- Associated Press - Tuesday, February 5, 2013

RICHMOND — Virginia’s Senate on Tuesday defeated a proposed amendment that would have replaced Gov. Bob McDonnell’s retail sales tax increase with a 5.5 percent wholesale tax on gasoline.

Sen. Steve Newman’s floor amendment was rejected on a 22-18 vote.

Mr. McDonnell earlier Tuesday had criticized Mr. Newman’s amendment, calling it a “whopping tax increase.”

The House passed an amended version of the transportation funding package. That version, with the Republican governor’s backing, passed on a bipartisan 53-46 vote. Several conservative Republicans voted no to the five-year, $3.1 billion plan.

Amendments Monday by Delegate S. Chris Jones, Suffolk Republican, eliminated a $100 fee on new hybrid car purchases but conditioned new tolls on Virginia interstates on legislative approval. It retained other major features of Mr. McDonnell’s original legislation.

“We have an opportunity to send a bill to the other end of the Capitol and continue the debate,” Mr. Jones said. “Do I like everything in it? No I don’t.”

Delegate Vivian E. Watts, Fairfax Democrat and a former state transportation secretary, said the plan yields insufficient money — particularly in the traffic-clogged urban crescent stretching from Northern Virginia through the Richmond area to Hampton Roads.

“I can’t vote for it because it’s bad economics, I can’t vote for it because it’s bad policy, I can’t vote for it because it doesn’t address the need,” she said.

Mr. McDonnell hailed Tuesday’s House passage, even with Mr. Jones’ tweaks.

“The floor substitute that passed with my support, by removing the fee, by removing the tolls, is one I am advocating every member of the General Assembly in the House to pass,” Mr. McDonnell said.

Mr. McDonnell had said he would not accept the Senate substitute by Mr. Newman, Lynchburg Republican, which would have generated about $600 million less than Mr. McDonnell’s original measure over five years.

“Whopping tax increases are dead on arrival,” he said. “The Senate plan is a whopping tax increase that I can’t sign, it won’t pass.”

Mr. Newman’s proposal replaced Mr. McDonnell’s general sales tax increase from 5 percent to 5.8 percent on all retail purchases with a 5.5 percent sales tax on gasoline paid at the wholesale level.

Mr. Newman said his changes were made more to shore up lagging support among Republican Senate conservatives than to appease Democrats. Mr. McDonnell’s plan was decreed to be a tax increase by Washington-based anti-tax crusader Grover Norquist, whose Americans for Tax Reforms solicits no-tax-increase pledges from elected officials and calls out those he believes have violated them.

Among the conservatives who blessed Mr. Newman’s overhaul was Attorney General Kenneth T. Cuccinelli II, a tea party idol who is unopposed for the GOP nomination to succeed Mr. McDonnell.

“I prefer the sales tax to the gas tax because the gas tax is in a long-term decline,” Mr. McDonnell said, noting greater automotive fuel efficiency and a trend of people to drive less as gasoline prices increase.

Senate Democratic Leader Richard L. Saslaw of Fairfax said that with half of the Senate’s seats, Democrats can block escalating annual diversions of revenue from the retail sales tax from the general fund, where it covers such services as health care, education and public safety, to transportation.

“Senator Saslaw is absolutely wrong. It’s bluster. It’s not correct. We’ve had $450 million of surplus over the past three years I’ve been governor. The general fund has been growing at anywhere from $800 million to $1 billion a year. Does the senator say we can’t afford another $50 million a year?” Mr. McDonnell said.

But because the share of the sales tax diversion increases each successive year, Democratic critics say it would shift more than $250 million within five years.

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