June 25, 2008

Day 3: Senate moves; House stuck in neutral    

• Senate passes transportation funding package
• House defers action on governor’s proposal
• Both houses to reconvene Thursday morning

VOTING ALONG PARTY lines 21-16, the Senate passed a bill Wednesday that would generate revenue to pay for some of the most critical statewide maintenance needs and regional road and transit issues.  The failure of SB 6009  to attract any Republican support, however, is a clear signal that the bill will arrive in the House Thursday on life support. 

 Major provisions of the bill, which were heavily amended in the Senate Finance Committee, include:

• an increase of the fuels tax by 1 cent per gallon per year for six years raising $99.4 million in FY10 and up to $298.2 million by FY15.  Senate Finance Committee staff estimate that 64 percent of the tax increase would be paid by out-of-state travelers and businesses.  The current state tax is 17.5 cents per gallon.
• an increase of 1/2 percent above the current 3 percent automobile titling tax raising $96.2 million in FY10 and up to $106 million by FY15.
• an increase of the state sales and use tax of 5 percent by an additional 1/4 percent raising $256.6 million in FY 2010 and up to $314.9 million by FY 2015.  The increase would not be applied to food and drugs.

 The new taxes would result in $452.3 million in FY10 and $719.1 million in FY15.  SB 6009, however, eliminates another 1/2 percent of the state sales tax on food, providing tax payer relief of $77.2 million in FY10 and up to $98.6 million of tax relief in FY15.

 The new revenues would be allocated as follows:

• $16.5 million in FY10 and up to $21 million in FY15 to ensure that there is no loss of funding under the allocation formula for transit, ports and airports resulting from the loss of sales tax revenues on food.
• $109 million in FY10 and up to $174.5 million in FY15 for the Commonwealth Mass Transit Fund.  This represents 25 percent of the new revenue.
• $266.1 million in FY10 and up to $446 million in FY15 for the highway maintenance fund.  This is roughly equal to 75 percent of the new revenue.

 By providing more money for road maintenance, the practice of transferring funds from the new road construction budget to the maintenance budget would be curtailed.  In effect, there would be more construction money for each of the nine construction districts.  The table below shows the additional funding each district would receive. 

Road construction money available under Senate Bill 6009 $ in millions
Districts	FY 09	FY 10	FY 11	FY 12	FY 13	FY 14	FY 15
Bristol	4.6	17.1	19.2	25.5	31.9	37.6	43.3
Culpeper	3.8	14.0	15.7	20.8	26	30.7	35.4
Fred’burg	3.8	14.2	16.0	21.1	26.4	31.2	35.9
Hpt Roads	11.2	41.3	46.5	61.5	76.9	90.7	104.6
Lynchburg	4.3	16.1	18.1	23.9	29.9	35.3	40.7
NOVA	10.4	38.6	43.4	57.5	71.9	84.8	97.8
Richmond	8.1	29.9	33.5	44.4	55.6	6.5	75.6
Salem	5.6	20.7	23.2	30.8	38.5	45.44	52.3
Staunton	4.6	17.1	19.2	25.5	31.9	37.6	43.3

 For Northern Virginia, the bill directs the state to impose these taxes: 1/2 percent sales and use tax (but excludes food and drugs); a 40 cent per $100 value increase in the grantor’s tax (which is paid by the seller); and an additional $5 per day in the transient occupancy tax.  The revenues would bring in some $335.4 million in FY10, increasing to $381.9 million by FY15.  The money would be allocated along the lines outlined in last year’s transportation funding bill (HB 3202).

 SB 6009 also imposes additional state taxes on Hampton Roads.  The sales tax in the region would increase by 1 percent, and a 1 percent fuel tax would be initiated.  The new revenue would total over $200 million in FY10 and increase to more than $250 million by FY15.  The money would be spent on the seven projects – the six included in HB 3202 plus an expansion of the Hampton Roads Bridge Tunnel.

 The measure also addresses other regions of the state, specifically the Richmond and Fredericksburg areas.  Under the bill, the Commonwealth would impose an increase in the sales tax by 1 percent in jurisdictions covered by Metropolitan Planning Organizations that have at least 8.5 million vehicle miles driven within the area.  The tax would become effective on July 1 in the calendar year following the year the Virginia Tax Commissioner determines the vehicle miles driven threshold has been met.

 

House Committees meet but no funding bill emerges

Del.  Ward Armstrong and Secretary of Transportation Pierce Homer presented the governor’s transportation funding proposal to a skeptical House Rules Committee this afternoon. 

 Committee members interrupted the presentation on HB 6026 to ask questions about its tax provisions and the economic impact on vehicle sales and housing.  Although the committee did not vote on reporting the bill, either with or without a recommendation, it is clear that a majority does not endorse the legislation.  House Speaker William Howell announced that a vote would take place at the next meeting of the House Rules Committee, but admitted the scheduling of a meeting depended on the Senate’s action on its funding bills.

 The House Appropriations Committee met Wednesday afternoon and reported out with no discussion HB 6046, a bill directing the Auditor of Public Accounts to administer audits of the Departments of Transportation and Rail and Public Transportation by a private management consulting firm.  Any monetary savings realized from the performance audit would be credited to the Highway Maintenance and Operating Fund. The audit costs would be paid from existing appropriations to agencies within the Transportation Secretariat.  Earlier in the day, several delegates argued that no action should be taken on revenue bills before the General Assembly until HB 6046 is enacted and the audit is carried out.  (Since 2001, JLARC has done four major studies on VDOT, and under legislation passed last year, receives regular reports from VDOT on the conditions of Virginia’s roads and bridges.  The Auditor of Public Accounts has done seven audits of VDOT since 2002.)

 The House Transportation Committee also  met Wednesday afternoon, and reported out several bills dealing with the design and construction of secondary roads (HB 6016), issuance of RFPs for major highway and light rail projects in Hampton Roads (HB 6020 and HB 6028),  and the awarding of state contracts for highway bridge maintenance and reconstruction on a design-build-finance-maintain basis (HB 6047).

 None of the legislation reported to the House floor deals directly with transportation funding.  Both the House and Senate will go into floor sessions at 10 a.m. Thursday.

 

House, Senate continue transportation ‘lockbox’ squabble

The House and Senate are nearing yet another impasse over a constitutional amendment to prevent the use of the Transportation Trust Fund for anything other than transportation.  The two bodies have been unable to reach agreement on the wording of such an amendment to put before voters since at least 2002.

 The House prefers a single “lockbox,” which would require a supermajority to divert money from the trust fund.  It is not interested in including language that would prevent transfers from the General Fund to the Transportation Trust Fund.  The Senate prefers a double “lockbox,” which would require a supermajority to divert money from the trust fund and safeguards on the use of the General Fund for transportation purposes. 

 The House and Senate also differ on other details, such as what constitutes transportation spending.  For this special session, the constitutional amendments in play are HJR 6001 (Oder) and HJR 6006 (Suit) on the House side and SJR 6004 (Deeds) in the Senate.  The House versions are on the House floor; the Senate resolution passed the Senate today and now goes to the House. 

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