June 27, 2008

General Assembly motors off until July 9

• House to debate 2 competing transportation funding proposals
• SB 6009 raises gas tax to cover statewide maintenance
• HB 6055 would divert general fund revenue for Hampton Roads

 THE GAVELS IN THE House and Senate will not sound again until July 9, when the General Assembly resumes a special session on transportation in Richmond.

 Having acted on all of the legislation reported from its committees, Senators will wait for the House to vote on two very different proposals.

 The first proposal -- SB 6009 (Saslaw) -- pumps new money into transit and road maintenance across the state.  The bill also provides hundreds of millions of dollars for Northern Virginia and Hampton Roads to address transit, rail, road, and bridge projects in the two regions.  In addition, the legislation would impose, under certain conditions, a 1 percent state sales tax in the Richmond and Fredericksburg regions for regional transportation purposes.  The funding streams for the statewide spending draw upon new gas taxes and increases in the state sales tax and the automobile titling tax.  For Northern Virginia, the bill relies on increases in the grantor’s tax, transient occupancy tax, and sales and use tax.  The revenue mix in Hampton Roads is different, utilizing a 1 percent motor fuels tax and a 1 percent sales and use tax.  The media has reported that the bill’s fate is poor.  (The June 25 edition of the Legislative Bulletin includes a detailed review of SB 6009.)

 The competing proposal -- HB 6055 (Hamilton) -- targets Northern Virginia and Hampton Roads by providing increases in driver’s license fees, grantor’s taxes, vehicle rental taxes, transient occupancy taxes, annual vehicle registration fees, and annual vehicle inspection fees.  With the exception of a project to expand capacity at the Hampton Roads Bridge Tunnel, HB 6055 spends the remaining money on projects and purposes set out in last year’s transportation funding bill.  The revenue estimates for the Northern Virginia portion is $156 million per year.  The Hampton Roads estimate is $250 million.  (Gov. Tim Kaine has said repeatedly that he does not favor legislation that ignores statewide maintenance needs.) 

 Beginning in FY11, HB 6055 would divert $250 million each year from general fund revenues for Hampton Roads.  The controversial provision includes the state sales tax, individual income tax, corporate income tax, and insurance license tax.  The theory is that the $250 million represents a portion of the growth in state taxes attributable to economic activity generated or facilitated by the ports of Hampton Roads.  (The June 26 edition of the Legislative Bulletin includes a detailed review of HB 6055.)

 Analysis of the bills …

 The Virginia Municipal League advocates for a funding model that is adequate, sustainable and dedicated with non-general funds to support the state’s transportation network.  As an organization, VML has lobbied the General Assembly and the governor to approve a program that addresses the long-term statewide needs of road maintenance and transit operations, imposes tax or fee increases by the Commonwealth and not by individual localities, and provides adequate resources for new construction and other transportation modes.  VML and VACo have requested cities, counties and towns to adopt resolution in support of a solution along these lines.  More than 60 localities have done so.

 The two bills before the House have some merit as shown in the table below.  Neither, however, is comprehensive or far reaching enough to meet Virginia’s long-term transportation demands. 

 The diversion of general fund dollars, as proposed in HB 6055, is particularly troublesome.  If approved, the bill will take scarce dollars away from public education, law enforcement, health care and social services.  Local governments in Northern Virginia and Hampton Roads, the bill’s supposed “beneficiaries,” have already expressed doubts.  Using state general fund dollars will result in service gaps or greater pressure on local governments to raise real estate taxes.

 VML urges members to take advantage during this legislative hiatus to contact their delegation and remind them that the state’s economic future and quality of life demand a successful resolution. 

Issues of concern to VML
Legislation pending before House of Delegates	State-imposed taxes	Avoids use of state general funds	Addresses statewide maintenance	Funds transit	Promotes tolls where appropriate	Promotes regional projects
SB 6009	Yes	Yes	Yes	Yes	Yes	Yes
HB 6055	Yes	No	No	No	Yes	Yes

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