By Tim Craig
Washington Post Staff Writer
Thursday, March 6, 2008 1:54 PM

RICHMOND, March 6 -- Senate Democratic leaders said Thursday they want a statewide increase in the wholesale gasoline and car titling tax as well as new regional taxes in Northern Virginia and Hampton Roads to raise money for transportation.

The proposal come as leaders of the Republican-controlled House and Democratic-controlled Senate continue talks to see if they can salvage last year's landmark transportation legislation, although officials in both parties are not optimistic they can reach a deal by the scheduled adjournment Saturday of the General Assembly.

On Friday, the Virginia Supreme Court said that regional taxing authorities created as part of that legislation violate the state constitution because voters do not elect the members of the authorities.

Senate Democratic leaders want to keep those authorities, but shift the burden for raising taxes in those regions to the General Assembly.

Under the Senate plan, which was delivered to House Republican leaders Thursday morning, those regions would see a half-cent increase in the sales tax, a tax of 40 cents for each $100 of assessed value on the sale of a home, and a $5-a-night tax on hotel rooms.

The rest of the taxes that had been included in Northern Virginia's regional plan, such as higher vehicle registration fees and higher taxes on automobile repairs, would be eliminated.

As part of the effort to salvage the regional taxing authorities, Senate Democrats are also pushing for a statewide solution to pay for an estimated $400 million deficit in the part of the budget used to repair and maintain roads.

To solve that, Senate Democrats are suggesting a 3 percent increase in the wholesale gas tax over three years as well as a 0.5 percent increase in the car titling tax.

The tax increases, which would be applicable to the entire state, are projected to raise about $550 million annually when fully phased in.

Senate Majority Leader Richard L. Saslaw (D-Fairfax) said the proposal "would stop the bleeding" of borrowed money that is needed to solve the state's transportation woes.

House Republicans, who have so far shown little interest in a statewide tax increase, said they doubt the Senate proposal could be enacted before Saturday.

They are proposing to respond to the Supreme Court opinion by making local governments in Northern Virginia and Hampton Roads -- not the General Assembly or the regional authorities -- vote to impose the new taxes for transportation.

Senate Democrats reject that approach, saying the General Assembly should be responsible for raising taxes.

If no agreement is reached this week, Gov. Timothy M. Kaine (D) may have to call a special session later this year.

"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."