Several days ago, I raised a question about Gov. Timothy M. Kaine’s amendments to the GOP transportation package, which seemed to represent a dramatic turn-around from previous stances. (See “Kaine Submits Transportation Amendments,” March 26, 2007.) After criticizing the use of debt to pay for transportation improvements, I asked, was Kaine really amending HB 3202 to borrow $500 million more than the $2.5 billion the Republicans had proposed?
Kaine’s amendments seemed at such variance with his previous rhetoric, and the rhetoric of fellow Democrats, that I wondered whether I even properly understood the amendment. Turns out that I did. During a blogger conference yesterday, the Governor illuminated the thinking behind this important amendment.
The General Assembly proposed issuing $2.5 billion in debt, with debt service to be paid out of the General Fund. But HB 3202 identified no particular source of funds, Kaine explained. “If you’re going to issue long-term debt,” he said, “you should use a transportation revenue source to back up the bonds.” He found a long predictable, long-term source of revenue — the tax on automobile premiums — to cover the debt service. Because the tax generated enough revenue to cover the debt service on $3 billion, he decided the state might as well borrow the full $3 billion.
In other tweaks to the legislation, Kaine lifted the restriction that would have limited the bond proceeds to Interstates and primary roads. His wording would permit the finacing of secondary road projects, making it possible to spread more money around the state.