Proposed Boost, 2nd in 2 Years, Would Raise $4 Billion by 2010
By Michael D. Shear and Rosalind S. Helderman
Washington Post Staff Writers
Saturday, January 21, 2006
RICHMOND, Jan. 20 -- Virginia Gov. Timothy M. Kaine (D) and a bipartisan group of state senators offered competing proposals Friday to raise taxes and fees, with each plan generating close to $4 billion by 2010, to relieve the state's congested transportation network.
Accepting the political dangers of proposing Virginia's second major tax increase in two years, Kaine is seeking higher taxes on auto insurance and the purchase of a car as well as stiffer fees for car registration and driving offenses.
With nearly $1 billion more to spend each year, the new governor said, he can double the state's support for mass transit, increase highway construction by 90 percent and revive stalled road projects.
The money would help build a connected network of carpool or express toll lanes on all of Northern Virginia's major highways, buy rail cars for Virginia Railway Express and Metro, widen Interstates 95 and 66, and fix traffic bottlenecks.
"We don't need any more studies. We don't need an extended session," Kaine told reporters Friday afternoon. "If we do this, if we have the courage to do this, we can fix the problems that have bedeviled us for a decade."
The senators also proposed to increase the sales tax on cars. They want a new sales tax on gasoline at the wholesale level that probably would be passed on to consumers. Drivers pay 17.5 cents per gallon in state gas taxes.
"We must have a dedicated and sustainable revenue source for transportation," said Senate Finance Chairman John H. Chichester (R-Northumberland). "We cannot cure transportation by draining the lifeblood from public and higher education, health care and public safety."
Chichester said Virginia's transportation system has moved from "life support to code red." Without investments, commuters will remain stuck in traffic, businesses will fail to move their goods and the quality of life in Virginia will decline, the senators said.
On Monday, Kaine proposed that local governments receive new authority to limit growth to help them ease traffic congestion. That proposal drew immediate protests from home builders, real estate agents and developers, who visited legislators Tuesday.
Kaine sought to rebut that criticism Friday, saying: "This will not cause the death of the housing industry. . . . People are not going to live in tents."
Kaine's proposals to fund transportation projects prompted new protests, this time from Republicans in the House and lobbyists for the auto dealers.
"It's very hard to justify a tax increase to the general public when we just went through one two years ago," said House Appropriations Chairman Vincent F. Callahan Jr. (R-Fairfax). "And then we've had massive surpluses in the years since. It's going to be a hard sell."
Don Hall, the chief lobbyist for the auto dealers association, said the proposals to increase the sales tax on cars would devastate the auto industry in Virginia.
"We are the golden goose," Hall said, referring to the $600 million that is collected from sales tax on cars. "They are about to kill it. They will put us in a tailspin."
Del. David B. Albo (R-Fairfax) said the Senate's proposal to increase taxes on gas "has a millisecond of life on the House side."
And Del. William R. Janis (R-Goochland) said Kaine misled voters last year. "Eight weeks ago, he was maintaining that he wasn't interested in raising taxes on cars or gasoline or anything else, for that matter."
Republican leaders in the House said they will present their transportation proposal -- without tax increases -- next week. One senior Republican has proposed taking more than $1 billion a year from the state's operating fund to pay for transportation projects, an idea that Kaine specifically rejected Friday afternoon.
The Kaine and Senate plans represent the second major effort to increase taxes in two years. In 2004, the House and Senate argued for more than two months over tax increases to pay for schools, colleges, health care and public safety.
That ended with a compromise brokered by then-Gov. Mark R. Warner (D) and 17 Republican delegates, who agreed to more modest tax increases than the Senate had proposed. Part of the compromise involved dropping Senate plans to raise taxes for transportation.
Kaine's plan would increase the sales tax on the purchase of a car from 3 percent to 5 percent, raising the tax on a $20,000 auto from $600 to $1,000. Taxes on auto insurance premiums would double, adding as much as $18 per year. Auto registration would go up, and fines for bad driving would escalate sharply.
Driving with a suspended license or reckless driving would be assessed an extra $750, and a DUI conviction would be penalized with an additional $2,200 on top of fines and court costs.
In the Senate plan, sales taxes on cars and wholesale gasoline would be imposed gradually, increasing to 5 percent. Senators said that by 2010, the average driver could pay $65 more each year for gas.
The costs of registering an automobile and renting a car would also increase under the Senate plan.
It would require a new review of procedures at the Virginia Department of Transportation and give local governments more tools to direct growth.
"This is nothing short of a remake of our transportation system," said Sen. Charles R. Hawkins (R-Pittsylvania).
Stewart Schwartz, the president of the Coalition for Smarter Growth, said lawmakers "must come up with stronger land use and transportation planning reforms before writing more checks."
Some lawmakers and local officials in Northern Virginia complained that the higher taxes would fall harder on their region.
Fairfax County Board of Supervisors Chairman Gerald E. Connolly (D) welcomed new funds for transportation but said the state should provide more by borrowing more.
"We have substantial underutilized debt capacity that ought to be used," he said.
Hugh D. Keogh, president of the Virginia Chamber of Commerce, praised the Senate proposal, saying the tax on gas may concern some in the business community, who "need to be prepared to give a little bit to get a big picture deal."
Many in the Senate have agreed in recent days that they would not be prepared for another brawl in the legislature unless a transportation plan was sizable enough to make a difference for commuters, meaning at least $1 billion in new funding yearly.
Kaine said he is willing to compromise but wants a solution by the time the legislature adjourns in March:
"Every legislator understands this problem. They've lived it. They've talked about it. They've heard about it from their constituents. They are here now for 60 days with every tool at their disposal to solve it. . . . It's now time to be about solutions."
Staff writers Chris L. Jenkins and Steven Ginsberg contributed to this report.
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