Legislators to consider transportation tax hikes
By Tara Donaldson
The full House of Delegates will vote on two competing tax proposals next week when legislators return to the Capitol. The first is the much-heralded gas tax increase sponsored by Fairfax Sen. Dick Saslaw (D-35th), which is likely to be rejected.The second is a last-minute compromise orchestrated in part by Springfield Delegate Dave Albo (R-42nd) that is also expected to meet with heavy opposition.
The Senate plan would raise taxes and fees statewide to pay for transportation improvements but it also includes additional increases for Northern Virginia and Hampton Roads to fund local projects.
The House compromise features only local tax increases in Northern Virginia and Hampton Roads; it does not contain any statewide funds. However, it also puts some of the burden of tax increases on local politicians, who don’t want to be seen as raising taxes any more than the state legislators do.
The Senate plan
On June 25, the Senate approved Saslaw’s tax plan on a 21-16 party-line vote. The following morning, a House committee voted to send it to the House floor so the entire House can debate and vote on it. However, the committee’s vote to send the bill on does not signal support; many of the Republicans who voted to bring the bill to the floor said they plan to vote against it.
Many House Republicans have instead supported plans to audit VDOT and other state agencies, using the cost savings to fund transportation.
Democrats have responded that while they don’t necessarily oppose audits, the cost savings won’t be anywhere near enough to fund hundreds of millions of dollars worth of transportation needs each year.
“I don’t know how you solve transportation problems of the magnitude we have in this state with no money,” Saslaw said.
Saslaw’s tax increase package includes a 1-cent-per-gallon gas tax increase each year for the next six years, a ¼-percent increase in the sales tax and a ½-percent titling tax on car sales.
He estimated that the gas tax hike would mean the average driver pays an extra $7.50 each year to fuel up.
To offset the extra pain at the pump, Saslaw’s plan would remove a ½-percent sales tax on food, which he said would save a family of four about $50 a year.
The Saslaw plan also includes regional packages for Northern Virginia and Hampton Roads. Northern Virginia residents would pay an extra ½-percent sales tax, a 40-cent increase in the grantor’s tax and an additional $5 per night on hotel rooms. That package would raise $340 million per year for Northern Virginia projects, Saslaw said. Hampton Roads residents would pay similar tax increases for their road projects.
“You’ve got to raise money,” he told the House Rules Committee. “You’re going to have to gore somebody’s ox.”
House Majority Leader Morgan Griffith (R-8th), asked his fellow committee members Thursday to advance Saslaw’s bill to the House floor but without adding the committee’s seal of approval.
“It is the only vehicle we have that appears to have a chance of getting out of the Senate,” he said.
The House plan
But that was before Newport News Delegate Phil Hamilton (R-93rd) stepped forward. Hamilton is the chief sponsor of the compromise bill, though Albo worked out the part of the deal that involves Northern Virginia.
The plan does not include any statewide taxes or solutions for the state’s transportation budget shortfall. Instead, it raises taxes and fees in Hampton Roads and Northern Virginia to pay for road projects in those areas only.
The bill is patterned after a similar plan that was adopted by the General Assembly last year but later vetoed by the Virginia Supreme Court. The court ruled the bill unconstitutional because it did not directly levy taxes but instead gave taxing power to the Northern Virginia Transportation Authority, an unelected body.
Albo said the current version of the bill includes an initial $100 fee for Northern Virginia residents applying for a driver’s license. Sixteen- and 17-year-olds who pass a safe driving class will be exempt. The plan also includes a 2-percent car rental tax in Northern Virginia.
In addition, Northern Virginia localities will have the option of increasing the grantor’s tax on home sales by 40 cents and of levying a 2-percent hotel tax.
“This has been a lot of work and a lot of compromise. This is the best I can get,” Albo said, adding later that the plan requires major concessions from all parties because it’s not what anyone had hoped for.
“This, in my opinion, is the only thing at the end of the day that’s got any chance of getting any money to Northern Virginia,” he said.
The bill’s fate is uncertain. House Rules Committee members voted to send the bill to the House floor without a recommendation – the same action they took with Saslaw’s bill. It appears as though the Republican-dominated House may pass some version of the bill but that the Democratically-controlled Senate will not.
And in any case, the bill is already raising concerns among local government officials, who don’t want the burden of raising taxes thrust onto them.
“That won’t work,” said Prince William Board of County Supervisors Chairman Corey Stewart, referring to the part of the bill that would allow localities, including Prince William, to raise the grantor’s tax and the hotel tax. “Prince William County is already taxing local residents to do the state’s job and we’ve been doing it for years.”
Stewart said 5 cents on every tax dollar in Prince William already goes to fund transportation projects that should be paid for by the state.
“There is no sentiment on the board whatsoever to increase taxes any more on local residents,” he said.
Secretary of Transportation Pierce Homer did not speculate on whether Gov. Tim Kaine (D) would sign the House measure but said the bill’s lack of a statewide solution is a major problem.
Another sticking point in the bill is a provision that would give Hampton Roads an extra share of transportation money – up to $250 million, from the state’s General Fund. That’s money that’s currently being used for schools, Medicaid and other projects around the state and the Senate Finance Committee already soundly rejected that idea in a different bill last week.
Coming up
Legislators are taking the week off and will return to the Capitol on Wednesday, July 9, to consider the House and Senate plans, along with a variety of other smaller proposals. The Senate has already approved Saslaw’s plan but the House of Delegates has yet to vote on either proposal. When they reconvene on July 9, delegates will vote on both the House and Senate plans. If the House plan is approved, it will then go to the Senate for committee hearings and a vote.