WASHINGTON — Virginia Gov. Timothy Kaine is hoping state lawmakers will embrace his transportation funding plan, which they will consider during a special session that begins today.
The state's mounting transportation needs were highlighted last week when the Commonwealth Transportation Board Thursday approved a six-year plan that would cut hundreds of projects and transfer $2.75 billion from the construction fund to the state's maintenance fund.
Kaine's plan would raise about $1 billion per year over the next six years through tax increases and also revive the Northern Virginia Transportation Authority's ability to issue bonds. Its passage seems unlikely because members of the Republican-controlled House of Delegates are mostly against any statewide tax increases.
Even in the Democrat-controlled Senate, Kaine's transportation proposal has dim prospects, sources said last week, because senators have transportation plans of their own, including a statewide gas tax increase.
Still, the Democratic governor has touted his plan at 10 town hall meetings across the state during the past six weeks. At the last meeting in Fredericksburg Thursday night, Kaine said he is open to working with lawmakers to come up with a variation of his proposal to address the state's badly needed transportation funding.
"We need additional revenues to deal with a growing problem," he said, adding that lawmakers must do something.
Just as Kaine finished crafting his proposal, which will be introduced to the House today by Del. Ward Armstrong, the Commonwealth Transportation Board approved the six-year plan to cut projects and infuse the maintenance fund.
Kaine's proposal would direct revenues from his tax increases to the beleaguered maintenance fund, which is so underfunded officials have to tap the construction fund every year just to keep up with maintaining the state's roads. The board axed about $1.7 billion of planned and proposed northern Virginia road projects and also delayed additional projects across the state that carried a price tag of about $400 million.
"If we do nothing, we will be spending almost all of [the state's construction fund] on maintenance" in the coming years, Kaine said.
The proposal lawmakers will consider today could revive the projects. It would increase the retail sales and use tax in the northern Virginia and Hampton Roads regions by 1%. The regional sales taxes collected in northern Virginia would total about $306.3 million in the first year and would be dedicated to the NVTA, restoring its ability to issue bonds, which it lost in a February state Supreme Court ruling. The regional sales taxes collected in Hampton Roads, about $167.9 million in the first year, would be used to fund seven regional projects in that area.
The proposal would also increase the existing statewide motor vehicle sales tax to 4% from 3%, bringing in an estimated $172.5 million in fiscal 2009. It would increase the statewide annual vehicle registration fee by $10, bringing in about $70.3 million in 2009. Revenue from both would be dedicated to road maintenance.
Lastly, the proposal would create a "transportation change fund," which would increase investment in transit and rail, as well as fund research into "innovative solutions" to reduce traffic congestion. The fund would consist of revenues obtained from an increase in the statewide grantor's tax, imposed on homes being sold. The increase would generate about $142 million in 2009.
Sen. Edward Houck, a Democrat who was in attendance at the Fredericksburg town hall meeting, said he thinks the Senate will likely pass a statewide gas tax increase, which the governor does not include in his proposal. Virginia's gas tax is one of the lowest in the nation.
Houck said he and other Senate Democrats have been supportive of an increase and one proposal would increase the tax by one cent per year for six years. He added that there is a "politics problem" between Democrats and Republicans, and that the debate this week will be contentious.
The state has had to rethink its approach to transportation funding since February, when the Virginia Supreme Court handed down a decision that said the NVTA did not have the authority to levy taxes and fees, and therefore could not issue bonds. The court ruled that only the General Assembly had the authority to levy taxes and fees.
The ruling threw a wrench in the NVTA's plans to issue nearly $2 billion in debt in coming years to pay for various transportation projects and forced the cancellation of its planned $102 million debut in the bond market. Kaine's plan would essentially restore funding to the authority through the tax revenues and grant it the ability to issue a similar amount of bonds.