DALLAS — The Virginia General Assembly is expected, when it convenes late Monday for its sixth special session this year, to reverse the deferral of a $50 million transfer to the state's transportation fund from the general fund that imperiled a proposed $100 million road bond issue.
House Appropriations Committee Chairman Chris Jones, R-Suffolk, said last week that the scheduled fiscal 2015 transfer will instead occur as planned. Jones said he will look for $50 million in spending cuts to help cover a $2.4 billion revenue gap in Virginia's two-year state budget.
Gov. Terry McAuliffe and legislative leaders agreed in June on a budget plan that delayed until fiscal 2016 the transfer of sales tax collections dedicated to transportation. The deferral proposal came after state's potential revenue shortfall was raised to $2.44 billion from earlier estimates of a $1.6 billion gap, due to lower-than-expected tax collections.
The budget bill was amended in September after Northern Virginia Transportation Authority warned that delaying the transfer could invoke a "kill switch" in the 2013 legislation that revised the state's transportation funding system.
The 2013 law stipulated that if any of its dedicated funding is diverted away from transportation, no more of the $6 billion expected to be generated by the new state and regional taxes and fees over the next 10 years can be collected.
McGuire Woods LLP, the NVTA's bond counsel, asked lawmakers for assurances that the deferred transfer authorized in a budget bill passed in mid-September would not prevent collections under the 2013 law.
The NVTA said it needed the situation clarified before it could go ahead with a $100 million issue of bonds supported by new revenue sources in the legislation. The bonds are expected to go to market by year's end.
Allowing the transfer to go ahead in fiscal 2015 and covering any resulting revenue gap with additional spending cuts is a more effective solution, Jones said.
"The simple answer to these questions is to eliminate the one-year deferral and restore as originally scheduled the increased existing general fund contribution to transportation," Jones said.
The fiscal 2014 transfer of $50 million occurred as scheduled.
The 2013 law raised the share of general fund sales tax revenues dedicated to transportation to 6.75% from the earlier 5%. The higher rate is expected to bring in an additional $900 million over six years.
The NVTA said its share of the sales tax should generate $228 million in fiscal 2015, along with $36.9 million from a tax on home sales and $25.2 million of hotel tax collections.
Jones said legislative experts, the state comptroller, and McAuliffe's advisors found no problem with the delayed transfer, but he agreed to amend the bill "out of an abundance of caution."
The budget amendment said 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.
The amendment eased the concerns of the NVTA's bond counsel, but questions have continued to be raised regarding the status of Virginia's transportation funding streams, Jones said.
Jones said he will offer a substitute bill to replace the amended version.
"This is just to be 100% sure," he said.
"I am confident this will alleviate the concerns of the bond counsel, make clear the General Assembly's intent regarding transportation funding, and allow us to complete action on the budget for this year," Jones said in a letter to state delegates.
Virginia's transportation funding law, which 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.
