RICHMOND – Negotiators from both the House and Senate came to an agreement Wednesday on a transportation plan that, if passed, would be the first transportation funding overhaul in Virginia since 1986.
“This is a huge moment for Virginia,” said Sen. Frank W. Wagner, R-Virginia Beach, a member of the conference committee. “We are on the cusp of bringing home real and lasting transportation solutions that will move Virginia forward now and in the future.”
The transportation compromise, 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.
The plan reduces the state’s gasoline tax by replacing the current 17.5-cent-per-gallon tax with a 3.5 percent wholesale gas tax. The tax on diesel would be 6 percent.
Although Gov. Bob McDonnell had initially proposed eliminating the gas tax altogether, he expressed satisfaction with this substantial cut.
“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 Republican governor said. “The plan agreed to today achieves that goal.”
According to McDonnell, the compromise 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.
The plan compensates for the decrease in gas tax revenue by raising the state’s sales tax from the current 5 percent to 5.3 percent.
“Tying transportation funding to a tax that every Virginian pays is a common-sense move,” McDonnell said. “In addition, the sales tax is a less regressive tax than the gas tax.”
The change in taxation will help relieve the burden on families in rural areas who are affected by the gas tax, according to Del. Beverly Sherwood, R-Frederick.
“By reducing and replacing the current gas tax with a wholesale tax, we will reduce the gas tax burden on Virginia families,” said Sherwood. “This plan addresses the long-term needs of both rural and suburban areas of the commonwealth without unfairly increasing the burden on Virginia families.”
The negotiators also agreed to devote 0.675 percent of the state’s general-fund revenues to transportation. That is less than the 0.75 percent proposed by McDonnell and the House of Delegates; however, it is more than the 0.55 percent the Senate proposed in its previous version of the transportation overhaul plan.
Del. Onzlee Ware, D-Roanoke, the only Democratic delegate on the conference committee, said Senate Democrats originally wanted to limit transportation’s share of the general fund to 0.55 percent because they worried that a higher percentage would take money from other public services, such as education and law enforcement.
“Throughout this process, it has been important to our party to develop a long-term solution that generates enough revenue to adequately address our needs without stripping funding to other core government services,” said Ware.
Transportation is vital to the prosperity of Virginia and deserves a high priority, said McDonnell.
“Transportation must be treated like a core function of government, and it must share in our growth in general fund revenues to a greater extent than currently structured,” said McDonnell.
Throughout the legislative session, the administration’s proposal to impose a toll on Interstate 95 in Sussex County has been caught up in the debate about transportation funding. (Caroline County is a secondary location for collecting tolls on I-95.) At one point, the administration’s bill was amended to put a moratorium on interstate highway tolls.
Restrictions on imposing new tolls reportedly are included in the conference report, but they have not been disclosed yet.
The conference committee’s 98-page plan now must win approval from both the House and the Senate before it can be signed into law by the governor. With the General Assembly scheduled to adjourn on Saturday, legislators will be cutting it close to pass the transportation bill this session.
Not all members of the governor’s party are happy with what they’ve heard about the compromise plan, either.
Attorney General Ken Cuccinelli, a fellow Republican and the presumptive GOP gubernatorial nominee, issued a statement Thursday criticizing the compromise plan.
“If reports are correct, this new bill contemplates a massive tax increase,” said Cuccinelli. “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.