The House version, based on Republican Gov. Robert F. McDonnell’s proposed funding overhaul, would scrap the gas tax, raise the sales tax and make a substantial claim on some of the existing general-fund revenue currently spent on schools, public safety and other services.
The Senate plan relies more on generating new revenue. It not only keeps the gas tax but hikes it, and allows it to rise with inflation. It also raises the tax on the wholesale price of fuel and boosts it again if Congress does not come through with a particular piece of legislation. And it gives localities the power to impose local sales taxes for transportation projects.
The conferees agreed at the outset to set aside their most fundamental differences — how they would raise money for transportation — and first try to reach an agreement on how much money they need.
The Senate plans to raise about $900 million a year once fully implemented, while the House version would generate about $825 million. Those figures are farther apart than they appear; both plans count on federal legislation to provide about $250 million of that, but only the Senate version includes a contingency in case Congress does not pass the law allowing states to collect Internet sales taxes.
After meeting separately with his fellow House conferees, Del. S. Chris Jones (R-Suffolk) returned to the full committee to say the House might support a plan generating $900 million a year. But he said the deal would have to stick with the House position on general funds.
The House, like McDonnell, wants to devote about $283 million in general funds to transportation by 2018. The Senate, which has long resisted using general funds for fear of cheating schools and other services, provides $56 million a year from general funds.
Jones said his caucus would also want to make sure that any funds raised through regional sales taxes in Northern Virginia and Hampton Roads would be counted toward the $900 million limit.
Senate conferees indicated that they might be willing to provide as much as $150 million to $175 million a year in general funds. Sen. Frank W. Wagner (R-Virginia Beach) said $40 million of that could come from state agencies that dip into the Transportation Trust Fund for various programs.
Senate conferees also urged their House counterparts to consider including central Virginia, which includes the Richmond area, among the regions given authority to raise local sales taxes for transportation.
“I think we made some good progress today,” Wagner said after the meeting.
When the transportation bill moved through the House, Northern Virginia delegates from both parties were largely united in their concern that the General Assembly grant them the authority to find regional funding solution. As a Dillon Rule state, localities may only exercise authority expressly granted by the General Assembly.
“We absolutely have to have a regional piece,” Del. David B. Albo (R-Fairfax), one of the conferees, said during the House’s floor debate on the bill.
All the same, the Northern Virginia delegates want to make sure that Richmond doesn’t use regional funding plans as an excuse to foist most of the funding responsibility onto urban localities. As a result, several expressed alarm over measure that would have made it easier for some jurisdictions to impose a local income tax to pay for roads. Critics say it would have amounted to a hidden highway toll on people who already pay as much as 40 percent in income taxes.
“This is not a statewide solution,” Fairfax County Board of Supervisors Chairman Sharon S. Bulova (D) said in an interview. “It gives certain localities the ability to raise taxes themselves. Even if we adopted it, it doesn’t help us address transportation on a regional level.”
Under current law, a governing body such as the Fairfax County Board of Supervisors would have to approve an income tax and then submit the proposal to a referendum of voters. Under the SB1313 — which was sponsored by Sen. Walter A. Stosch (R-Henrico) on behalf of Portsmouth and passed the Senate by a 27-11 vote — the referendum requirement would have been eliminated. The governing bodies in several cities and urban areas, including the counties of Arlington, Fairfax, Loudoun, and Prince William, would have been able to charge an income tax of up to 1 percent, on top of state and federal income taxes, with the revenue going to local roads.
Sen. Barbara Favola (D-Arlington) said she voted for the measure because her board — of which she is a former member — had often asked for more local control over the ability to raise revenues. Other Northern Virginia Democrats also backed the bill including Sens. George Barker, Adam Ebbin, Mark Herring, Janet Howell, Toddy Puller, David Marsden and Richard L. Saslaw. But Sen. J. Chapman “Chap” Petersen spoke out against the bill.
“It would be an unwanted and unique tax burden on Northern Virginia residents that the rest of the state doesn’t have to pay,” Petersen said. And he said the sum is considerable: for a family with taxable income of $200,000 a year, such a tax could mean paying $2,000 more for roads and highways.
“It’s as if we’re letting the state off the hook,” Petersen said. “Instead, we’re gong to be putting 100 percent of the burden not only on Northern Virginia residents, but on those who file income taxes.”
Del. Timothy D. Hugo (R-Fairfax) said in a written statement that he understood local jurisdictions’ interest in finding ways to fund transportation but disagreed with this one. He also said he opposed removing the referendum because voters should have the final say on whether to raise taxes.
The bill passed the Senate 27 to 11, with two senators not voting. Petersen was also the only Democrat to join 10 Republicans in voting against the bill.
The bill was ultimately killed last Wednesday in a House subcommittee by a 7 to 3 vote.