Overhaul probably just starting on Va. transportation funding

RICHMOND — When it comes to the nitty-gritty of Virginia Gov. Robert F. McDonnell’s transportation-funding fix, state Sen. John C. Watkins isn’t a big fan.

Getting rid of the gas tax? Taking money that could be used for schools or health care? Betting on Congress to pass an Internet sales tax bill? The Powhatan Republican has doubts about all of it.

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Still, just days after McDonnell (R) unveiled his plan, Watkins took to the Senate floor to applaud the governor for offering a solution and urge colleagues to work with him.

“All 40 of us need to find solutions,” Watkins told his Senate colleagues.

“They’ve also got to be solutions that at least 51 people on the other end of this dark hall can go along with,” he continued, referring to House members. “And I think if we come up with a solution, [McDonnell] will go with us because he knows that the economic vitality of this state and the quality of life in this state is at stake.”

Less than two weeks after the governor announced his transportation-funding proposal, the General Assembly has not fully embraced the particulars. But Richmond seems to be heeding the governor’s challenge to solve an issue that has vexed Virginia for nearly a generation.

A number of factors seem to be conspiring to prod lawmakers into action this session. One is the shrinking availability of funds for road repairs, which has made rural areas more aware of what urban areas have long considered a funding crisis. Another is the approach of 2017, when officials say the state will be out of money to build new roads. And there’s a popular governor, with national ambitions and a legacy to burnish, putting the issue on the front burner. Not to mention the fact that McDonnell will be gone in a year, quite possibly replaced by a successor more partisan and less likely to engineer a compromise.

“The governor’s proposal is so bold and so new that it’s been able to move the debate to a dialogue,” said Sean T. Connaughton, the state transportation secretary.

McDonnell’s plan tries to claim a middle ground between paying for roads with increased taxation or with revenue the state already has. He eliminates the gas tax but also raises the sales tax; he redirects some existing state revenue but increases some motor-vehicle fees.

In a rare move that underscores the urgency of the issue, Speaker William J. Howell (R-Stafford) is sponsoring the governor’s plan in the House of Delegates. It is one of just four that list him as chief patron this year.

Other legislators have stepped up with transportation plans of their own, and at least eight bills are in the mix, an indication that state government is focused on transportation if not yet wedded to a particular approach.

For decades, regional, partisan and philosophical divides have stalled efforts to devise a long-term funding method for roads. In heavily congested Northern Virginia and Hampton Roads, there have been calls for more funding. But rural areas were largely content as long as their roads were maintained.

“My gosh, you go to other parts of the state and you have these beautiful four-lane highways that at rush hour you can count the cars on one hand,” said Del. Jackson H. Miller (R-Manassas), the House majority whip. “And so why would those legislators think there’s a problem?”

As maintenance funding shrunk in recent years, rural areas started taking note of the dearth of road dollars, said Del. Vivian E. Watts (D-Fairfax), a former state transportation secretary.

“Statewide, people are beginning to feel the pain that we in Northern Virginia have been feeling for more than a decade,” Watts said.

Even those who agreed on the need for more funding disagreed on where to get it. In the General Assembly, Democrats have mostly favored raising taxes to pay for roads, and most Republicans have wanted to use existing revenue. But the issue does not break perfectly along partisan lines. As recently as last year, moderate Republicans joined with Democrats in the evenly split Senate to reject plans to take a greater share of general-fund money to pay for roads.

The rise of the tea party and anti-tax activist Grover Norquist have stiffened opposition, especially among Republicans, to any plan that depends on a major increase in state revenue. But with funds drying up, there’s a sense at the state Capitol that the time has come to solve the problem.

The political landscape has added to that the sense of urgency. The major-party candidates running to succeed McDonnell — former Democratic National Committee chairman Terry McAuliffe (D) and Attorney General Ken Cuccinelli II (R) — are seen as strongly partisan figures. Some legislators have said they doubt that McAuliffe could move the GOP-dominated House or that tea party favorite Cuccinelli could sway the more moderate Senate. And neither candidate has well-known ideas about transportation funding.

“We don’t know where those two people stand” on transportation, Watkins said.

Sen. Frank M. Ruff Jr. (R-Mecklenburg) considers himself a conservative but has concluded that new revenue will have to be part of the equation.

“If the question is, ‘Do you want to pay more for tax?’ the answer will always be no, but that’s not really the right question,” he said. “The right question is, ‘Do you want to pay more for sales tax or gas tax, or do you want to pay for car repairs and front-end alignments?’ . . . When you start having a bunch of potholes, you can get your car aligned today and then next week and the week after.”

It is harder to find a Democrat, or moderate Senate Republican for that matter, who thinks the time has come to use more general-fund revenue to pay for transportation. Watkins still resists the idea, but he said he might feel differently if the money was used for specific projects, such as extending Metro to Dulles International Airport.

Some Republican lawmakers have balked at McDonnell’s plan, as have Norquist and the conservative-leaning editorial page of the Wall Street Journal. The latter railed against the plan under the headline “Republican Road Folly,” objecting in part because the “gas-tax-for-sales-tax swap violates the user pays principle of sound tax policy.”

“Virginia is going in the opposite direction of every other state with a Republican governor,” Norquist said in an interview Friday. “We’ve been sharing that with as many people as possible.”

McDonnell says his plan will bring in $845 million a year by fiscal 2018, short of the $1 billion a year many transportation advocates are calling for. He is counting on federal legislation to deliver $250 million of that, betting on a bill — long stalled in Congress — that would give states the authority to make online retailers collect sales taxes.

An additional $283 million a year would come from taking a greater share of general-fund revenue for transportation, which the Senate shot down last year on grounds that it would cheat education and other “core” government services.

The part of McDonnell’s plan that gets the most attention would eliminate the state’s 17.5 cent-per-gallon tax on gasoline, which brings in about $680 million a year, and increasing the sales tax from 5 percent to 5.8 percent. If it passes, Virginia will become the first state to drop the gas tax, a source of revenue states have relied on for decades to fund transportation projects.

The governor describes that aspect of the plan as essentially “revenue-neutral” in the first year, although the sales tax increase would generate about $25 million more than the gas tax would. But by 2018, the sales-tax increase is projected to bring in about $180 million more a year than the gas tax would, with the difference attributed to anticipated economic growth.

McDonnell and some supporters have cast the proposal as “conservative” because the growth in revenue would come mostly from an expanding economy, not an increase in tax rates. Other revenue would come from increasing motor vehicle registration fees by $15 a year and imposing a $100-a-year fee on hybrid and alternative-fuel vehicles.

Since announcing his plan, McDonnell has met with Democrats and Republicans and pitched his proposal on cable TV. His top aides have also reached out to legislators, bearing binders crammed with all the details.

“Whatever we can do is what we’re doing,” McDonnell spokesman Tucker Martin said.

 
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