Gov. Timothy M. Kaine has unveiled a $1 billion-a-year package of tax increases to pump more money into Virginia’s transportation system. As it is the only comprehensive proposal on the table for addressing Virginia’s long-term transportation needs, it will set the terms of debate when the General Assembly convenes June 23 in a special session on transportation.
I’ll save the commentary later. Here are the highlights of the proposal as outlined by the governor:
Statewide tax hikes. Depicting Virginia as facing a “shortfall in highway maintenance funding” that drains money from new road construction, Kaine spins his proposed tax increases as an investment in “safety.” Most highway maintenance funding goes to addressing safety issues – “repair and operation of bridges, tunnels, traffic signals, and streetlights, as well as installation of guard rails and rumble strips, and plowing and paving the third largest highway system in the U.S.” The governor proposes:
- Increasing the existing statewide motor vehicles sales tax from 3 percent to 4 percent and dedicating all motor vehicle sales tax funds to maintenance;
- Increasing the statewide annual vehicle registration fee by $10 and dedicating those funds to maintenance.
The General Assembly approved both of those increases on a regional basis in HB 3202 last year, the governor noted.
NoVa and Hampton Roads tax hikes. To address traffic in the two most congested regions of the state, the governor’s plan would fund “critical, targeted projects” through new funds raised on a regional level. They include:
- Increasing the retail sales tax in both regions by 1 percent (exempting food and drugs);
- Dedicating regional sales taxes to the Northern Virginia Transportation Authority, consistent with current law; and
- Dedicating regional sales taxes to seven regional projects in Hampton Roads, including the Hampton Roads Bridge Tunnel, while abolishing the Hampton Roads Transportation Authority.
Transportation Change Fund. Acknowleding that Virginia’s transportation challenges cannot be addressed by roads and highways alone, the Governor proposes creating a special fund to pay for mass transit, rail and “innovative solutions” like teleworking and ridesharing. Three-quarters of this fund would be dedicated to transit and rail projects, increasing transit and rail investment by over 30 percent. The fund also would make dollars available for transportation projects to support economic development through aviation, port, and innovative highway investments.
This fund would rely upon a revenue stream created by a statewide 25 cent grantor’s tax.
For each of these proposals, Kaine proposes a “lockbox mechanism” specifying that the fund shall expire if it is used for any purpose other than transportation.
Update: The governor has posted details on his website. These include: