One day before the Virginia General Assembly convenes for the final session of his term, Republican Gov. Bob McDonnell unveiled a sweeping transportation package Tuesday that scraps the state’s 17.5-cent-per-gallon gas tax and bumps Virginia’s sales and use tax nearly a percent.
The proposal, which McDonnell highlighted at a press conference in Richmond, pushes the 5-percent sales tax to 5.8 percent, a measure that would help provide more than $3 billion in transportation for the commonwealth over the next five years, according to the governor’s office.
If the governor’s proposal is adopted by state lawmakers – something that’s months and many debates away – Virginia would be the only state in the nation to do away with the gas tax.
Virginia’s current gas tax rate has gone unchanged since 1986. Factoring in inflation, a more diverse economy and an increase in energy-efficient vehicles, the gas tax mechanism has led to severe shortfalls in the growing commonwealth.
For Northern Virginia residents reliant on the Dulles Toll Road—and residents looking forward to Metro’s Silver Line extension—McDonnell’s transportation pitch specifically calls for allocating an additional $300 million for Phase Two of the Dulles Corridor Metrorail Project, or Rail to Dulles. That $300 million, paired with the $150 million the state has already devoted to the project that extends Metro to the Dulles Airport and into Loudoun, would help keep tolls from soaring along the Dulles Toll Road. The toll road is operated by the Metropolitan Washington Airports Authority, which is managing and largely funding Rail to Dulles.
Moreover, McDonnell wants to dedicate an additional .25 cent of the existing sales and use tax to transportation. Currently, transportation receives 0.5 cent of the sales tax. The governor wants to phase in this share to 0.75 cent over five years.
“When combined with the 0.8 cent sales and use tax increase, transportation will receive approximately one-quarter of sales and use tax proceeds, thus ensuring a sustainable transportation revenue stream for the future,” states a release about McDonnell’s transportation plan. “All of the revenues from the additional .25 cent will be dedicated to support maintenance and operations. During the first three years … up to $300 million will be committed to the Dulles Metrorail Extension Project, providing the reforms identified by the U.S. Department of Transportation Inspector General are implemented.”
Current projections show Virginia’s transportation maintenance funds falling $364 million short in fiscal 2013, meaning that money will be transferred from the state’s construction account to the road maintenance account. That shortfall is expected to grow to $500 million by 2019 if new funding or revenue streams aren’t aren’t secured.
“In short, Virginia has to use money meant for construction for paving and potholes,” McDonnell’s office notes.
The transportation proposal would also increase the vehicle registration fee by $15, with the revenue going toward intercity passenger rail and transit, and impose a $100 annual fee on alternative fuel vehicles, also to be used for transit.
Additionally, the tax on diesel fuel would go unchanged because “heavy trucks have a disproportionately large impact on the deterioration of Virginia’s highways,” states McDonnell’s announcement.
At the press conference, McDonnell noted that transportation and education are the two prime focuses of his final year in office.
If the state government hasn’t provided kids with world-class schools and roads, McDonnell said, then the government has failed.
“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,” McDonnell said.
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