Could Virginia soon end charging diesel tax?

By Keith Goble, Land Line state legislative editor | 2/5/2013

Virginia House and Senate lawmakers this week are pushing forward with transportation funding plans that could overhaul fuel tax collections in the state.

House lawmakers voted 53-46 early on Tuesday, Feb. 5, to advance Gov. Bob McDonnell’s plan to increase revenue available for roads, bridges and transit. The Senate was working later in the day to approve another version of the funding plan.

Tuesday is the deadline for bills to advance from one chamber to the other side.

The governor’s plan is a five-year, $3.1 billion package. It relies on an increase to the state’s general sales tax to help raise more than $600 million annually.

Another $250 million each year relies on a Congressional effort to make online retailers collect sales taxes.

The main part of the funding package would eliminate the state’s 17.5-cent-per-gallon gas tax in exchange for increasing the 5 percent sales tax by 0.8 percent. Also included is a provision to raise the current 0.5 percent of the sales tax routed to transportation to 0.75 percent over five years.

The 17.5-cent-per-gallon tax on diesel purchases would continue.

Also included in the plan is a vehicle registration fee hike and imposing a fee on alternative fuel vehicles.

The House version would eliminate a proposal to charge toll taxes on Interstate 95 south of Fredericksburg.

The governor has authority under state law to seek federal permission to toll existing roadways – except for Interstate 81 – without getting the General Assembly’s approval. A request to charge tolls on I-95 is awaiting final approval by the Federal Highway Administration.

Also added to HB2313 is a provision to add regional transportation funding options.

Delegate Onzlee Ware, D-Roanoke, voted for the bill. He said while it is easy to sit back and do nothing it is time for action.

“If you want to be progressive you have to think outside of the box. That’s why I’m supporting this bill,” Ware told House lawmakers during floor discussion on the bill.

The Senate was working on a funding plan that has undergone many changes. Sen. Stephen Newman, R-Lynchburg, offered nearly 60 pages of amendments to the governor’s plan.

Newman’s version of SB1355 would do away with the state’s tax on gasoline and diesel. The revenue sources would be replaced with a 5.5 percent sales tax on the wholesale price of fuel. The change would allow for taxes to rise with inflation

The revised effort would also do away with the sales tax increase sought by the governor.

If House and Senate lawmakers approve differing versions of the governor’s funding plan a select group of lawmakers representing both chambers would meet to reach agreement on provisions before it could move to the governor’s desk.

Gov. McDonnell said a transportation funding resolution is long overdue.

“For too long we have kicked the can while Virginians have sat in traffic. And the problems we face have only gotten worse,” McDonnell said in a press release. “We must act decisively and we must act now to pass comprehensive transportation funding reform.”

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

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