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Legislative Bulletin

January 22, 2007

Republican leadership offers transportation funding proposals

Republicans leaders in both the House and Senate outlined several proposals last week to provide increased revenue for transportation. The proposals include land-use measures designed to curtail sprawl, a substantial infusion of state general funds, $2 billion from a statewide bond initiative, increased user fees and reforms to streamline VDOT.

More details about the legislation are expected to be available this week.

The description of the proposal here is based on a press conference held by House and Senate leaders and conversations with several Republican leaders. VML is providing only an outline of the proposal at this point, because it wants to review the bills more closely before explaining the "fine print."

The pertinent bills are now available on-line. There are two "big bills" -- HB 3202 and SB 1417. HB 3202, sponsored by House Speaker Bill Howell (Stafford), appears to include the entire package; SB 1417, sponsored by Sen. Tommy Norment (James City) appears to include everything in the package except the provisions for two regional transportation authorities. Those are found in SB 1414, sponsored by Sens. Jeannemarie Devolites Davis (Fairfax) and James O'Brien (Fairfax), and in SB 1415, sponsored by Sen. Marty Williams (Newport News).

As part of the proposal, certain large counties would be required -- and other counties, towns and cities would be permitted -- to create "Urban Development Areas" in their comprehensive plans. The goal of requiring these areas would be to curtail sprawl, limit traffic congestion and promote better planning.

The transportation element of the plan would allow local governments in Northern Virginia and Hampton Roads the ability to raise and retain additional revenues for critical local road, rail and transit projects.

The revenue component of the proposal would increase General Fund investments by $250 million, implement abusive driver penalties (generating $61 million), equalize the diesel fuel tax with the gasoline tax ($20 million), increase overweight truck penalties and heavy truck registration ($30 million), and increase vehicle registration fees by $10 (generating $71 million). The proposal would also dedicate 50 percent of each year's general fund surplus to transportation (estimated at $227 million in the current fiscal year, and $64 million on an on-going basis). The $339 million set aside from the general fund at the end of the 2006 regular session is also dedicated to transportation.

The proposal refers to new bond issues of $1.3 billion over the next four years, and another $700 million in bonds after 2012. It also dedicates one-third of the insurance premium taxes to Federal Revenue Anticipation Notes (FRAN) debt service.

The package also will grant new revenue authority to the Hampton Roads and Northern Virginia Regional Transportation Authorities.

To address maintenance costs, VDOT would be required to define a "local subdivision road" and a "local collector road," and would be prohibited from accepting for maintenance purposes any new subdivision roads into the state system.

Many members of the General Assembly believe that subdivision roads are heavily burdening the VDOT maintenance budget.

The numbers do not bear this out.

VDOT's annual cost to maintain secondary roads is $425 million. Of that sum, less than $30 million a year is used to maintain subdivision streets. An estimated $3 million per year is added for new subdivision streets.

Gov. Tim Kaine, who released his own transportation proposal last month, called the announcement "an early - and significant - step in the legislative process." He said that the state needs to use reliable, long-term funding to build and maintain a 21st century transportation system, while keeping the current commitments in the areas of public education, public safety and public health.

VML will provide a more detailed assessment of the package later this week. If you have questions about the land-use portions of the proposal, contact Mark Flynn at mflynn@vml.org or 804/400-1321. For questions about the transportation or funding aspects, contact Denise Thompson at dthompson@vml.org or 804/640-5615. For general questions, contact Deputy Director Suzette Denslow at sdenslow@vml.org or 804/400-1191.

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