WASHINGTON — A key Virginia lawmaker is sponsoring legislation that would raise nearly $1 billion annually for infrastructure through gas and sales taxes, after warning of a severe budget shortfall for road maintenance near the nation’s capital and complaining the governor’s transportation plan is only “a drop in the bucket,”
Del. Vivian Watts, D-Annandale, introduced the bill last week, aiming to solve some of Virginia’s infrastructure woes by imposing a 4% statewide gas tax phased in over four years.
Watts, who was the state’s secretary of transportation and public safety from 1986 to 1990, said her bill would help the state restore billions of dollars lost over the years by its failure to increase gas taxes to counter inflation and give it the financial strength to expand and properly maintain its infrastructure in the heavily-trafficked northern Virginia area.
The bill would be more effective than the plan unveiled last month by Republican Gov. Bob McDonnell, she said.
In a Tuesday press briefing, entitled “Virginia Transportation 2012: Quicksand at the Bottom of the Well,” Watts said while Virginia’s gas tax of 17.5 cents per gallon paid for 50% of road maintenance costs in fiscal 1987, the state’s failure to increase the tax since then has cost it $8 billion. It also has reduced the percentage of maintenance fees covered by the tax to 14%, she said.
Virginia’s gas tax is well below the national average of 20.9 cents, according to the American Petroleum Institute. Because the state has been attempting to make up for the loss of tax revenue by diverting its sales taxes to infrastructure maintenance, non-resident drivers don’t pay their “fair share” of road maintenance costs.
Though non-Virginians account for 20% of traffic in Northern Virginia, they don’t bear anywhere near that much of the finance burden, Watts said.
“Based on a House Appropriations Committee staff memo in October 2009, which calculated that a 20-cent increase in the gas tax would cost the average two-car family $300 a year, a 5% wholesale gas tax would cost less than $200 per family per year,” Watts said. “Out-of-state drivers would pay their share.”
In her presentation, Watts said the plan proposed by McDonnell relies too heavily on the willingness of future governors to cut spending by $200 million each year, and still leaves the commonwealth short of the annual maintenance shortfall of $550 million.
The fuel tax that would be imposed by Watts’ bill would bring in $650 million each year, she projected, and would only come into effect after the unemployment rate in the commonwealth decreased for four consecutive quarters.
Watts also aimed criticism at McDonnell’s plan to raise $1 billion through grant anticipation revenue bonds, or Garvees, to finance major transportation projects. They include a planned sale of 15-year bonds next month aimed at providing $623 million to subsidize construction of a tunnel under the Elizabeth River in Norfolk.
Watts noted all three major rating agencies issued warnings about the outlook of Garvees, which are backed by annual federal appropriations. Uncertainty about possible federal spending cuts has raised trepidation about the bonds.
Watts’ legislation would also aim to produce a few hundred million dollars more each year by imposing a 0.5-cent sales tax on non-food items, and providing incentives for local governments to adopt a commercial and industrial real estate tax capped at 12.5 cents.
The bill must first clear the Finance Committee in the Republican-controlled House. Gas tax increases have long been unpopular at all levels of government, and Virginia has not seen a gas tax increase in 26 years.
The General Assembly is in session until March 10.
