The Senate passed a funding package that appealed to Democrats and some Republicans but turned off more-conservative members of the GOP. The Senate voted to amend a House bill, itself an amended version of Gov. Robert F. McDonnell’s proposed funding overhaul. The Senate proposal raises about $900 million a year, considerably more than the Republican governor’s plan if federal legislation he bets on does not come through.
Where the House made changes last week to McDonnell’s bill — it left intact his plan to scrap the gas tax and raise the sales tax but junked his $100 annual fee on hybrids — the Senate went for a wholesale reinvention.
The Senate plan would not only keep the gas tax but also increase it and allow it to rise with inflation. It would increase the tax on the wholesale price of fuel and raise it again if Congress does not come through with a particular piece of legislation, and it would give localities the power to impose local sales tax for transportation projects. It leaves the general sales tax rate alone.
About the only agreement between the two plans were on raising the vehicle registration fees by $15 and on the notion of giving a bigger slice of general-fund revenue, which normally goes to services such as schools and law enforcement, to transportation. Just how large a slice that should be was in dispute. The Senate offered up about $56 million a year by 2018. The House and McDonnell want $283 million a year by then.
The bill passed the evenly divided Senate 26 to 14. All of those opposed were Republicans. The House later rejected the Senate’s amendments, and a conference committee was called.
The House and Senate appointed a total of 10 conferees, most of them from heavily congested Northern Virginia, Hampton Roads and the Richmond area. All but two are Republicans, but they include some of the GOP’s most outspoken advocates for greater transportation funding.
The conferees will try to sculpt a plan that can clear two very different chambers and get the governor’s approval. Their biggest challenge could be finding a compromise that the Republican-dominated House can stomach in an election year. Every delegate is up for reelection, which could make some especially wary of raising taxes.
Even though the House and Senate differ, the bill’s emergence from the Senate was hailed as progress on an issue that has vexed the commonwealth for nearly a generation. Just a week ago, Senate Democrats vowed to kill any transportation plan in retaliation for an attempted GOP redistricting coup. They came around after House Speaker William J. Howell (R-Stafford) ruled the Republican’s plan out of order.
“A realistic transportation solution is within our grasp,” Lt. Gov. Bill Bolling (R), who presides over the Senate and breaks some tie votes, said Wednesday. “But to get it, everybody’s going to have to be willing to compromise.”
But Del. C. Todd Gilbert (R-Shenandoah) questioned whether there was much room for compromise on a bill that had pushed both chambers to their ideological limits.
“There are pretty clear lines in the sand that have always been drawn by the respective sides here,” he said. “There are those who say the general fund is untouchable, and there are those who say tax increases are a non-starter. And I don’t see how any bill successfully hits the governor’s desk without somebody or both sides breaking on that. ”
Sen. Frank W. Wagner (R-Virginia Beach), architect of the Senate amendments, said he was confident a deal can be reached but was reluctant to go into specifics.
“It’s typical, like any negotiations — unless it’s with your wife, and then you have to meet them more than half way,” he said.
The General Assembly has not raised the gas tax since 1986, and the state has seen the buying power of that flat 17.5-cent-per-gallon levy steadily erode with inflation. For about a decade, Virginia has tapped highway construction funds for maintenance. The construction fund is projected to run out of money by 2017.
McDonnell set out to solve the problem by eliminating the gas tax but increasing the state sales tax from 5 percent to 5.8 percent. His plan also raised car registration and hybrid fees and took a larger share of general-fund revenue for transportation.
His plan would raise $845 million a year by 2018, but $222 million of that bets on passage of federal legislation allowing states to collect Internet sales taxes.
The Senate plan banks on passage of the Internet sales tax as well but has a contingency if Congress does not approve it. The plan would raise the wholesale fuel tax by 1 percent and raise it an additional 1 percent if the Marketplace Equity Act is not enacted by July 2014.
It also would raise the tax on gas and diesel fuel to 22.5 cents per gallon and tie that tax to the producer price index to ensure that revenue keeps pace with inflation. And it would give certain jurisdictions the authority to impose a local sales tax of up to 1 percent.
Errin Haines contributed to this report.