A key provision of Gov. Gerald L. Baliles' plan to solve Virginia's massive highway problems was dealt a setback today when an advisory panel rejected his idea of establishing separate funds for highway maintenance and construction.
Without two funds, Baliles has said, maintenance costs will take an increasingly large percentage of all the state's highway money until nothing is left for building new roads. Current state law gives priority to maintenance needs.
However, the financial options subcommittee of Baliles' Commission on Virginia Transportation in the 21st Century recommended today that the state retain a single highway trust fund, rebuffing the governor.
"One fund gives the highway department greater flexibility," said House Speaker A.L. Philpott (D-Henry), the chairman of the subcommittee.
Former governor John N. Dalton of Richmond, a Republican who supported Philpott in opposing two trust funds, said "even if we bite a bigger bullet this time" and appropriate massive amounts of money for construction, Baliles' successor probably will have to seek even more highway money.
The governor's proposal is considered to be important to the state's rapidly developing areas, such as Northern Virginia and Tidewater, where the need for new roads has become a major political issue. Political leaders in those jurisdictions say that their highway maintenance needs are minimal compared to the demand for new construction.
Ray D. Pethtel, whom Baliles named highway commissioner earlier this year, said the action is "not a defeat yet" for the governor's ambitious plans, which will be considered by the entire transportation commission Monday and by a special session of the legislature in September.
David K. McCloud, the governor's chief of staff, agreed that "an obituary is premature."
But a disappointed Sen. Charles L. Waddell (D-Loudoun), chairman of the Senate Finance Committee, said: "We voted to do nothing."
Baliles said in a statement that he considered the subcommittee's action "the beginning of the debate."
"Before the process is over," he said, "there will be debate and disagreement on how solutions should be developed."
When he named the commission in February, Baliles recommended using revenue from the state gasoline tax, which goes up 1.6 cents a gallon July 1, for maintenance, and bonds, tolls or other sources for construction.
The commission's subcommittee on critical needs has determined that the state has $10.2 billion in current highway needs, which will grow to $20 billion by 2005.
William H. Craig Jr., executive vice president of the Virginia Road and Transportation Builders Association, a trade group, said contractors can handle $1.5 billion worth of work during the next 18 months. He said that it is not vital that a separate trust fund be established "so long as we know the money is there."
Philpott said he favors adding $400 million for highway construction next year, but he did not say how it should be financed, except that another of Baliles' ideas, to sell general obligation bonds, has little support, within either the commission or the legislature.
Among proposals that Philpott said are being seriously considered is increasing the state sales tax from 4 percent to 5 percent, which would generate about $400 million a year. "We may not give all that to highways," he said.
Dalton, who said subcommittee members favor spending an additional $350 million to $500 million on roads next year, said boosting the sales tax is "an option people are talking about."
Philpott said the state's tradition of building roads on a pay-as-you-go basis "is the only way it's ever going to be."
Joshua P. Darden Jr., a Norfolk car dealer who is vice chairman of the commission, said, however, he wasn't certain the speaker's views were correct. "What you have heard is from the opponents," he said. "The speaker left no doubt he was cool to it, and he appointed people to the commission who share his views. Others think it makes sense, and you haven't heard from them yet."