By Anita Kumar
Washington Post Staff Writer
Friday, May 28, 2010; A09
RICHMOND -- There will be no offshore rigs, no new oil industry jobs and no additional money for road and rail projects in Virginia after President Obama's announcement Thursday to halt offshore drilling plans.
The decision has left Gov. Robert F. McDonnell scrambling to find another source for transportation funding and jobs during one of the worst economic downturns in decades.
McDonnell (R), who has made offshore drilling one of his administration's top priorities, has continued to support drilling even after the deadly April 20 explosion in the Gulf of Mexico that created the worst oil spill in U.S. history.
On Thursday, McDonnell said he understood, but disagreed, with Obama's decision to cancel plans for proposed lease sales off the Virginia coast.
"I do not believe outright cancellation was the only alternative,'' he said. "It is my hope that the president's action does not signal the end of offshore energy exploration and production off Virginia in the years ahead."
March 31, the day Obama announced that Virginia would be one of the first states to drill off the East Coast, was one of the happiest for the young McDonnell administration. Thursday was clearly one of the most disappointing, with glum staffers walking around Capitol Square.
But Stephen J. Farnsworth, a political analyst at George Mason University, said Obama's announcement "saves the governor from himself."
Farnsworth said photos of the accident were making it more and more politically difficult to support drilling.
"This is a face-saving way to allow a delay,'' he said.
McDonnell has repeatedly said that drilling off Virginia's coast would create thousands of jobs and millions of dollars in tax revenue.
He campaigned last year on paying for road improvements in part with proceeds from oil and gas drilling. Congress would still need to pass a bill to allow Virginia to receive royalties from offshore drilling, as it did in 2006, when it allowed Gulf Coast states to begin taking home 37.5 percent of revenue.
McDonnell estimated that $177 million each year from oil drilling could go to transportation starting in 2013. But he had his critics.
"I've said from the outset that the notion of potentially reserving some future revenues from oil leases for transportation . . . would be very shortsighted," Sen. Mark R. Warner (D-Va.) said.
Virginia has struggled over where to find money for infrastructure, with Democrats and Republicans at odds over raising taxes and other ways to generate money. The state's transportation budget shortfall, in the billions of dollars, has led to thousands of lost jobs and hundreds of unfinished projects.
McDonnell announced a lengthy plan to pay for Virginia's growing list of traffic woes without raising taxes -- privatizing liquor sales, adding tolls on Interstates 85 and 95, and offshore oil drilling. In recent weeks, he has asked the federal government for permission to impose tolls on the southern reaches of Interstate 95 and has created a commission to study selling the state's 350 liquor stores.
Del. David B. Albo (R-Fairfax), who has long tried to broker an agreement on transportation, said he thought drilling could bring in money for transportation, though not enough to solve the problem.
"It's discouraging," he said. "It leaves us no money for roads."
Most Virginia leaders reconsidered their support for drilling after the Gulf Coast accident.
Virginia's senators, Warner and James Webb, both Democrats who support drilling, said they agree that drilling should be delayed, as did the mayor of Virginia Beach, the state's largest city and one that relies heavily on tourism.
Rep. James P. Moran Jr., a Northern Virginia Democrat and chairman of the appropriations subcommittee for the interior and environment, said the decision would help Virginia with environmental concerns as well as with the Defense Department, which recently released a report showing that exploratory drilling off almost three-quarters of the shoreline is incompatible with military operations and training.
"Our naval assets, including the ongoing battle to keep a major aircraft carrier from being relocated to Florida, far outweigh the illusory benefits from drilling," Moran said.
Environmentalists cheered Thursday's decision and called on McDonnell to further embrace wind energy.