Virginia House panel rejects fuel tax increase

| 3/7/2008

The search continues in Virginia for ways to generate transportation revenue. A bill has died that sought to increase the state’s fuel tax by 30 percent.

The House Finance Committee voted 14-6 to kill a bill – SB713 – that would have increased the per-gallon tax on diesel and gas by 5 cents during the next five years. The Senate previously approved it.

Sponsored by Senate Majority Leader Richard Saslaw, D-Fairfax, the bill called for increasing the state’s 17.5 cent-per-gallon tax on motor fuels by a penny each year until 2014. The bill’s fiscal impact statement showed the increase would generate $47.2 million the first year, with that number rising to $281.6 million by 2014.

Saslaw said the tax increase is needed to help fill a $290 million shortfall in the budget used for road maintenance. To make matters worse, legislators are preparing to repeal the controversial “abusive driver” fees approved last year that were intended to help fund transportation.

Despite warnings to lawmakers that failure to act puts the state one step closer to running out of road funds in the next decade, Saslaw said he was not surprised by the House committee’s action on his bill. Democratic Gov. Tim Kaine and the Republican-controlled House have been resistant to efforts to raise taxes this year.

Instead, some GOP lawmakers say they would prefer to use existing revenue – such as a portion of the existing sales tax – to fill any maintenance gaps.

To view other legislative activities of interest for Virginia, click here.

– By Keith Goble, state legislative editor