The Virginia House voted today to approve a nearly $900 million a year transportation funding plan that would overhaul how the state collects taxes on fuel purchases. It also prohibits tolls on Interstate 95.
A Senate vote is all that remains before HB2313 moves to Gov. Bob McDonnell’s desk. The final vote must come by Saturday, Feb. 23 – the last day of the session.
Voting comes days after a select group of lawmakers from both chambers hashed out their differences on the state’s first major transportation reform in more than a quarter century. The plan includes converting Virginia’s 17.5-cent-per-gallon excise tax on gas and diesel to a wholesale tax.
Gasoline sales would include a 3.5 percent wholesale tax, or “at the rack tax,” and diesel purchases would include a 6 percent levy. The tax rates would rise with inflation.
The change in tax collection would initially equate to about a 10.5-cent-per-gallon gas rate. Delegate Chris Jones, R-Suffolk, told lawmakers Friday during floor discussion that the diesel rate would equate to 21 cents per gallon.
A statement issued by Gov. McDonnell on Thursday, Feb. 21, notes that changing the funding mechanism for roads, bridges and transit will allow future revenue to grow with the state’s economy.
“Tying transportation funding to a tax that every Virginian pays is a common-sense move. In addition, the sales tax is a less regressive tax than the gas tax,” McDonnell stated.
Another part of the funding plan would increase the state’s general sales tax from 5 percent to 5.3 percent. The additional 0.3 percent would go to transportation.
Also included in HB2313 is a provision to increase the amount of general fund money that goes to transportation by $200 million.
McDonnell said the change is warranted because “transportation is vital to the future prosperity and economic well-being of the Commonwealth, and it must be treads as such.”
A separate regional component would allow certain localities to collect additional taxes for local projects. Specifically, areas like Hampton Roads could impose a 0.3 percent sales tax increase and a 2.1 percent wholesale fuel tax.
The additional revenue could amount to another $200 million each year for regions around the state.
Delegate Robert Marshall, R-Prince William, was not happy with the decision to increase tax rates. Instead, he told lawmakers he would have preferred they look harder at doing a better job of managing money already available to the state.
The amended bill would also prevent tolls from being added to Interstate 95.
A request to charge tolls on I-95 south of Fredericksburg is awaiting final approval by the Federal Highway Administration.
To view other legislative activities of interest for Virginia, click here.
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