A. "Tag" Greason (R-32) wrote on his Facebook page: "Today's transportation vote in Richmond will effect every citizen in the Commonwealth...and if the Vote is successful, we will solidify Virginia as the best place to run a business and raise a family in the country."

Del. David Ramadan (R-87), on the other hand, wrote: "Very disappointed with 60-40 vote to pass the 'Compromise' Transportation Plan. Residents of the #HOD87 will now be double taxed."

Patch editors Erica R. Hendry and Dusty Smith reported for this story.

See also:

McDonnell Calls on Senate to Pass Roads Funding

Governor’s Transportation Plan Hits Roadblock

McDonnell's Transportation Bill Moves Forward

Speak Out: Will McDonnell's Tax Plan Help Virginia?

Myth Buster February 22, 2013 at 11:31 PM
Since when is a compromise a sweeping tax increase on 8 items? This isn't a compromise, this is fleecing Northern Virginia tax payers. -The personal property tax will increase from 3.5% to 4.3%. -The tax on vending machine sales rises from 4.5% to 6% in NOVA and Hampton Roads and 5.3% elsewhere in the state. -Heavy equipment used for contracts on road construction, railroads, docks, etc. will be taxed at 4.3%, up from 3.5% -Except for the increased tax on motor vehicles, other tangible personal property will be taxed at 5%. -In Northern Virginia, commercial, industrial and residential land and building sales will have an additional tax of 25 cents per $100 of value. -In Northern Virginia there will be a 3 % hotel tax -While the bill shifts the 17.5 cent flat tax per gallon of gas to a 3.5% sales tax on the wholesale price of gasoline, -The sales tax on purchasing vehicles (trucks and cars) increases from the current 3% to 4% on July 1, 2013, 4.1% on July 1, 2014; 4.2 % on July 1, 2015, and 4.3% on July 1, 2016. -Diesel gas per gallon increase of 3%.
Bob Bruhns February 23, 2013 at 12:56 PM
There is a lot of money in the Sacred Cow known as transportation. Nationally, we are hearing that a Billion dollar cut is a lot of money to cut out of a $70 Billion transportation budget. Here in Virginia there is talk about a $300 million bailout of the double priced Dulles Rail / Silver Line project that hasn't even opened yet. The problem is, that a lot of that $300 million is being wasted - our rail project costs two times what it should cost, and we have to borrow a whole lot of extra money to pay that double price, and we have to pay the finance charges on the borrowed money, too. That's our fault - we approved this project without even knowing how we would pay for it. Oh, it was supposed to be a no-brainer. Oh, money was supposed to gush out of buildings and paychecks because of this little rail line. Etc. And we thought we could take federal money and make other people pay for our rail project. But before long, we will also be paying for THEIR rail projects the same way. Maybe THEN we might ask about the double prices that somebody likes to charge for these projects? Questions like, "What ever happened to the US DOT Inspector General's report from November 1, 2012, about MWAA funneling money for years to 'Contractor A', that charged 1.3 to 3.3 times what other contractors charged for the same work?" A double priced project like the Dulles Rail / Silver Line must be full of that sort of thing - shouldn't that stop? And what other overcharges can we find?
Bob Bruhns February 23, 2013 at 01:03 PM
Another question might be "What other transportation projects are full of double priced contracts?" Our various budgets are full of very high-priced items, and it's time that line-item prices stopped being hidden by trick public-private contracts. Let's see where our tax dollars are actually being spent, shall we?
Ellie Lockwood February 23, 2013 at 02:31 PM
We obviously need to identify and elect Delegates who are better able to analyze numbers and how they fit into the bigger picture than the current group can.
Ann H Csonka February 23, 2013 at 09:35 PM
The Guv loves more highway lanes, yet pretends to remove the gas tax (for those who use the highway and shift it to wholesale which indirectly increases the cost of gasoline--what a dumb dishonest way to tax consumers). The Guv's boondoggle new Rt. 460 is opposed by those in the area, destroys precious wetlands, and the money would be better-spent on improvements ot the parallel existing highway. At the same time, he killed rail transportation from the ports area north. I.e., dumb and dumber ... but who knows what sneaky benefit he may have invested in that area. Oh, well. Maybe he'll learn to count and serve the public interest someday.

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