RICHMOND
- With legislators and transportation leaders by his side, Governor Bob
McDonnell announced Tuesday a plan that would provide more than $3.1
billion in transportation funding for the Commonwealth over the next 5
years, tying transportation funding to economic growth and replacing the
state's outdated gas tax revenue model with a 0.8 percent increase in
the state's sales tax dedicated to transportation. The proposal would
make Virginia the first state in the nation to eliminate the state tax
on gasoline, allocates additional general funds to transportation,
capitalizes on revenues being lost on out-of-state sales, and creates a
long-term revenue system to fund Virginia's highway, rail and transit
needs. Virginia's current transportation maintenance funding shortfall
means that in FY 2013 $364 million must be transferred from the state's
construction account to pay for road maintenance. That transfer amount
is anticipated to grow to $500 million by FY 2019 unless new funding is
provided. In short, Virginia has to use money meant for construction for
paving and potholes. The governor's plan fixes the problem by
generating $844 million in new funding per year for transportation by FY
2018, eliminating the state maintenance crossover and contributing to
construction, rail, transit and other priorities. By eliminating
crossover and with proposed revenue growth, this plan provides an
additional $1.8 billion for highway construction over the next 5 years.
"Transportation
is a core function of government. Children can't get to school; parents
waste too much time in traffic; and businesses can't move their goods
without an adequate and efficient transportation system," Governor
McDonnell said. "My 2013 transportation funding and reform package is
intended to address the short and long-term transportation funding needs
of the Commonwealth. Declining funds for infrastructure maintenance,
stagnant motor fuels tax revenues, increased demand for transit and
passenger rail, and the growing cost of major infrastructure projects
necessitate enhancing and restructuring the Commonwealth's
transportation program and the way it is funded. We simply cannot
continue to do what we have always done and expect this problem to go
away. The gas tax is a stagnant revenue source, and no changes to it
will provide a reliable growth mechanism for transportation in the
state. In short, if we stick to the same old means of funding
transportation, we will find ourselves having the same debates and
facing the same revenue shortfalls over and over again as inflation
slowly eats away at the gas tax, cars get better mileage to meet CAFÉ
standards and more alternative fuel vehicles hit the streets. Market
forces clearly dictate that we have to change how we fund
transportation. This is a math problem. The current revenues numbers do
not add up to a safe, efficient and sustainable transportation network.
The time is now for an innovative and sustainable plan to meet our
transportation needs and grow Virginia's economy."
The governor's 2013 Transportation Plan proposes to make these fundamental changes:
- Eliminate
the current 17.5 cents per gallon motor fuels tax on gasoline: The
viability of the gas tax as the state's primary revenue source for
transportation has been eroded by greater vehicle fuel mileage, the
introduction of alternative fuel vehicles and the impact of inflation.
Once this provision is enacted, Virginia will become the only state in
nation without a tax on gasoline and motorists will likely see a
significant break in the price of gasoline at the pumps. The motor fuels
tax on diesel will remain unchanged because heavy trucks have a
disproportionately large impact on the deterioration of Virginia's
highways.
- Replace the current gas tax with a 0.8 cent increase
to the Sales and Use Tax (SUT) dedicated to transportation: The SUT is a
reliable, predicable and sustainable revenue source. For decades we
have already had the policy that .5 cents of the sales tax goes to
transportation. As the economy grows, the revenue from the SUT grows
with it. As a percentage of the price of a product or service procured,
the SUT inherently accounts for inflation. Virginia's SUT will remain
below its neighboring states. Under the governor's plan, 85 percent of
the increased SUT will go to the Highway Maintenance and Operations Fund
and 15 percent will go to the Transportation Trust Fund.
- Dedicate
an additional .25 cent of the state's portion of the existing SUT to
transportation: Transportation currently receives 0.5 cent of the SUT,
and the governor proposes to phase in this share to 0.75 cent over five
years. When combined with the 0.8 cent SUT increase, transportation will
receive approximately one-quarter of SUT proceeds, thus ensuring a
sustainable transportation revenue stream for the future. All of the
revenues from the additional .25 cent will be dedicated to support
maintenance and operations. During the first three years, however, up to
$300 million will be committed to the Dulles Metrorail Extension
Project, providing the reforms identified by the U.S. Department of
Transportation Inspector General are implemented.
- Increase
vehicle registration fees by $15 and dedicate the revenue to intercity
passenger rail and transit: There is a strong and growing demand for
public transportation in Virginia, both within and between the state's
regions. The successful passenger rail services to/from Washington, DC
and Lynchburg, Richmond, and Norfolk, and the dramatic growth in transit
in Virginia (especially in Northern Virginia and Hampton Roads)
requires greater financial support from the Commonwealth. This need is
anticipated to grow as passenger rail services are extended to Roanoke,
light rail is extended to Virginia Beach, and Metrorail is opened to
Dulles Airport and beyond. Revenues generated by the fee will be split
between passenger rail and transit.
