Kaine tries to sell tax hike
By Tara Donaldson
It seemed like a long shot, but Gov. Tim Kaine (D) was in Woodbridge on Tuesday night, trying to sell voters on his plan to improve transportation with a series of tax increases.
The governor hosted a town hall meeting at the Ferlazzo Building, the first stop on a statewide tour aimed at drumming up support for his transportation plan before a June 23 special session of the General Assembly.
“We have to decide: Do we want to invest more in transportation or not?” he said. “We either have to be able to spend more on transportation or we have to be able to look at ourselves in the mirror and say ‘You know what? We don’t want to do it.’”
“There’s no such thing as a free lunch” was Kaine’s essential theme throughout the night, and he repeated that message in various terms every few minutes as he explained his proposal.
Kaine’s plan is a three-pronged approach based on safety improvements, regional fixes and alternatives to roads. Each piece of the transportation puzzle is accompanied by a tax increase to fund it.
Safety first
Kaine calls the first part of his proposal the “safety first” program. If approved, it would create a stable maintenance fund to keep bridges and roads in good repair.
A maintenance fund would be used to repair or replace aging bridges and roads and would also free up existing funds for new roads and transit projects. The maintenance fund would also be used to improve evacuation times for Hampton Roads, a high-risk area during hurricane season.
To pay for the maintenance fund, Kaine would increase the annual vehicle registration fee by $10. He’d also up the statewide automobile sales tax from 3 to 4 percent.
The governor pointed out that the current 3-percent sales tax on cars is not only among the lowest in the nation, it’s also inexplicably lower than the sales tax on anything else purchased in Virginia.
Those two tax hikes would raise $400 million in the first year, and all of that would be dedicated to the maintenance fund, he said.
Regional relief
The second piece of the Kaine plan is called “regional relief,” and is a targeted approach for Northern Virginia and Hampton Roads.
The governor’s plan would increase the sales tax by 1 percent in both regions on everything except food and medicine. The funds would be used only for regional projects.
That caveat is essential, said Laurie Wieder, president of the Prince William Regional Chamber of Commerce, who told Kaine that “It’s very very important that transportation revenues raised in Northern Virginia stay in Northern Virginia.”
Transportation change
The final part of the transportation puzzle is Kaine’s “transportation change fund.” The governor has called for the creation of a special fund to pay for alternative solutions, such as transit, rail, telework and ridesharing.
Under his plan, 75 percent of the fund would be used for transit and rail projects while the rest could be used for new solutions to gridlock, as well as for airports and harbor projects that support economic development.
To fund the transportation change fund, Kaine has proposed increasing the grantor’s tax by 25 cents statewide. That’s less than the 40-cent tax hike that was approved only for Northern Virginia last year before being struck down by the Virginia Supreme Court.
A hard sell
“We’re not going to get it for free,” Kaine said of transportation improvements. “We’re going t have to be willing to invest.”
But whether Virginians will be willing to invest is far from certain.
Even the relatively friendly crowd on Tuesday seemed less than enthusiastic about the idea.
Jo Ann Bell, chairman of the Regional Chamber, told the governor that her organization has taken the stance that “new taxes and fees should be looked at only as a last resort” and suggested that state officials reprioritize the existing budget rather than raise taxes.
Kaine responded by pointing out that Virginia has the fifth highest per capita income in the nation but that the state is 39th in terms of taxes as a percentage of income. There is no stable way to fund transportation with that kind of disconnect, he said.
Bell wasn’t the only member of the audience to suggest that funds be shifted, rather than generated. However another resident proved the difficulty of that plan by reminding Kaine that education is also a top priority for residents
Education easily makes up the largest chunk of the state budget — 39 percent — and Kaine acknowledged that it is “the most important item in the state budget.”
Together, transportation, education and health and human resources account for almost 79 percent of the state budget, which means it is almost impossible to significantly increase one of those funds without robbing another.
As all three are top priorities for voters and legislators, any plan that requires taking money from one to fund another isn’t an easy sell, either.
But Kaine’s uphill battle didn’t end there.
Others suggested other funding mechanisms, such as a change in the proffer system or an increase in the gas tax.
Gas tax
Coles District Supervisor Marty Nohe (R) represents Prince William on the Northern Virginia Transportation Authority. He didn't endorse a gas tax increase, but did say that would be the best way to put some of the burden on out-of-staters who are just passing through.
“A lot of the people using our roads don't live here in Northern Virginia,” he said, receiving general applause as he pointed out that Virginians are paying for congestion caused by Marylanders and North Carolinians who don't contribute at all.
Kaine acknowledged that a gas tax increase would snare many of those who are just passing through, but said a regional sales tax will, as well.
The problem with a gas tax increase, he said, is that while it makes sense, it just hits people too hard at a bad time.
“Gas really is like medicine and food,” he said, arguing that all three are now considered “necessities of life” and shouldn't be taxed any more than necessary.