Many people are beginning to wrap their minds around the House Republicans’ proposed destination-based cash-flow tax and what it means for tax reform. Most people are still looking into the tax’s impacts on trade and how...
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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.
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