The agreement also includes Internet sales tax revenue that would flow to Virginia under the Marketplace Equity Act but provides for a contingency if Congress fails to pass it. Under the deal, 57 percent of Internet sales tax revenue, or $183 million a year, would go to transportation.
If Congress does not pass the act by January 2015, the wholesale tax on gasoline would rise from 3.5 percent to 5.1 percent.
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Democrats also pushed for a guarantee that the amount to come out of the state’s general fund would drop to only $63 million if Congress fails to act on Internet taxes, Sen. Janet D. Howell (D-Fairfax) said.
In a bid to appeal to Northern Virginia and other urban areas, the deal devotes a percentage of transportation funds to rail and transit, including $300 million to extend Metro’s Silver Line to Dulles International Airport.
The plan also includes a regional component that would allow Northern Virginia and Hampton Roads to impose additional local taxes and use that revenue for only transportation projects in those areas.
Under the deal, Northern Virginia would be able to raise as much as $350 million a year and Hampton Roads at least $175 million.
The conferees agreed to set aside more sales tax revenue to education, increasing it from 1.125 percent to 1.25 percent, and raise the amount of tax paid on new car sales. The car titling tax, now 3 percent, would go up to 4.3 percent. The $100 alternative-fuel vehicle fee eliminated in the House version of the bill was restored in the compromise.
“It’s clearly an improvement on where we started in this process,” said Robert Chase, president of the Northern Virginia Transportation Alliance. “This is not a long-term fix. I think perhaps, most importantly, it doesn’t preclude us from being able to build on this in the future.”
As Republicans and Democrats began digging into fine print, both sides expressed uneasiness about the deal. For Democrats, the package would mean weakening their long-standing orthodoxy against using additional general funds on roads. They also complained that the proposal does not raise enough money to meet the state’s needs and relies too heavily on a regional approach to a statewide problem.
“Many members of our caucus are very concerned about diverting revenue from schools, public safety and health care, which are on life support right now after the last four years,” Del. Scott A. Surovell (D-Mount Vernon) said, noting that the state is now spending less on kindergarten through 12th grade than in 2007.
Surovell said the deal is not a good one for Northern Virginia, either, because the region already contributes the lion’s share of general funds that underwrite schools in the state. Now more of that money would also go to highways and other parts of the state would contribute even less to fund Northern Virginia’s transit and road construction needs due to its special tax district, he said.
Senate Minority Leader Richard L. Saslaw (D-Fairfax) called the plan “convoluted” but also said he would reserve judgment on Wednesday afternoon.
“They haven’t really eliminated the gas tax at all. They’re just collecting it in a different manner. No one should be fooled by that,” Saslaw said.
On the other side of the aisle, Republicans objected to anything that would force consumers and motorists to dig deeper into their pockets, especially now that the state is running surpluses.
“We all want a comprehensive solution to address our transportation needs, but in an attempt to cobble together enough new tax revenue to satisfy the demands of Senate Democrats, this has become a Frankenstein’s monster for Virginia taxpayers,” said Del. Ben L. Cline (R-Rockbridge), co-chairman of the Conservative Caucus.
Laura Vozzella contributed to this report.
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