RICHMOND – Negotiators from both the House and Senate came to an agreement Wednesday on a transportation plan that, if passed, will be the first major transportation overhaul in Virginia since 1986.
“This is a huge moment for Virginia,” said Sen. Frank W. Wagner (R-Virginia Beach), one of the conference committee members. “We are on the cusp of bringing home real and lasting transportation solutions that will move Virginia forward now and in the future.”
The transportation compromise, which was hammered out by a 10-member conference committee over the past week, would potentially raise close to $900 million a year in transportation revenue.
The plan greatly reduces the gas tax by replacing the current 17.5 cent per gallon tax with a 3.5 percent wholesale gas tax. The tax on diesel would be 6 percent.
Although McDonnell had initially proposed eliminating the gas tax altogether, he expressed satisfaction with this substantial cut.
“When we launched our effort to fix transportation, we called for decreasing Virginia’s reliance on the steadily decreasing transportation revenue source of the gas tax. The plan agreed to today achieves that goal.”
According to McDonnell, the new plan would reduce the cost that Virginians pay at the pump by an estimated 6 cents per gallon. This would add up to almost $272 million per year saved by motorists.
The plan compensates for the decrease in gas tax revenue by proposing to raise the state’s sales tax from the current 5 percent to 5.3 percent.
“Tying transportation funding to a tax that every Virginian pays is a common-sense move,” McDonnell said. “In addition, the sales tax is a less regressive tax than the gas tax.”
According to Del. Beverly Sherwood (R-Frederick), this will help relieve the burden on families in rural areas who are affected by the gas tax.
“By reducing and replacing the current gas tax with a wholesale tax, we will reduce the gas tax burden on Virginia families,” Sherwood said. “This plan addresses the long-term needs of both rural and suburban areas of the Commonwealth without unfairly increasing the burden on Virginia families.”
The negotiators also agreed to devote 0.675 percent of general funds to transportation revenue. Although this number is lower than the 0.75 percent McDonnell and the House of Delegate’s proposed, it is significantly larger than the 0.55 percent the Senate proposed in its previous version of the transportation overhaul plan.
Del. Onzlee Ware (D-Roanoke), the only Democratic delegate on the conference committee, said the reason for the Senate’s original proposal of 0.55 percent was due to concerns among Democrats that dedicating large amounts of the general fund to transportation would hurt other areas of government.
“Throughout this process, it has been important to our party to develop a long term solution that generates enough revenue to adequately address our needs without stripping funding to other core government services,” said Del. Onzlee Ware (D-Roanoke).
Governor McDonnell stated, however, that transportation was vital to the prosperity of Virginia and deserved to be given priority.
“Transportation must be treated like a core function of government, and it must share in our growth in general fund revenues to a greater extent than currently structured,” he said.
Throughout the session, the proposal of imposing new tolls within the state of Virginia has been at the center of the transportation debate. Although reports have stated that restrictions on imposing new tolls are included in the conference report, specific language has not been announced yet.
The conference committee’s 98-page compromise now has to gain approval from both the House and the Senate before it can be signed into law by Governor McDonnell. With only two days left of the General Assembly’s session, legislators will be cutting it close to pass the transportation bill this session.
“This is a moment to find common ground and get results for the people of Virginia,” McDonnell said. “It is why they sent us here. Not to argue and posture, but to cooperate and solve problems.”