By Eric M. Weiss and Tim Craig
Washington Post Staff Writers
Friday, March 7, 2008

Senate Democratic leaders in Richmond said yesterday that they want a statewide tax on wholesale gasoline and an increase in the car titling tax, as well as new regional taxes in Northern Virginia and Hampton Roads, to raise money for transportation.

The proposal comes as leaders of the Republican-controlled House and Democrat-controlled Senate continue talks to see whether they can salvage last year's landmark transportation package, although they are not optimistic about reaching a deal by tomorrow's scheduled adjournment of the General Assembly.

Sen. Charles J. Colgan (D-Prince William), chairman of the Finance Committee, said Gov. Timothy M. Kaine (D) told him Wednesday that he preferred having the General Assembly take up transportation during a special session in April.

"We are not going to rush into this," said Senate Majority Leader Richard L. Saslaw (D-Fairfax). "We are going to do it right this time."

The House voted yesterday to allow local governments to spend tax dollars they collected on transportation, an idea Northern Virginia officials quickly rejected.

Meanwhile, the Northern Virginia Transportation Authority voted yesterday to begin refunding as much as $12 million collected in taxes and fees since January in light of a Virginia Supreme Court decision last week that the authority's taxing ability was unconstitutional. The authority also formally repealed a decision to raise seven taxes and fees to raise $300 million a year for Metro, Virginia Railway Express and regional road and transit projects.

Stephen A. MacIsaac, an NVTA attorney, said most of the money sitting in the authority's bank account is from a grantor's tax, which was set at 40 cents per $100 of assessed value and was paid by home sellers. The authority hopes that the region's circuit courts can track down those home sellers owed refunds.

The authority wants to transfer fees and taxes it collected from car rentals, auto repairs, hotel room rentals and vehicle registrations to the state treasurer's unclaimed property division, which could make refunds. The Virginia Department of Motor Vehicles has not sent the authority any money collected through new-car registration fees. Still, tracking down and giving refunds to everyone due them could take as long as three years, according to a staff memo to the authority.

But NVTA members held out hope that refunds won't be necessary and that the General Assembly will find a way to let the agency keep the money and spend it on desperately needed transportation improvements across Northern Virginia.

"Are we going to spend the next several years doing what we've been doing the last few years: bemoaning the problem and not doing anything?" asked Chris Zimmerman, authority chairman and a Democratic member of the Arlington County Board.

Senate Democratic leaders want to keep the regional authorities but shift the burden of raising taxes back to the General Assembly.

Under the Senate plan, which was delivered to House Republican leaders yesterday, revenue measures for Northern Virginia would include a half-cent increase in the sales tax, the 40-cent grantor's tax and a $5-a-night tax on hotel rooms.

The Senate would drop higher vehicle registration fees, a tax on automobile repairs and other revenue measures that had been included in the NVTA plan.

Senate Democrats also are pushing for a statewide solution to an estimated $400 million shortfall in that part of the budget used to maintain roads. They are calling for a 3 percent tax on wholesale gas sales over three years and an increase in the car titling tax from 3 percent to 3.5 percent.

When fully phased in, those statewide revenue measures would raise a projected $550 million a year for road work.

During a news conference yesterday, Kaine did not endorse the Senate Democrats' proposal outright, but he said it appeared to address his concerns about the regional transportation plans and statewide road maintenance. Asked whether he should present his own proposal, Kaine said, "I am being just as active as I feel like I should be."

House Republicans, who have shown little interest in a statewide tax increase, said they doubted that the Senate proposal could be enacted by tomorrow.

"Obviously, we are talking," said House Majority Leader H. Morgan Griffith (R-Salem). "But I do think it is fair to say the House is not likely to pass a tax increase in the next few days or in a special session."

NVTA members were dismissive of the House proposal to shift more of the burden of transportation funding to local governments. One member, Fairfax County Board of Supervisors Chairman Gerald E. Connolly (D), called it "dead on arrival."

Craig reported from Richmond. Staff writer Anita Kumar contributed to this report.