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A Breakdown: Virginia Transportation Funding

The final days of the 2013 General Assembly session in Richmond ended on an historic note. For the first time in 26 years, the Virginia General Assembly approved a broad-based, sustainable and bi-partisan funding plan for the maintenance and construction of the state transportation system including the states transit and rail systems. When fully implemented, this important piece of legislation raises nearly $900 million per year statewide and over $300 million per year in Northern Virginia.  While the bill is far from perfect and there are certainly things in it not to like, it is a lot of very real money that will be used to make improvements to roadways, the rail system and other infrastructure. These improvements will help improve our business environment and the quality of life in Northern Virginia.
Securing significant, reliable transportation funding has long been a priority issue of the Prince William Chamber.   Before the start of the General Assembly session it seemed that solving Virginia’s transportation funding crisis was not going to happen this year.   However, through the diligent efforts of the Prince William Chamber, in partnership with our elected leaders, many business groups around the state and private citizens,  the issue rose to the forefront of legislative consideration.  Passage of this legislation is a true achievement;  one your Chamber is proud to have championed.
The Prince William Chamber thanks Governor McDonnell, Speaker Howell and the Republican and Democratic Leadership in the House and Senate of Virginia for making passage of Virginia’s transportation funding legislation a priority.  We also thank the members of the Prince William delegation who voted in favor of the bill–Delegates Dudenhefer (R) and Torian (D) and Senators Barker (D), Colgan (D), and Puller (D)–for their leadership on this important issue.
The major elements of the plan will generate $880 million annually statewide within five years of implementation, which includes redirecting $198.2 million from existing revenues to transportation, are as follows:

  • Eliminates the current 17.5 cents per gallon tax on gasoline
    • Increases the motor vehicle sales tax (when you purchase a car) by 1.3%, phased in over several years
    • Adds 3.5 % motor fuel sales tax at the wholesale level and 6% diesel sales tax at wholesale level (reflects high wear and tear on roads from heavy trucks)
  • Increases the statewide sales and use tax from 5% to 5.3%
  • Eliminates the Highway Maintenance and Operating Fund (HMOF)/Transportation Trust Fund (TTF) “crossover”
    • Provides the $505.7 million additional revenue to the HMOF in FY 2017 to stop the transfer of funds from the construction fund (TTF) to pay for maintenance (HMOF)
  • Redirects existing sales and use tax revenue to transportation
    • Currently, of the 5% existing sales tax only Within five years of implementation, only .5% is directed to transportation
    • The share of existing general sales and use tax dedicated to transportation will rise from 0.5% to 0.675%
  • Earmarks a substantial portion of any future sales tax proceeds generated from Internet purchases (if Congress passes the Marketplace Equity Act) for transportation, education and localities. If the act fails to pass by January 1, 2015, the anticipated revenue would instead come from an additional 1.6 percent tax applied to the wholesale gas tax.
  • Provides a dedicated source of funding for the Mass Transit and Intercity Passenger Rail Fund
    • The fund was created in 2011 but has had no dedicated funding stream
    • Of the 0.3% increase in general sales tax increase, 0.125% will be used to support rail and transit projects in the Commonwealth
    • Amounts distributed 40% for rail, 60% for transit
    • Also includes $300 million for Phase II of Dulles Rail
  • Includes major regional packages for Northern Virginia and Hampton Roads
    • Allows for an increase in local sales tax
    • Will raise approximately $300-350 million for Northern Virginia and $175-200 million for Hampton Roads per year
    • The Northern Virginia regional component includes:
      • 0.7% regional sales tax (imposed by General Assembly)
      • increases Grantors tax by 0.25/$100
      • adds additional 3% transient occupancy tax (hotel tax)
      • maintains 2.1 cent regional gas tax dedicated to transit and rail
      • commercial & industrial property tax up to 12.5 cents (as authorized in HB 3202 (2007) or a local equivalent, such as bonding or dedication of broad based property tax or other local options).
      • Note: The revenue from the first four items listed would be sent to the Northern Virginia Transportation Authority but attributed to each jurisdiction.  NVTA will use 70% of each locality’s contribution on regional projects.  The remaining 30% of a locality’s share would be sent back to the locality for dedication to local transportation projects if the locality either implements the 12.5 cent differential taxing authority for commercial & industrial property OR raises the equivalent revenue through another “local effort” (such as bonding).  

The House vote to approve HB 2313 was 60 to 40 in favor of the plan; the Senate approved the bill by a vote of 25 – 15 . Here’s how the members of the Prince William delegation to the General Assembly voted:
YEAS–Del. Mark Dudenhefer (R), Del. Luke Torian (D), Sen. George Barker (D), Sen. Chuck Colgan (D), Sen. Toddy Puller (D)
NAYS–Del. Richard Anderson (R), Del. Tim Hugo (R), Del. Scott Lingamfelter (R), Del. Bob Marshall (R), Del. Jackson Miller (R), Del. David Ramadan (R), Sen. Richard Black (R), Sen. Richard Stuart (R)