- Impose a $100 annual
Alternative Fuel Vehicle Fee and dedicate the revenues to transit: The
governor is a strong supporter of alternative fuel vehicles. He has
directed that Virginia's state fleet be converted to natural gas
vehicles. And he knows that alternative fuel vehicles will only continue
to grow in popularity and use in the years ahead. In fact, over the
past four years, as gas prices have grown from less than $2 per gallon
to as high as $4, more Virginians have turned to alternative fuel
vehicles. There are over 91,000 of these vehicles currently registered
in Virginia. This is a great development for energy security and
conservation, but it does present a challenge to how transportation
funding has been derived in America for the past century. Drivers of
alternative fuel vehicles that use natural gas or electricity pay no
motor fuels tax at the state or federal level and thus do not contribute
to the primary means of funding roads. However, these vehicles still
have the same impact on Virginia's roadways as conventional fuel
vehicles.
While the governor's plan will
eliminate the Virginia gasoline tax, the federal gas tax of 18.4 cents
will remain and with more alternative fuel vehicles on the road, the
less of a share Virginia will get of those federal gas tax revenues.
Therefore, the governor's plan proposes an additional $100 fee for
alternative fuel vehicles to ensure that these drivers continue to
contribute something to Virginia's transportation networks, which they
use every day. The revenues generated by this fee will be dedicated to
the Commonwealth Mass Transit Fund to help fund the growing demand for
transit and reduce congestion. Legislation passed during the 2012
session already required a fee for electric vehicles, and this measure
applies the increased fee to all alternative fuel vehicles.
- Adopt
the Marketplace Equity Act now and dedicate projected revenues to
transportation and education: The 113th Congress will consider the
Marketplace Equity Act, which would grant states the legal authority to
collect out-of-state sales taxes. This is a tax that is already imposed
and required by law to be paid as a use tax on the taxpayer's income tax
return. Unfortunately, compliance is very low and these are dollars we
should be collecting. This proposal would conform the Code of Virginia
to any changes in federal law, contingent upon the Marketplace Equity
Act being adopted by Congress. Potential revenues will be dedicated to
transportation, public education and localities. Governor McDonnell's
2013 Transportation Funding Plan will allocate a portion of these
revenues not only to transportation, but also to other critical areas of
need. First, 1.125 cents of the 5.8 percent sales tax will be dedicated
to public education ($310 million over 5 years). Second, 0.5 cents of
the 5.8 percent sales tax will be given back to the localities to use at
their discretion ($138 million over 5 years). Third, 0.5 cents of the
5.8 percent sales tax will be given back to the localities for local
transportation priorities ($138 million over 5 years). Finally, 3.675
cents of the 5.8 percent sales tax will be provided to the
Transportation Trust Fund ($1.02 billion over 5 years).
In
conversations with Congressional leaders, it is likely that this bill
passes in congress. The bill has support from the National Governor's
Association and both online and bricks-and-mortar retailers.
"Over
the course of the next five years, this innovative plan proposed by
Governor McDonnell will generate more than $3.1 billion in additional
funding to be invested in the Commonwealth's transportation network,"
said Secretary of Transportation Sean Connaughton. "This will be the
single largest increase in dedicated funding for transportation in a
generation, and will provide a true long-term sustainable and equitable
solution to fund today's transportation needs and to meet the future
demands for a safe, efficient and economically viable transportation
network. It will also end the unsustainable transfer of our funding for
new transportation construction projects just to pay for maintenance.
This crossover has taken more than $3.3 billion from construction
projects to address maintenance deficits since 2002."
"This is a
bold plan that makes a critical investment in Virginia's transportation
system," said Speaker of the House William Howell. "It marks another
major step forward in our efforts to continue to make Virginia
attractive to businesses. This much-needed investment shows a commitment
to upgrading and improving our state's infrastructure that will help
attract businesses to Virginia and create jobs. I am enthusiastic about
the solution we have put forward today and what it will mean for
commuters, businesses and the Commonwealth. We have crafted a plan upon
which we can build consensus, but there is more work to be done to bring
everyone together on a practical solution to this problem. I look
forward to working with Governor McDonnell and Senate leadership on this
issue throughout the General Assembly session."
