Governor Wants Car Tax Hike Weighed
Raising Sales Levy Would Help Fund Va. Road Repairs

By Tim Craig
Washington Post Staff Writer
Tuesday, January 15, 2008

RICHMOND, Jan. 14 -- Gov. Timothy M. Kaine said Monday that he wants legislators to consider increasing the state tax on automobile sales to generate more money for highway maintenance and end the controversial fees on bad drivers.

People who buy cars in Virginia pay a 3 percent sales tax even though the state sales tax is 5 percent.

"If you are serious about transportation, why have a lower sales tax on vehicles than anything else?" asked Kaine (D). "That is my proposal. Let's see if the legislature reaches a consensus on that or something else."

Kaine said he will not introduce a bill calling for a tax increase, but he described it as the best approach for closing a projected $290 million shortfall in the part of the transportation budget used for the repair and maintenance of roads and bridges.

Kaine, who has been pushing for the increase since taking office in 2006, said such a tax increase would need a bipartisan consensus. Because he is not likely to spend time advocating for a higher tax, any proposal would face long odds in getting approved. Several House Republicans quickly rejected the idea.

The tax issue has become the first flash point between the new Democratic majority in the Senate and the Republican-controlled House of Delegates. Lawmakers from both chambers increasingly wonder whether the debate over transportation funding could consume them this session, as it has the past two years.

Kaine's comments signaled to Senate Democrats that he will be an ally as they begin to explore ways to raise more money for transportation, which they have said is one of their priorities.

House Republicans said Monday that Kaine is using the abusive-driver fee debate as cover to build support for another tax increase. Last week, Kaine surprised many lawmakers by calling for a repeal of the driver fees, which range from $750 to $3,000 and are assessed on drunken-driving and reckless-driving convictions.

"They are planting the seeds . . . creating a nightmare . . . and then they will say the only solution is to raise taxes," said Del. David B. Albo (R-Fairfax), who added that the "odds of a big statewide tax increase coming down the pike out of this body are about zero point zero, zero, zero."

House Speaker William J. Howell (R-Stafford) said he would probably oppose an increase in the sales tax on vehicles because the "car industry is in the doldrums right now." But Howell said he wants to work with Kaine "so things can work out."

In the past two years, Kaine has advocated raising the tax on car sales to 5 percent, which would have generated more than $500 million annually for new roads and mass transit.

The Republican-controlled House rejected the idea, instead working with GOP senators to push a plan that included regional transportation taxing authorities in Northern Virginia and Hampton Roads, an increase in vehicle registration fees and the abusive-driving fees.

Many Northern Virginia Democrats campaigned heavily in the fall on a platform that included ending the abusive-driving fees and finding more ways to fund transportation. Democrats picked up four Senate and four House seats. A Washington Post poll before the election showed that voters opposed the abusive-driving fees and thought the transportation plan did not go far enough.

Kaine's call to end the driver fees comes with risks. Many local government officials fear that the transportation deal, which is being challenged before Virginia's Supreme Court, could unravel.

Even if the court upholds the regional authorities, Senate Democrats say, last year's transportation plan doesn't do enough to address the shortfall in the maintenance budget. Last week, all 21 Democrats in the Senate held a news conference to say they are considering a variety of options for raising money to address transportation.

"We can't begin to solve our transportation problem unless you consider some kind of taxes," said Sen. John S. Edwards (D-Roanoke). "You can't solve the problem the way Republicans tried to solve it. Last year's debacle of a transportation bill proves it can't be done on fees alone."

House Majority Leader H. Morgan Griffith (R-Salem) defended the GOP approach, saying Kaine wants "to raise taxes on average citizens while lowering taxes on drunk drivers."

Underscoring the challenge facing Senate Democrats, one top House Democrat quickly distanced himself from the idea of raising the sales tax on cars.

"The car industry is suffering right now in difficult economic conditions, so it is very likely we would oppose any additional taxes on that industry," said Del. Brian J. Moran (D-Alexandria), chairman of the House Democratic caucus and a likely candidate for governor next year. "Last year, we had a comprehensive package. I am in favor of letting the dust settle for a period of time."

Some Democratic proposals call for an increase in the state's 17.5 cent-a-gallon gas tax, which hasn't been raised since 1986. Kaine said he's open to increasing it but called the sales tax on cars "straightforward and rational."

"There are a lot of different people talking about a lot of different proposals. Let's see if they reach consensus on them," Kaine said.