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Governor proposes sales tax increase to fund roads
Gov. Tim Kaine (D) released his plans May 12 to raise $1.1 billion in tax revenues annually by fiscal year 2012 to address the state's transportation woes.Plans included increasing retail and vehicle sales taxes and vehicle registration fees, and creating a fund for public transportation growth.
During his announcement, the governor called for a special session starting June 23 to discuss transportation funding.
The General Assembly ended its session in March with transportation funding questions largely unanswered. Ideas on where funding should come from were split largely along party lines. Democrats said tax increases were needed to pay for transportation needs, and Republicans were against tax hikes.
“I am offering a plan that is simple, statewide and sustainable to address the growing shortfall in our [road] maintenance needs and provides dedicated funds to address our statewide and regional transportation needs,” he said.
Kaine said shortfalls in highway maintenance funding drain money for road construction.
His plan to address this deficit calls for an increase statewide in the motor vehicle sales taxes from 3 percent to 4 percent, and an increase in vehicle registration fees by $10.
Kaine addresses congestion concerns in Northern Virginia and Hampton Roads by calling on an increase in the retail sales tax by 1 percent in these regions.
He also proposed creating a fund for public transportation by increasing the current 40 cent tax per $100 sale value on home sellers by 25 cents.
Del. Tom Rust (R-Sterling) said Kaine's plan “conceptually makes sense because it addresses the Northern Virginia and Hampton Roads component.”
However, increasing Northern Virginia's retail taxes pushes the region above the current sales taxes in Maryland and Washington, D.C., he said, adding that this could mean consumers will go elsewhere to shop.
Del. David Poisson (D-northeastern Loudoun) called Kaine's plan “simple and very straightforward.”
“It also makes plans for mass transit, which [last year's legislation] didn't,” he said.
Although many of Loudoun's legislators called Kaine's plan a step in the right direction, Sen. Jill Holtzman Vogel (R-western Loudoun) called the proposal “a real stretch.”
“It's a bit heavy-handed given where we are with the economy,” she said. Vogel said she would prefer taking a second look at the legislation that was approved by the General Assembly last year and reworking it to address the state's transportation needs.
Funding came up short this year after the so-called abusive driver fees were repealed, the transportation authority's taxes were deemed unconstitutional and an economic downturn generated less in taxes than projected.
These elements left a hole in transportation about $700 million deep, said Vogel, but there were other elements in the bill that worked without calling on increases in taxes.
The governor did not call for a gas tax increase in his proposal. The Senate approved legislation this year that would increase the gas tax by 1 cent each year for the next five years. This plan was rejected by the House. The last time the state's gas tax was raised was in 1986, when it was raised by 17.5 cents.
Del. C. Chuck Caputo (D-Dulles) said increasing the state's gas tax will likely be a key point of debate during the special session.
“It's a good start,” he said of the governor's plans.
Contact the reporter at hhobbs@timespapers.com
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