WASHINGTON - Virginia Gov. Timothy Kaine is pushing a transportation funding plan that he says would raise about $1 billion per year over the next six years through tax increases and also would revive the Northern Virginia Transportation Authority's ability to issue bonds.

But Republicans, who control the House of Delegates, have not warmed to the plan and have been against imposing or increasing statewide taxes that the Democratic governor has proposed. Even some Democrats, who control the Senate, are questioning Kaine's plan. Some of them have floated an increase to the state's gas tax, one of the lowest in the nation, but Kaine did not include that option in his plan.

Lawmakers will meet in a special session on June 23 to consider Kaine's plan. So far, lawmakers have not proposed any other concrete alternatives.

"The focus now is on getting the proposal out to the public," said deputy secretary of transportation Barbara Reese. "We have not heard or seen any detailed proposals from any of the other parties involved."

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 justices said that only the General Assembly had the authority to levy taxes and fees. The decision also ruled out a similar agency in the Hampton Roads region.

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 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. 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 governor's plan would also abolish the recently created Hampton Roads Transportation Authority.

Chris Zimmerman, chairman of the NVTA, said Kaine's plan would provide the $300-plus million per year that the agency would have raised had it been able to continue to impose the seven taxes and fees. The authority had expected to have bonding capacity for $1.7 billion in new transportation funding over the next six years from the tax and fee revenue. The tax revenues that Kaine has proposed would raise a similar amount.

"The question is going be whether those opposed to the plan will propose something themselves," Zimmerman said, or whether they will "sit on their hands, leaving Virginia, northern Virginia particularly, in a transportation funding crisis."

The state collects transportation money from dozens of sources, but most comes from taxes on gasoline, cars, and other products. About $1.5 billion a year is spent to maintain roads and an additional $1 billion a year to construct roads. The increase in funds would mark the first significant infusion of revenue for northern Virginia transportation needs in more than 20 years.

"The largest sum of the money is going to year-in and year-out transit capital replacement and capital needs ... Metro funding, bus service," Virginia Transportation Secretary Pierce Homer said. He added that larger regional projects financed by bonds could be in the works in the future.

Projects the NVTA plans to fund initially with debt include $29 million for the Fairfax County Parkway and Monument Interchange and $15 million to widen the Prince William Parkway, as well as provide $50 million of funding for the Washington Metropolitan Area Transit Authority, known as Metro, which has reported funding shortfalls. In all, the NVTA planned to fund 22 projects with about $100 million of bonds in the first year. If Kaine's proposal is enacted by the General Assembly, the agency could move forward with the projects.

"One of their goals, the Northern Virginia Transportation Authority, is to do a lot of the smaller projects, both transit and highway, that northern Virginia needs," Reese said.

Kaine's 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. Those tax revenues would be dedicated to road maintenance. 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 in the statewide grantor's tax, imposed on homes being sold. The increase would generate about $142 million in 2009.

"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 following the release of his plan.

Homer said that the plan was a starting point that meets the needs of legislators and the region.

 

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.