eNews March 2, 2020: Special Edition – Transportation Legislation Overview

Monday, March 02, 2020 - 05:01pm

An overview of the transportation omni-bus bills currently in conference

HB1414 (Speaker Filler-Corn) and SB890 (Saslaw) are sweeping transportation legislation packages that generate new revenue, create new transportation programs, and change how transportation funding is distributed by simplifying what are currently many disparate funding sources into a two main funds: 1) the Transportation Trust Fund and 2) the Highway Maintenance and Operations Fund.

Existing transportation programs are folded into these funds as sub-funds (i.e. the Construction Fund, the Commonwealth Mass Transit Fund, the Rail Fund, etc.).

HB1414 and SB890 are omni-bus bills that will generate over $350 million annually for transportation. Notably:

$55 million for road maintenance (city streets, primary and secondary roads)
$80 million for construction (SMART SCALE)
$125 million for Transit (transit capital needs from expiration of CPR bonds in 2018)
$30 million for the Northern Virginia Transportation Authority.

Each proposal raises state transportation revenue by converting fuels taxes to a cents-per-gallon-tax and increasing fuels taxes before finally indexing fuels taxes to inflation. These proposals will also convert regional fuels taxes to a cents-per-gallon-tax and then index regional fuels taxes to inflation. Moreover, the bills would increase Northern Virginia’s regional funds by raising the region’s grantor’s tax and transient occupancy taxes.

Differences remain

The House and Senate have convened a conference committee to hash out the differences between the transportation packages that each chamber passed in slightly different forms. The members of these committees are:

House Conferees: Delores McQuinn, Jay Jones, Barry Knight, Vivian Watts, Rip Sullivan
Senate Conferees: Dick Saslaw, David Marsden, George Barker, Emmet Hanger, Tommy Norment

The differences between the two bills are highlighted in VML’s chart comparing the House and Senate transportation packages which you can download as a PDF here. The PDF also includes charts related to fund distributions for each bill.

Now, let’s look at what the conferees will need to decide as they work through the differences between the two bills.

Statewide Revenue

In both plans, Motor Fuels Taxes are converted to a cents-per-gallon tax (currently taxes are levied on the wholesale price of fuel). The House and Senate proposals increase the tax rate over several years and then index the tax to inflation.

House Proposal: 4 cent per year increase for 3 years
Senate Proposal: 4 cent per year increase for 2 years

A Highway Use Fee for fuel efficient and electric vehicles has been designed to make up for the decline in fuels revenues as a result of the increased use of high fuel efficiency and electric vehicles. Electric vehicles will be assessed a fee that is 85 percent of what an average vehicle would pay in motor fuels taxes in a given year or participate in the optional “mileage-based user fee” described below:

Fee is 85 percent of the difference in gas tax collected from an “average fuel economy vehicle” (25 mpg) driving an average number of miles in a year and the vehicle subject to the fee.

Optional participation in a “mileage-based user fee” program; this fee cannot exceed the “highway use fee.”

Regional Revenues

Regional Revenues, which are the same in each proposal, index regional motor vehicle taxes to inflation.

Northern Virginia

The regional Grantor’s tax and Transient Occupancy Tax are increased by this legislation.
- The Grantor’s tax is increased to 20 cents from the current 15 cents
  - 10 cents of the Grantor’s tax is directed to the Northern Virginia Transportation Authority for the purpose of congestion relief projects.
- The Transient Occupancy Tax is increased to 3 percent (up from the current 2 percent).
  - Non-WMATA compact jurisdictions can use two-thirds of this revenue for public transportation and the remaining third for any transportation purpose

I-81

Authorizes the issuance of bonds for improvements on the I-81 corridor (as approved by the 2019 General Assembly).

Corridor Q

Authorizes the issuance of bonds to continue improvements along the final section of Corridor Q in Southwest Virginia.

