The Virginia Senate voted Wednesday, Feb. 13, to approve a new $900 million a year transportation funding plan that would change fuel pump prices for truckers and other drivers. Also included in the plan is the authority given to localities to impose local sales taxes.
It is significantly different from the House version that followed, along with Gov. Bob McDonnell’s plan to increase revenue available for roads, bridges and transit. A select group of lawmakers from both chambers will now assemble to try to come to an agreement on the provisions before it could move to the governor’s desk.
Gov. McDonnell issued a statement following the vote expressing confidence that a deal will get done.
“It is now time for both bodies of the General Assembly to work together in conference and agree upon a fiscally responsible plan that will pass with bipartisan majorities in the House and Senate, and which I can sign into law,” McDonnell said in a news release.
Senators voted 26-14 to approve the bill that would increase the state’s gas and diesel fuel tax rates by 5 cents per gallon to 22.5 cents. A 1 percent increase would also be added at the wholesale level, which would equate to a 3-cent-per-gallon hike at the pump.
The percentage added at the wholesale level would be earmarked for local road projects. The rate would double to 2 percent if Congress doesn’t make online retailers collect sales tax. The governor included the online revenue source in his five-year, $3.1 billion package.
McDonnell’s plan called for eliminating the state’s 17.5-cent-per-gallon gas tax while keeping intact the same tax on diesel. In exchange for dumping the gas tax, the governor has called for increasing the state’s 5 percent sales tax by 0.8 percent.
The governor made clear his disappointment that the Senate chose to rely heavily on fuel taxes.
“Common ground must include a significant commitment of the projected future growth in general fund revenues, greater reliance on sustainable revenue sources, which grow with economic activity, as opposed to gasoline tax increases,” he stated.
The Senate plan would also tie fuel tax rates to inflation to ensure that revenues keep pace with inflation. The state’s existing tax rates haven’t changed in 25 years.
Also added to HB2313 is a provision to let localities collect an additional 1 percent sales tax to fund local projects.
“We felt it was important that regions around the state be given the tools to meet their differing needs, which may be greater than in other areas,” Sen. Frank Wagner, R-Virginia Beach, explained to lawmakers prior to the floor vote.
In addition, the Senate version would raise the current 0.5 percent of the general sales tax routed to transportation by 0.05 percent. McDonnell asked for lawmakers to endorse a 0.25 percent increase to 0.75 percent over five years.
Both versions approved by the chambers would prevent tolls from being added to Interstate 95. The Senate went one step further to prohibit charging highway users to drive on any existing roadways.
A request to charge tolls on I-95 south of Fredericksburg is awaiting final approval by the Federal Highway Administration.
Virginia House and Senate lawmakers have until the Feb. 23 adjournment to reach agreement on a funding plan.
To view other legislative activities of interest for Virginia, click here.
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