RICHMOND – Critics of the transportation funding compromise reached by legislative negotiators say the plan would place a huge burden on Virginia taxpayers.
Attorney General Ken Cuccinelli was among the growing number of conservatives who spoke out against the compromise, which is being considered this afternoon by the House and Senate
“If reports are correct, this new bill contemplates a massive tax increase,” Cuccinelli, the Republican candidate for governor, said in a statement.
“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.”
Cuccinelli applauded Gov. Bob McDonnell’s efforts to pass a transportation funding overhaul plan this session, but he urged legislators to be wary of any legislation that could potentially harm the economy.
“With Virginia families and businesses facing rising gas prices, increased regulatory burdens and taxes from the federal government, and the fiscal impact of the federal health care law dramatically rising as we approach the 2014 implementation, we cannot ask them to fund another enormous tax increase.”
Both chambers of the General Assembly today are considering House Bill 2313, which would raise about $900 million a year for transportation and transit projects. In the House, several members urged approval of the bill.
“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.
But according to Grover Norquist, president of Americans for Tax Reform, the transportation bill would raise taxes by $6.1 billion over the next five years.
“Gov. Bob McDonnell’s proposed transportation fix started as a $2.4 billion tax increase. As the House and Senate conferees debated the final language, the size of the tax hike has evidently increased by 250 percent, to nearly $6.1 billion in new and higher taxes once fully implemented over five years.”
“A higher sales tax, higher car tax, and internet tax scheme, and a higher diesel fuel tax are not indicative of bold leadership in any sense of the term.” Norquist said.
The compromise reached by a conference committee on Wednesday would raise the state’s sales tax from the current 5 percent to 5.3 percent, as well as add a 3.5 percent motor fuel tax at the wholesale level and a 6 percent diesel tax. At the same time, it would eliminate the state’s 17.5-cent-per-gallon gasoline tax.
“We have to break the fixation that the solution to every need is to throw more money at the problem. People are fed up with it,” said E.W. Jackson, a Republican candidate for lieutenant governor of Virginia. “We need leadership in Richmond willing to make hard decisions about spending and our transportation needs, not just find another excuse to reach into the pocket of taxpayers.”
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.
McDonnell hopes to wean Virginia off the gas tax, which he says is a declining revenue source because of more efficient cars. 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 minority leader.