On Tuesday, Virginia Gov. Bob McDonnell (R) announced “proposed amendments to ensure that the provisions of the [transportation] legislation do not negatively impact Virginia businesses and citizens, that they comply with the Virginia Constitution, and that Virginia’s Executive Branch agencies can properly implement and administer the new and improved funding mechanisms.”
These changes include:
- Reducing the proposed vehicle titling tax increase from 4.3 percent to 4.15 percent. After hearing from automobile dealers and constituents, the governor proposed this amendment to ensure that the increase is reduced and does not adversely affect the number of vehicles purchased.
- Reducing the annual fee for alternative fuel vehicles from $100 to $64. The intent of this fee assessed to drivers of alternative fuel vehicles was to ensure that they pay their share for road maintenance and wear and tear caused by their vehicles. The original proposal for a $100 fee was based on a 17.5 cents-per-gallon gas tax. The conference report establishes a lower rate of taxation on gasoline. As such, this amendment ensures equity in how different types of vehicle fuels are taxed.
- Correcting and reducing the rate of taxation for the regional congestion relief fee. The goal for this fee was to raise about $30 million per year. Based on slightly incorrect data, the fee was set at $0.25/$100 for real estate transactions. Using correct data, a rate of $0.15/$100 will generate the same revenue of $30 million per year.
- Reducing the transient occupancy tax in Northern Virginia. At 3 percent, the TOT would place the tax in Northern Virginia near or above surrounding out-of-state jurisdictions. Reducing the rate to 2 percent will not significantly affect revenue but will ensure that Virginia’s hotels remain competitive.
- Addressing potential legal questions regarding regional taxation authority for Northern Virginia and Hampton Roads. Amendments are made to the sections imposing the regional taxes for transportation by the state to improve the legal posture of the law by changing the applicability of the taxes to any planning district commission meeting certain empirical thresholds, including population, registered vehicles and transit ridership. Hampton Roads and Northern Virginia are the only jurisdictions meeting these criteria, but other parts of the Commonwealth could use these tools if their transportation challenges continue to grow.
- Ensuring that transportation funds generated by this legislation are used only for transportation.
The amendments go back to the General Assembly when it returns next week.
At the end of his announcement, McDonnell tersely stated, “I also thank Attorney General [Ken] Cuccinelli for the assistance he and his office provided to my office throughout the process to highlight and address the legal questions raised.” That is a reference to the objections that gubernatorial candidate Cuccinelli raised last Friday.
Cuccinelli’s campaign released a cryptic statement: “As officials within the McDonnell Administration keenly pointed out, Attorney General Cuccinelli played an important role in making sure the legislation was able to move forward without the threat of any legal challenges. Moving forward, Ken Cuccinelli remains committed to working to fix Virginia’s transportation problems, which will create jobs and ease the congestion across the Commonwealth.” According to those familiar with his thinking, that means he finds that the revisions render the bill constitutional. Cuccinelli has not said whether he’d seek to repeal the gas tax increase, which fiscal conservatives outside the state flipped out over.
The exchange highlights several challenges for Cuccinelli. The first is a campaign that is less than clear and has not carved out a full portrait of him or his agenda. Advisers promise those are coming in the next few months. The next challenge is how he will deal with McDonnell’s record, which can be described as “constructive conservatism.” Is this far enough to the right for Cuccinelli’s base? In its substantial education reforms, is there anything for Cuccinelli to run on? The transportation bill was one that Cuccinelli did not embrace and in fact tried to undermine with a competing measure. Can he claim credit for it now?
In the weeks ahead, Cuccinelli would be wise to fill in a lot of blanks. Otherwise, he is likely to get less than enthusiastic backing from the base of his party while being slain by the opposition.