DALLAS -- Virginia lawmakers will consider a budget amendment proposed by Gov. Terry McAuliffe to ensure state spending cuts do not imperil a planned $100 million road bond issue.
The amendment is being sought by the Northern Virginia Transportation Authority in advance of the sale of tax revenue bonds it plans to issue in November for road projects in the heavily populated suburbs of Washington, D.C.
Del. S. Chris Jones, R-Suffolk, chairman of the Virginia General Assembly's House of Delegates' transportation committee, said the amendment was drafted by staff attorneys to provide clarity to bond rating agencies at the request of the NVTA's bond counsel, McGuireWoods LLP.
A budget bill passed by the General Assembly in mid-September deferred for one year a $50 million transfer of general revenue to Virginia's transportation fund required under a 2013 transportation funding law due to lower-than-expected collections.
The 2013 legislation stipulates that if any of its dedicated funding is diverted away from transportation, none of the $6 billion expected to be generated by the new taxes and fees can be collected.
The proposed budget amendment states that nothing in the earlier budget legislation, any other appropriations act, or any amendments to appropriations or budget acts would affect funds raised under the 2013 transportation law.
Virginia's transportation funding law that went into effect July 1, 2013 eliminated the state's motor fuels tax of 17.5 cents a gallon in favor of a 3.5% sales tax on the wholesale price of gasoline and 6% on diesel fuel. Additional taxes, including an extra 0.7% general sales tax, are levied in northern Virginia and the Hampton Roads area to fund projects in those areas.
NVTA said the sales tax is expected to generate $228 million in fiscal 2015, along with $36.9 million from a tax on home sales and $25.2 million of hotel tax revenues.
The requested amendment is a matter of the agency being super-cautious, said Martin Nohe, chairman of NVTA. One of our main principles is to be a good steward of public dollars," said Nohe, who was in New York on Tuesday to meet with rating agencies on the bond issue.
Some lawmakers said the amendment is not necessary but Nohe said no chances will be taken.
"When we see something that could affect those tax dollars, we use an abundance of caution so that those funds are not jeopardized in any way," he said.
Lawmakers are expected to take up the amendment in late October.
"There is a great deal of support for it," said NVTA communications director Kala Quintana.
The bonds are tentatively scheduled to go to market in early to mid-November in a negotiated sale, NVTA said. The underwriters have not yet been selected.
The NVTA adopted a capital budget in 2013 with $93.7 million of bond projects and $116 million of pay-as-you-go work.
The bond projects have been deferred while a bond validation lawsuit filed by the NVTA in July 2013 was decided. The NVTA prevailed in the lower court earlier this year, with no appeal made to the Virginia Supreme Court.
"Our primary goal is to begin funding and executing transportation projects as soon as possible," Nohe said in May.
The legislation adopted by the General Assembly on Sept. 18 included spending cuts of $346 million in fiscal 2015, which began July 1, and covered a portion of a $536 million gap expected in fiscal 2016.
However, McAuliffe said late last week that the state is facing a revenue shortfall of $1.3 billion in fiscal 2015 and another $1.1 billion in fiscal 2016. Virginia has some $1.5 billion in enacted reserves, but a revenue gap of almost $900 million remains.
