WASHINGTON - Virginia Gov. Timothy Kaine yesterday unveiled a plan to raise about $1 billion per year over the next six years through tax increases to fund transportation needs and revive the Northern Virginia Transportation Authority's ability to issue bonds.
"I am offering a plan that is simple, statewide, and sustainable to address the growing shortfall in our maintenance needs and provides dedicated funds to address our statewide and regional transportation needs," Kaine said in a statement.
The governor called for lawmakers to convene in a special session on June 23 to consider the plan.
But his proposal is not expected to be received well by Republicans, who have been against imposing or increasing statewide taxes. Republicans control the House of Delegates. Democrats, who control the Senate, have supported an increase to the state's gas tax, one of the lowest in the nation, but Kaine did not propose that in his plan.
Kaine proposed increasing 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. 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 region. Kaine's plan would also abolish the recently created Hampton Roads Transportation Authority.
The state's transportation funding woes stem from a Virginia Supreme Court decision in February that the NVTA did not have the authority to levy taxes and fees, and therefore could not issue bonds. The decision also ruled out the Hampton Roads Transportation Authority's ability to issue debt as well. The justices said that only the General Assembly had the authority to levy taxes and fees.
The NVTA had planned to issue $102 million of bonds but had to cancel the deal after the court's decision. Chris Zimmerman, chairman of the agency, said Kaine's plan appears to provide the $300 million per year that the agency would have raised had it been able to impose the seven taxes and fees .
Zimmerman said he expects to see "a lot of political heavy lifting" to try to sell the plan to lawmakers before of the start mid-June session. "I think the governor has given everybody a good start," he said. "Hopefully there will be enough support that General Assembly will enact it."
Kaine's proposal would also increase the existing statewide motor vehicles sales tax to 4% from 3% , bringing in about $172.5 million in fiscal 2009. Those tax revenues would be dedicated to maintenance of roads. His plan also would increase the statewide annual vehicle registration fee by $10 - raking in about $70.3 million in 2009, which would also be dedicated to maintaining roads.
The plan would create a "transportation change fund" which would increase investment in transit and rail, as well as fund the consideration of "innovative solutions" to reduce traffic congestion, such as through teleworking and ridesharing. The fund would consist of revenues obtained from an increase of the statewide grantor's tax by 25 cents, a tax imposed on homes being sold. The 25-cent increase would generate about $142 million in 2009.
"[The plan] is an idea, it's a starting point, and I think it meets the needs that have been articulated by the legislators and the region," said Virginia Transportation Secretary Pierce Homer.
State finance director Jody Wagner said Kaine's plan "begins the conversation" on transportation funding.
"This is a problem that we have to deal with and this is his suggestion of how to deal with it," she said, adding that the governor is "open to suggestions" for different ideas.