Bridges need building on highway package

Raising sales tax an opening move

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RICHMOND — Credit Gov. Bob McDonnell for his fourth-quarter Hail Mary pass in a bid for a meaningful legislative legacy, partly by pursuing profound transportation funding reforms that have eluded several previous governors.

Legislative leaders of both parties said late last week that the most comprehensive effort in 27 years to overhaul Virginia’s dwindling font of highway maintenance money can’t pass as introduced. But, they said, with a little compromise and a few amendments, it’s not only possible but probable.

Legislation that Mr. McDonnell submitted Friday would boost the sales tax paid on all goods except groceries and prescription drugs by nearly a penny on the dollar, from 5 percent to 5.8 percent, but end the 17.5 cents-per-gallon tax on gasoline.

Pair that with the Republican governor’s plan to shift an increasing amount of the existing sales tax from the general fund, which pays for public schools, health care and other services, to transportation — and it yields slightly more than $3 billion over five years for repair and upkeep of Virginia’s more than 125,000 lane miles of deteriorating highways.

Democrats aren’t alone in objecting to the use of the regressive sales tax that burdens the poor disproportionately as a vehicle for generating transportation revenue. That’s particularly an issue in the Senate, where Democrats control half of the 40 seats and 21 votes are required for passage.

On the opposite pole of the political spectrum, many Republicans say it’s a tax increase — a 16 percent jump in the sales tax rate, to be exact — and that the phase-out of the gasoline tax doesn’t make up for it. Washington-based tax hawk Grover Norquist has warned that voting for it would violate the no-tax-increase pledge many Republican lawmakers have signed with his organization, Americans for Tax Reform.

But for some, discomfort with the bill only starts there. Consider the following:

About $1 billion, or a third of the revenue Mr. McDonnell envisions, is anybody’s bet. It depends on a dysfunctional Congress that hasn’t even agreed on a federal budget for almost four years to enact contentious legislation requiring state sales taxes to be collected on all online purchases.

The cost to register your personal car or pickup truck would increase from $33 to $48, or 45 percent, a distinction that discomfits the House’s conservative GOP majority with elections for all 100 House seats set for November.

Big-rig drivers and owners of diesel cars not only pay a higher sales tax, but the tax on diesel fuel would remain in place under Mr. McDonnell’s bill.

While gas-guzzlers anticipate a break with the end of the gasoline tax, people who buy fuel-sipping hybrid vehicles would pay the state an additional $100 penalty at the dealership for conserving fuel and cutting emissions.

And then a handful of House Republicans is unhappy with Mr. McDonnell and the Virginia Department of Transportation over their plans to levy a $4 toll for cars using Interstate 95 from the Richmond area south to the North Carolina line — something that’s not part of Mr. McDonnell’s transportation package, but that they want on the table as horse-trading as the bill advances.

“We need to have a greater conversation than just the swap of the gas tax for the sales tax. We need to make sure tolls are part of that conversation,” Delegate Christopher K. Peace, Hanover Republican and an opponent of tolling existing state highways, said last week.

“We were told by the governor that we needed to consider and pass his proposals before we could even talk about tolls,” Mr. Peace said with a scowl. “That is not acceptable.”

Mr. McDonnell has spent much of last week huddling with House and SenateGOP caucuses pitching his transportation initiative, even before the actual legislation carried by House Speaker William J. Howell, Stafford Republican, was filed ahead of Friday’s deadline.

And he privately put the arm on individual lawmakers he summoned to his office.

By Tuesday, a well-choreographed round of emails from House GOP leaders and a few business groups carefully and broadly endorsing his proposal went out to distribution lists that included Virginia’s Capitol press corps.

But the statements masked a number of concerns that have to be resolved over the 34 remaining days of the 2013 General Assembly session.

Lt. Gov. Bill Bolling, spurned by the state GOP in his quest for its gubernatorial nomination and sporting a newfound independent streak, counts himself a supporter of Mr. McDonnell’s plan right now but says it needs work. Mr. Bolling’s personal preference is to revise the gasoline tax, something with a direct tie to highway usage and what he calls “the ultimate user fee.”

“I think the governor believes this bill gives us the best chance we need to pass a transportation bill in the Senate and in the House of Delegates, but I think the governor is open to other ideas,” he said Friday. “It depends on what those ideas are.”

How far will he go?

The governor’s policy team, thirsty for a major victory, says Mr. McDonnell is open to redecorating the room, but not to knocking out the walls and drawing new blueprints. That means the sales tax increase will have to be its centerpiece.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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