Virginia governor Bob McDonnell unveiled a sweeping plan to reconfigure the manner by which the state pays for transportation infrastructure which cuts Virginia’s gas tax in favor of an increase in its sales tax.
The plan eliminates the 17.5 cent per gallon gas tax while it increases Virginia’s sales tax from 5 to 5.8 percent. McDonnell’s plan also proposes a $15 increase in vehicle registration fees as well as adds an annual $100 alternative-fuel vehicle fee to offset lost federal gas tax revenue.
This plan, according to McDonnell, will provide more than $500 million a year by 2019 to eliminate Virginia’s practice of borrowing money meant for new projects just to fund paving and pothole patching. It will also provide $1.8 billion in new construction projections needed to grow Virginia’s economy. That would certainly be a welcome relief for a state considered home to some of the most congested roadways in America, according to the Texas A&M Transportation Institute.
Virginia’s 2013 General Assembly is expected to consider Governor McDonnell’s proposal during this year’s legislative session. If the proposal passes, Virginia would become the first state to eliminate its gas tax. Drivers should be aware the federal assessment of 18.4 cents per gallon, which they are already paying.
The proposal does not eliminate the 17.5 cent-a-gallon diesel tax because interstate truckers, subject to a multi-state revenue sharing agreement, consume the majority of diesel in the state. Studies indicate interstate trucking companies generate 68% of the diesel tax revenues in Virginia.
McDonnell supports his proposal by sharing how the gas tax will never be able to add up to a safe, efficient and sustainable transportation network. Because the General Assembly did not make provisions for gas tax to be adjusted for inflation when it set it at 17.5 cents-a-gallon in 1986, it will never become a reliable growth mechanism for transportation, Conversely, he says, his proposal would create a dynamic new funding system that will grow with economic activity in the state and address the long-term structural deficiencies of relying on the gas tax.
Not all Virginians are in favor of McDonnell’s proposal, however. One of the biggest arguments against it is that a secondary purpose of the gas tax was to place a heavier cost burden on residents who drive the most. There are those who feel the removal of the state gas tax keeps people from realizing there are costs to driving.
There may be a compromise that could please both sides: tweaking McDonnell’s proposal so that fuel will no longer be exempted from sales tax.
Agree or disagree with McDonnell’s proposal, in part or as a whole, one must agree with how the governor feels about Virginia’s transportation mess: The time has passed for legislative stalemates. We must do something now.
Would that more politicians used that philosophy to solve all our nation’s problems!