Tensions and passions were high at the California Supreme Court before they even turned to the Gillette Co. v. Franchise Tax Board case deciding whether the Multistate Tax Compact is a binding agreement or a model law...
- The Tax Policy Blog
- Virginia House Passes Modified Version of Governor McDonn...
Virginia House Passes Modified Version of Governor McDonnell’s Transportation Plan
The Virginia transportation funding dilemma continued yesterday when the House of Representatives passed a slightly modified version of Governor Robert McDonnell’s original transportation funding plan. The majority of the Governor’s plan is still intact; the House voted to eliminate the state’s 17.5 cent gas tax and increase the state sales tax to 5.8 percent. They also removed the provision that would allow Virginia to use tolls on Interstate 95 and eliminated fees on hybrid vehicles. Without these two provisions, the proposal would generate $52 million less revenue than originally proposed.
We recently criticized the Governor’s proposal for distancing the cost of roads from those who use them. The House’s removal of the toll provisions exacerbates this problem. Other critics of the plan are concerned that the plan’s diversion of sales tax revenue could create funding issues for education, public safety, and healthcare. Further, its reliance on funding from yet-to-be passed federal legislation regarding online sales tax collection is problematic. What will lawmakers do if this funding, which is completely out of Virginia’s control, doesn’t come to fruition?
The Senate recently rejected multiple funding proposals—including two originated by Senators and the Governor’s original plan. What happens to the House version of the bill now depends entirely on the Senate. They have until midnight tonight to vote on the proposal. For the bill to pass the Senate, it would need support from both sides of the aisle—a very unlikely prospect considering that it has the opposition of both Democrats and Republicans in the Senate.
The Governor staunchly defended his move from gas tax-funded roads to sales tax-funded roads in a recent press interview, noting that he “prefer[s] the sales tax to the gas tax because the gas tax is in a long-term decline.” We’ve continually argued that the majority of transportation funding should be derived from user-related charges such as tolls and gas taxes. Failing to do so leads to overuse, congestion, and infrastructure deterioration. Since these are the ultimate problems Governor McDonnell originally hoped to solve, the current plan on the table is moving in the wrong direction.
More on Virginia here.
Follow Liz Malm on Twitter @elizabeth_malm.
Get Email Updates from the Tax Foundation
We will never sell or share your information with third parties.
Join the Tax Foundation's fight for sound tax policy Go
About the Tax Policy Blog
The Tax Policy Blog is the official blog of the Tax Foundation, a non-partisan, non-profit research organization that has monitored tax policy at the federal, state and local levels since 1937. Our economists welcome your feedback. If you would like to send an e-mail to the author of a blog post, please click on that person's name to locate his or her e-mail address or visit our staff page here.