Transportation Proposals Begin Working Through Legislative ProcessJanuary 27, 2007
Transportation has once again taken center stage at the Virginia General Assembly. I will use this edition of The Bolling Report to update you on the transportation proposals currently being debated in Richmond.
As I’ve often said, building a transportation system for the 21st century is the most important issue currently facing Virginia. While transportation challenges exist in every part of our state, these challenges are critical in two regions of our state – Northern Virginia and Hampton Roads.
It was against this back drop that the General Assembly labored for nine months in 2006 to find a transportation solution.
In 2006 Governor Kaine and leaders in the State Senate insisted on higher taxes to provide additional money for the Transportation Trust Fund, while the House of Delegate resisted these proposals, arguing that we should be able to adequately fund transportation with existing revenues.
Unfortunately, these differences could not be resolved and nothing was done to address our transportation challenges. Therefore, transportation remains the number one issue currently facing Virginia, and it is once again center stage at the General Assembly.
As the 2007 session of the General Assembly approached, Governor Tim Kaine was the first to introduce a transportation funding initiative.
The Governor proposed using $500M in existing general fund revenues to provide a one time shot in the arm to targeted transportation projects. In addition, he proposed generating an additional $550M a year for transportation by enacting the following tax and fee increases:
Increasing Virginia’s motor vehicle sales tax from 3% to 5%. Imposing an abusive driver fee on motorists who drive under the influence, drive recklessly or commit certain other offenses. Increasing the registration fee for vehicles by $15 a year Increasing the registration fee on heavy trucks, commensurate with the increase on automobiles. Republican leaders in the General Assembly dismissed the Governor’s recommendations, arguing that they represented the same proposals that were rejected by the General Assembly in 2006.
Following weeks of closed door meetings, Republican leaders in the General Assembly announced last week that they had reached agreement on their own transportation proposal. I will attempt to provide you with a summary of the proposal’s key fiscal provisions below.
(In addition to these fiscal provisions, the Republican proposal also includes a number of recommendations on land use planning and enhancing efficiency within the Department of Transportation. Due to space limitations, this report will focus on the proposal’s fiscal provisions.)
STATEWIDE PLAN
First, the Republican transportation proposal would generate $339M in one time money for critical transportation projects by appropriating money that was set aside for transportation in last years budget but never allocated to specific projects.
Second, the proposal would transfer $250M a year in existing general fund revenues to the Transportation Trust Fund on an ongoing basis.
Third, the proposal would generate an additional $246M a year for the Transportation Trust Fund by:
Increasing the vehicle registration fee by $10 a year Imposing an abusive driver fee on motorists who commit various driving related offenses Equalizing the state tax on diesel fuel with the tax on gasoline (the state tax on diesel is currently 16 cents per gallon while the tax on gasoline is currently 17.5 cents per gallon) Increasing registration fees and penalties for heavy and overweight commercial trucks Dedicating 50% of future non-designated budget surpluses to the Transportation Trust Fund. This is currently estimated at $64M a year.
The proposal would further authorize the issuance of $2B in transportation bonds to help move critical projects forward at a more rapid rate than would otherwise be possible.
REGIONAL PLANS
In recognition of the unique transportation challenges in Northern Virginia and Hampton Roads, the Republican proposal would generate additional funding for transportation projects by authorizing local "self help plans" in these regions of the state. Highlights of these regional plans will be discussed below:
Northern Virginia
The Northern Virginia plan would generate up to $383 million a year in transportation funding for the Northern Virginia Transportation Authority and effected localities.
The proposal would affect the following localities: the Counties of Arlington, Fairfax, Loudoun and Prince William; and the Cities of Alexandria, Fairfax, Falls Church, Manassas and Manassas Park.
Money derived from the plan would go to the Northern Virginia Transportation Fund. Money in the Fund would be allocated as follows:
First call on the Fund would be to pay debt service on bonds. The next $50M would go to the Washington Metropolitan Area Transit Authority. The next $30M would go to Virginia Railway Express.
Once phase two of the Dulles Rail project begins, at least $20M each year would be dedicated to that project. 45% of remaining revenues would go to participating localities to be used for urban and secondary road improvements.
The plan would also empower the Northern Virginia Transportation Authority to impose tolls for newly constructed or reconstructed highways under their control.
Effected localities would be authorized to impose the following additional fees and taxes upon an affirmative vote of a majority of the members of their local government body:
Drivers Licenses - A fee of $100 for the initial issuance of a driver’s license. (does not include minors who have successfully completed a driver safety course approved by the Department of Motor Vehicles) Grantors Tax - A tax of .40 for each $100 of value on each property or land transaction in effected localities, such as the selling of a house. Rental Car Tax - A tax of 2% on all vehicle rental transactions Commercial Real Estate Tax - A tax of .25% of the fair market value of all commercial and industrial properties in the effected areas. (includes all multi-unit residential properties)
Effected localities must vote to participate in the plan on or before January 1, 2008.
Hampton Roads
The Hampton Roads plan would generate $209 million a year for the Hampton Roads Transportation Authority. The Authority would have a broad array of powers regarding the planning and construction of highways, bridges and tunnels in the effected region.
The plan would also empower the Hampton Roads Transportation Authority to impose tolls for any "new or improved highway, bridge, tunnel or transportation facility constructed by the Authority."
The Hampton Roads plan would affect the following localities: the Counties of Isle of Wight, James City and York and the Cities of Chesapeake, Hampton, Newport News, Norfolk, Portsmouth, Suffolk, Virginia Beach and Williamsburg.
These localities must vote to participate in the plan on or before September 1, 2007. (NOTE: Legislation introduced in the Senate provides that if the governing body of at least six of the effected localities votes to participate in the Authority all effected localities will be required to participate in the Authority. This provision is not included in legislation introduced in the House of Delegates.)
The plan would authorize effected localities to impose the following additional fees and taxes:
Drivers Licenses - An additional fee of $20 on the initial issuance or renewal of a drivers license Vehicle Registrations - An additional vehicle registration fee of $10 (in addition to the increase proposed in the statewide plan) Vehicle License Fee - A one time license fee equal to 1% of the retail value of all vehicles at the time they are first registered in an effected locality Vehicle Inspection Fees - An additional vehicle inspection fee in the amount of $10 Sales Tax - A sales tax in the amount of 5% on all vehicle repairs. (currently, such repairs are considered a service and are not subject to the state sales tax) Grantors Tax - A tax of .30 for each $100 of value on each property or land transaction in effected localities, such as the selling of a house. Rental Car Tax - A tax of 2% on all vehicle rental transactions Commercial Real Estate Tax - A tax of .30% of the fair market value of all commercial property and real estate
While most Republicans in the General Assembly seem prepared to support these plans, some conservative Republicans object to the fact that they include new taxes and fees. Supporters of the proposals argue that new taxes and fees are necessary to generate the money that is required to meet our transportation needs, and that some compromise on taxes and fees must be made in order to secure approval of the proposal in the Senate.
In addition, Governor Kaine and Democrats are concerned that the statewide plan would take money away from general fund revenue needs, such as education, public safety, health care, etc. They have also complained that the regional plans would "balkanize" statewide transportation spending by creating special taxing districts in Northern Virginia and Hampton Roads.
Whether these differences can be resolved or not, and whether the plans can obtain sufficient votes for passage or not, remains to be seen. Passage in the House of Delegates seems likely, but passage in the Senate could be more difficult. This picture will become clearer as the plans begin working their way through the legislative process this week.
It is important for you to let your legislators know how you feel about these proposals. Please take time to contact your legislators and share your thoughts with them. I know they would be glad to have your input.
The Bolling Report