"There is no
question that funding for Virginia's transportation needs is sorely
lacking," said Delegate Tim Hugo. "I look forward to working with my
colleagues in the General Assembly and Governor McDonnell in passing
this legislation that will 'stop the bleeding' of the Transportation
Trust Fund and allocate almost half a billion dollars more to fix
Virginia's transportation problems."
"Transportation funding is a
critical need across the Commonwealth that must be addressed this
year," said Senator Steve Newman. "I look forward to working with the
Governor and my colleagues in the General Assembly to pass this balanced
approach to solving this pressing need without burdening the working
men and women of Virginia. I am also pleased that this plan eliminates a
complete class of taxation by removing the state gas tax."
"We
have known for years that the transportation budget hasn't been the
priority Virginia needs it to be," said Attorney General Ken Cuccinelli.
"Governor McDonnell has been creative and aggressive in his efforts to
address transportation issues, resulting in a significant amount of work
in progress across the Commonwealth. Nonetheless, it's past time that
we reprioritize the money we spend in government as well as offer
alternative approaches if we're ever going to solve this issue. I
appreciate the governor taking the lead and putting some fresh and
innovative ideas on the table. During the process of looking at each
alternative and debating its merits, it's my job as attorney general to
advise the governor and lawmakers of the legal intricacies of each
proposal presented in this session, and I intend to be actively involved
in doing just that. I hope that when the process is complete, Virginia
will have meaningfully boosted its ability to improve our transportation
system, thereby making our Commonwealth an even better place to do
business and raise a family."
"I applaud Governor McDonnell for
putting forth a detailed plan to address Virginia's transportation
infrastructure needs," said Lieutenant Governor Bill Bolling. "The
governor and I fully understand that transportation is a critical issue
facing every region of our state and now is the time for action. I look
forward to working with the governor and members of the General Assembly
to pass a comprehensive and substantive plan this year that will enable
us to build a transportation system for the 21st Century."
"Two
years ago when the General Assembly adopted the governor's
transportation bonding package, everyone acknowledged that a sustainable
funding initiative was necessary to meet the Commonwealth's ongoing
transportation needs," said Jeffrey Southard, executive vice president
of the Virginia Transportation Construction Alliance. "This bill goes a
long way toward meeting those needs. If all the provisions of this bill
are adopted by the General Assembly, we will see almost $3.1 billion in
new funding for our critical transportation needs over the next five
years. This initiative will generate nearly 20,000 jobs, create more
than $2.5 billion in economic activity in the Commonwealth and generate
over $150 million in new tax revenues for economic growth. More
importantly, this bill will improve mobility, reduce congestion, promote
further economic activity and improve safety on our highways-all
factors that will improve the quality of life in Virginia for today and
years to come."
"Virginia's transportation infrastructure is
vitally important to the Commonwealth's economic competitiveness. The
state's transportation system supports business, tourism and economic
growth," said Virginia Chamber President and CEO, Barry DuVal. "The
governor's transportation proposal is a bold plan to ensure long-term,
dedicated and sustainable funding is available that begins to address
the Commonwealth's critical infrastructure needs."
The governor also announced the following transportation reform and innovation proposals:
- Constitutional
Lock Box on Transportation Funds: The governor supports legislation to
send to the voters a constitutional amendment that will ensure that
funds committed to the Commonwealth Transportation Fund are used solely
for transportation purposes. This will help restore public trust that
transportation dollars will be spent on transportation.
- Streamlining
VDOT Business Operations: Legislation to reduce bureaucratic hurdles
and increase efficiency by giving the commissioner and VDOT greater
authority over administrative issues, operational issues that
principally involve the practice of engineering, and expanding
stakeholder outreach and involvement.
- Transit Funding Reform: If
we are going to invest more funding in Virginia's transit systems, we
must ensure that our transit providers are operating as efficiently as
possible. The current transit funding formula - in place since 1986 - is
broken. The formula is based on one single factor: operating costs
regardless of size, efficiency, or type of transit service provided. In
other words, the more you spend, the more you get. Using two-year-old
data, a transit providers' funding is determined based on the proportion
its costs bear to the total state transit operating costs. This system
does not reward efficiency, and creates winners and losers by rewarding
higher cost systems with more funding, while punishing those systems
that achieve cost savings. The governor's plan includes a new
performance-based funding formula for transit. The formula will be based
50 percent on system size and 50 percent on performance factors.
- Improving
the Competitiveness of the Port of Virginia: Finally, the governor's
transportation plan will continue efforts to grow Virginia's economy and
create jobs by implementing further reforms at the Port of Virginia.
These reforms will focus on eliminating bureaucratic hurdles to better
enable the VPA to compete with private companies in a highly competitive
global marketplace. They will also expand the VPA's ability to act as a
catalyst for economic development across the Commonwealth.
