Virginia Gov. Bob McDonnell didn't get everything he wanted in his five-year plan to raise $3.1 billion for surface transportation, but his proposal finally got the General Assembly to address the state's crumbling infrastructure for the first time this century.
Over the weekend, legislators in Richmond approved a deal that actually raises an estimated $3.5 billion for maintenance and new construction. McDonnell proposed scrapping the 17.5 cent per gallon gasoline tax and replacing it with a small increase to the sales tax and dedicating that money, plus a little bit more, for transportation.
The plan approved by the legislature also eliminates the gas tax, which has not been increased in 25 years, but substitutes a 3.5 percent wholesale tax on motor fuels that is indexed to inflation. It also would increase the sales tax on non-food items from 5 percent to 5.3 percent, with more general fund money put into transportation accounts. Major metropolitan regions like Northern Virginia were given authority to raise the sales tax to 6 percent and use the difference for transportation projects.
The legislation also drops the diesel tax for trucks in exchange for a 6 percent tax at the wholesale level. McDonnell had proposed maintaining the diesel fuel tax.
McDonnell's idea to add a registration fee for hybrid cars to $100 stayed intact, but lawmakers also voted to double the registration fee for electric vehicles to $100. And they raised the vehicle sales tax to 4 percent from 3 percent.
The legislation also put a roadblock in the McDonnell administration's efforts to impose tolls on Interstate 95 to raise additional revenues for the state's main north-south corridor by requiring General Assembly approval for any new tolls on the highway.
McDonnell had to give into Democrats on accepting the expansion of Medicaid under the Affordable Care Act championed by President Obama. He also opened himself up to criticism from hardliners in the Republican Party who oppose tax increases of any kind. But Democrats had to compromise on their aversion to diverting general fund money to transportation, which they feel takes away from schools, public safety, health and law enforcement programs. Under the legislation, up to $200 million could be redirected from the general fund to transportation, according to local media accounts.
"This is a historic day in Virginia,” McDonnell said in a written statement. “We have worked together across party lines to find common ground and pass the first sustainable long-term transportation funding plan in 27 years. There is a ‘Virginia Way’ of cooperation and problem solving, and we saw it work again today in Richmond.”
McDonnell's statement continued
: "Most Virginians and Americans are tired of the politics of dysfunction and inaction that we see in Washington. They prefer cooperation and results. They want elected officials to advocate for their principles and then find ways to work together to get things done and improve their daily lives. We do that in Richmond. For several decades now transportation loomed as an issue that seemingly could not be solved. Lines were drawn and debates droned on as motorists sat in traffic. Today we have shown a path forward, a path past the old political arguments and endless posturing that threatens the economic prosperity and competitiveness of our state and nation.
"Every year, Virginians have been paying a hidden transportation tax. The Texas Transportation Institute found that our failure to approve new transportation funding, and the resulting congestion, cost every motorist in Northern Virginia $1,400 a year; every driver in Virginia Beach $877 a year; and every commuter in Richmond $581 a year. For nearly three decades, Virginians have paid a high price for our inaction on transportation. Their commutes have gotten longer as political positions got more and more rigid and unyielding. And that is a tax in and of itself. With this bill, gas prices will be reduced, and we will reduce our historic reliance on the gas tax which is in a long-term decline. Today we have stated unequivocally that transportation is a core function of government, by moving $200 million in future general fund dollars, and another $200 million from anticipated changes to federal law, to transportation. And we will allow Northern Virginia and Hampton Roads the resources they have long requested to address their pressing, local transportation needs. Through tax reform, general fund dedication, and economic growth, we will build a 21st century transportation network."
Ed Rendell, the former governor of Pennsylvania and co-chairman of infrastructure-advocacy group Building America's Future, praised McDonnell for making transportation a priority and achieving a sustainable funding stream.
"Leadership is an essential ingredient to addressing our nation’s severe transportation funding challenges. Gov. McDonnell and the Virginia General Assembly proved that they can work together and craft a transportation funding plan with bipartisan support that will provide sustainable investments for roads, bridges and transit systems. This is a valuable lesson that policymakers in Washington and around the nation should heed,” said Rendell in a statement. “Virginia’s leaders understand that the continued cost of inaction is too high a price to pay. I applaud the Governor and Legislature for taking bold action that will improve the quality of life for Virginians and pave the way to greater economic prosperity.” - Eric Kulisch