Passenger Rail Authority

Both bills create an independent Rail Authority that will construct, own, acquire, and maintain passenger rail right of way for the purpose of contracting out the operation of passenger rail service across the Commonwealth. This authority will be used to upgrade the Long Bridge which connects Virginia to Washington DC over the Potomac River and is the primary bottleneck for rail service connecting Virginia to the Northeast Rail Corridor. The primary distinction between the two versions involves which state entity must review any proposed issuance of bonds.

The Passenger Rail Authority will have broad powers to:

Use eminent domain to acquire rights of way and property
Supersede local authority, particularly zoning authority
Issue revenue bonds using the inside the beltway I-66 toll revenue
Expand rail service throughout the Commonwealth as necessary

Statewide Programs

Interstate Operations and Enhancement Program. Authorizes issuance of bonds for I-81 improvements (authorized by 2019 General Assembly)

Transit Incentive Program. Seeks to improve transit in urban areas with a population greater than 100,000 by encouraging the development of routes of regional significance, regional funding models for transit, bus-only lanes, and fare integration (25 percent of these funds are for reducing fares for low income persons).

Special Structures Program. Implements funds approved by 2019 General Assembly to improve certain capital-intensive bridges and tunnels

Regional Programs

I-81 Corridor Improvement Program. The Commonwealth Transportation Board will develop a project prioritization process for I-81 improvements.

Corridor Q. Allows bonds authorized for Rt. 58 to be used to complete the improvements on U.S. 460 (known as Corridor Q) as it connects into Grundy. This will provide for the acquisition of rights of way, utility relocation, permitting, and mitigation, design, and construction from the end of the Lover’s Leap section into Grundy.

Funding Formulas

Each bill adjusts the way future transportation funding formulas are calculated and directs a slight majority of funds to Maintenance over Construction. However, the House proposal puts slightly more revenue towards maintenance while the Senate proposal puts slightly more funding towards construction programs.

	SB890	HB1414
HMOF (maintenance)	51%	51.24%
Transportation Trust Fund (construction)	49%	48.76%

Transportation Trust Fund distribution by program

Within the funding formula changes proposed by each chamber, the Senate puts more funding towards non-road construction programs while the House directs a greater share towards road construction.

Program	SB890	HB1414
Construction Program	53%	54.9%
Mass Transit Fund	23%	22.2%
Rail Fund	7.5%	5.72%
Port Fund	2.5%	2.45%
Aviation Fund	1.5%	1.35%
Space Flight Fund	1.0%	0.8%

Vehicle Registration Fees

The House proposal reduces the vehicle registration fee by $20 while holding locality registration fees harmless.
The Senate proposal does not change state registration fees

State Inspection Requirement

The House proposal reduces the vehicle state inspection to a bi-annual requirement.
The Senate proposal does not change the vehicle state inspection program.

Transportation Safety Legislation: HB1414 (Filler-Corn) / SB907 (Lucas)

HB1414 includes measures to improve road safety that are identical to a separate Senate companion, SB907 (before they were stripped by the Senate Transportation Committee).

These safety measures include:

Expand local authority to lower speed limits below 25 mph (included in SB907, but localities may only reduce speed limit to 15 mph)
Ban the use of cellphones while driving
Ban open containers of alcohol in the passenger compartment of motor vehicles
Mandate that all passengers of a motor vehicle must wear seatbelts (included in SB907)

A separate conference committee has been formed for the transportation safety legislation:

Senate Conferees: Louise Lucas, Dave Marsden, David Suetterlein
House Conferees: Delores McQuinn, Jay Jones, Barry Knight

What does all this mean for local governments?

These proposals will significantly affect local governments. On the plus side, the proposals will generate additional revenues for construction and maintenance projects. On the minus side, the proposals will create a new authority that will have the power to use eminent domain and ignore local ordinances.

For more information about this legislation and how the funding distribution breaks down, please contact Mitchell Smiley.

VML Contact: Mitchell Smiley, msmiley@vml.org