The plan also would weaken the link that has long tied road funding to fuel consumption and divert more money from sales taxes — which also fund schools, law enforcement and other services — toward roads.
If the deal is approved, it would be the first major transportation-funding package to emerge from the General Assembly since a doomed 2007 plan. A deal also would allow Gov. Robert F. McDonnell (R) to claim a legacy of moving forward on a stubborn problem that has dominated the legislature for years. Supporters say that unlike the last major fix — when the gas tax was set at 17.5 cents per gallon in 1987 — the new revenue would keep pace with economic growth and inflation.
“This is a moment to find common ground and get results for the people of Virginia,” McDonnell told lawmakers in a written statement Wednesday. “It is why they have sent us here. Not to argue and posture, but to cooperate and solve problems.”
But the 98-page bill must get past the evenly divided Senate and GOP-led House, and both Republicans and Democrats saw things in the deal that were not to their liking. A vote may come as early as Thursday.
Del. Sal R. Iaquinto (R-Virginia Beach) said he is inclined to support the compromise because he believes it is a good way to fix transportation funding.
“I think there’s a good chance it’ll pass,” said Iaquinto, who was pleased with how Hampton Roads would fare under the proposal. “I’m encouraged.”
The deal by a 10-member conference committee would substantially cut the fuels tax but raise the sales tax from 5 percent to 5.3 percent and divert a portion of existing revenue to roads.
The plan would cut the gas tax by about a third, replacing the current 17.5 cents-per-gallon levy with a new 3.5 percent wholesale gas tax. The tax on diesel would remain about the same, but it would be converted from a flat per-gallon tax to a 6 percent wholesale tax. The new taxes on gasoline and diesel would rise with inflation.
The deal reduces the amount of general fund revenue that McDonnell and the House sought to use for roads but diverted more than the Senate had wanted.
McDonnell and the House had proposed devoting 0.75 percent of general sales tax revenue for roads, which would have generated about $283 million a year by 2018. The conferees agreed to reduce that take to 0.675 percent so that about $198 million a year would be redirected from the pot that also funds schools, police and other services. That was up from the $56 million a year the Senate had been willing to divert by committing 0.55 percent of the sales tax to transportation.
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