Virginia lawmakers signed off this week on the governor’s changes to a five-year, $6 billion transportation funding plan. The funding initiative also prohibits tolls on Interstate 95.
House and Senate lawmakers upheld amendments made by Gov. Bob McDonnell, including technical changes to a provision to raise additional revenue in Northern Virginia and Hampton Roads. HB2313 includes an overhaul for how the state collects taxes on fuel purchases.
McDonnell said the funding plan provides a long-term solution to address the state’s growing transportation challenges.
“The reforms and new revenues adopted by the General Assembly will ensure that Virginia has the adequate resources to improve our crumbling infrastructure, reduce congestion, and provide the transportation network our citizens and businesses need to attract new jobs and economic development opportunities,” McDonnell said in prepared remarks.
Effective July 1, Virginia’s 17.5-cent-per-gallon excise tax on gas and diesel will be converted to a wholesale tax.
Gasoline sales will include a 3.5 percent wholesale tax, or “at the rack tax,” and diesel purchases will include a 6 percent levy. The tax rates will rise with inflation.
The change in tax collection is expected to initially equate to about a 10.5-cent-per-gallon gas rate. The diesel rate is estimated to be 21 cents per gallon.
Another part of the funding plan will increase the state’s general sales tax from 5 percent to 5.3 percent. The additional 0.3 percent will go to transportation.
The amount of general fund money that goes to transportation will also be increased by $200 million.
A separate regional component allows certain areas to collect additional taxes for local projects. Specifically, areas like Hampton Roads and Northern Virginia could impose a 0.7 percent sales tax increase.
McDonnell amended the funding bill after Virginia Attorney General Ken Cuccinelli cautioned that the state’s constitution prohibits imposing special taxes on geographic areas.
The provision was changed to define the affected areas by population and traffic use, instead of geography.
The governor said the regional component will allow areas such as Northern Virginia and Hampton Roads “the resources they have long requested to address their pressing, local transportation needs.”
One more provision included in the bill prevents 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.
Copyright © OOIDA