Virginia Gov. John N. Dalton next week will propose a 4 percent sales tax on wholesale gasoline prices to underwrite the costs of extending the Washington Metro subway into the Virginia suburbs and to build highways elsewhere.
If approved by the state legislature, the measure would add between 3 and 4 cents to the wholesale price of gasoline -- an increase that is certain to be passed by retailers to motorists.
The tax proposal, which would offset declining revenues for highway construction and maintenance as well as Metro, would be a dramatic departure from Virginia's previous, piece-meal approach to funding the subway.
Officials familiar with the Dalton proposal, expected to go to the General Assembly which convenes Wednesday, say the measure would raise between $95 million and $127 million a year. It would give the Virginia suburbs what Maryland has long had -- a firm revenue source for Metro construction.
Unlike Virginia, both Maryland and the District of Columbia long have underwritten their own share of Metro construction costs. Maryland uses its transportation trust fund to pay all construction costs and about half of the operating costs for Montgomery and Prince George's counties. The District relies on a variety of taxes for its Metro funding.
"We'll finally be treating Metro like other transportation projects and giving it increased state aid," said Del. Robert E. Harris (R-Fairfax), who predicted the gasoline tax could raise nearly a half billion dollars for Metro over the next 30 years.
"That's big dollars," said Harris, who noted that the state revenues would ease what has become a tremendous financial burden for Northern Virginia localities.
Dalton is expected to outline the gasoline sales tax proposal in his opening-day speech to the General Assembly. The governor has spent the last few days testing the idea on various assembly members from around the state.
The Republican governor, whose proposal is an endorsement of one of several revenue options suggested by the state's Highway and Transportation Commission, long has been searching for additional funds to meet rising highway construction and maintenance costs.
These financial problems have been exacerbated because motorists have been buying less gasoline in an effort to curb already expensive fuel consumption. That conservation has rendered the state's current 9-cent-a-gallon gasoline tax insufficient for the highway projects it is supposed to finance.
Dalton, according to several area legislators, has been warned all along that any new gasoline tax would have to be linked to funding Metro's construction costs to win backing from Northern Virginia.
Steve Roberts, staff member of the Northern Virginia Transportation Commission (NVTC), said yesterday Dalton's tax proposal would provide an additional $8 million in state funds in its first year and about $10 million in its second toward defraying the region's Metro construction debt. That would nearly double the $10 million now provided by the state.
Northern Virginia's Metro debt now costs area taxpayers about $14 million a year. The costs will run as high as $24 million a year over the life of Metro construction bonds.
A sampling of Northern Virginia legislators indicated that most would support the tax measure.
"What we're talking about would go a long way to help pay our Metro bill," said State Sen. Wiley F. Mitchell Jr. (R-Alexandria). Mitchell nevertheless said he plans to introduce a separate regional sales tax measure that would impose a tax of one cent on a dollar to help pay Metro's operating costs.
"I plan to introduce the sales tax bill as a safety valve since we can't be certain a gasoline tax would pass," he said. "And no matter what happens, the money would not be sufficient to cover the entire Metro deficit."
But Mitchell praised the gasoline taxing concept as "a major step in increasing state aid" for Metro, saying such a proposal would eventually guadruple the amount of state funding for Northern Virginia's subway.
The Alexandria senator said that despite Dalton's previous opposition to sales tax bills he expected the governor would sign his one-cent sales tax legislation if it is approved by the assembly.
Del. Harris said yesterday there would probably be no need for Mitchell's sales tax increase measure if the gasoline tax is enacted.
But other legislators said a sales tax -- twice defeated in earlier assembly sessions -- would be necessary to meet federal requirements that Metro have "a stable and reliable" source of operating funds in order to receive $1.7 billion in federal construction aid.
Harris said the gasoline tax proposal would mean that the state would "pick up 95 percent of Northern Virginia's current obligation for the 60-mile system under construction or in operation plus pick up 95 percent of our additional obligation to build the remaining 41 miles of the subway."
This, Harris said, is a complete turnaround from the early 1960s "when Metro was sold to the state as a self-sustaining financial operation" that ended up costing more than anyone ever dreamed.
"Now, localities will be free of much of the burden for paying for Metro," Harris said. "And if we need to enlarge the system in the future, the funding mechanism will be in place and the precedent already set."