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Senator proposing increase in gas tax

BY CHELYEN DAVIS

State Sen. John Watkins has fired the first volley in an expected General Assembly debate over transportation funding.

Watkins, R–Chesterfield, unveiled on Thursday a wide-ranging proposal to increase state funding for transportation by adding a sales tax to gasoline, lowering some income tax rates and eliminating certain tax exemptions.

Lawmakers from the Fredericksburg area say they do expect transportation to be a big issue in the 2013 legislative session, and that members of both houses are working on proposals. But Watkins’ idea, they say, is one of many, and unlikely to survive the legislative process in its current form.

Transportation funding has been a problem in Virginia for years. Thanks to better-mileage cars, hybrids and the fact that Virginia’s gax tax is a flat rate, the buying power of the gas tax has decreased over time. Meanwhile, the cost to build and repair roads has increased. By now, Watkins said, the state is shifting $450 million that would have gone to road construction into road maintenance instead.

For years legislators have argued over how to get more money into transportation. Those arguments have led to more public–private projects, bonds and other ways of getting money, but have never led to the kind of major revenue increases that many Democrats and some Republicans favor. Proposals to raise the gas tax have regularly failed.

“The time has come that we must revisit the dedicated revenue stream and provide for future maintenance and construction needs,” Watkins said in a written statement, introducing his proposal to the Senate Finance Committee at its annual retreat this week.

He would add a 5 percent sales tax on gasoline at the wholesale level; reduce state income tax rates on those making less than $17,000 a year; and end several tax credit and sales tax exemptions, including credits for having clean fuel vehicles and sales tax exemptions for car repairs and taxi services.

Virginia taxes gas at 17.5 cents a gallon—a rate unchanged since 1986—but doesn’t impose a percentage sales tax on gasoline.

Watkins estimated that about 30 percent of the proposed sales tax would be paid by out-of-state motorists. Overall, his proposal would generate about $734 million a year in additional money for transportation.

According to the Richmond Times–Dispatch, the 5 percent sales tax on gasoline would equate to about a 14-cent increase in the gas tax.

Watkins said his proposals are “a user fee concept, which, in my estimation, is exactly the same as a toll.”

Tolls have generated a lot of controversy lately; Gov. Bob McDonnell has proposed adding tolls to Interstate 95 and possibly Interstate 64, leading to opposition from citizens’ groups, some lawmakers and both groups representing local governments.

Watkins’ bill contains a provision requiring General Assembly approval for any tolls—currently, that’s not required.

Other lawmakers say Watkins’ bill is an option, but that there will be many proposals in the upcoming session.

“It’s very ambitious,” said House Speaker Bill Howell, R–Stafford, of Watkins’ proposal. “I’m not sure we’re ready to raise the gas tax 14 cents a gallon, and raise other taxes by taking away sales tax exemptions.  Something needs to be done, and I commend him for coming up with a proposal. I just think it’s probably a little extravagant.”

Watkins’ bill might have a decent chance of passage in the Senate, but would face a tougher time in the House, where there are more Republicans and more have taken strong anti-tax stands.

“We’ve got to do something and we’ve got to make it a priority. The difficulty we have, we’ve got to come up with a plan that the House will go along with and the governor will sign,” said state Sen. Richard Stuart, R–Stafford.

Stuart said legislators are already talking about transportation proposals for the upcoming session, and that Watkins’ is just one of them.

“There are some discussions that potentially could lead to a plan that the entire General Assembly could get behind. I don’t know if it’s going to be the Watkins plan or not. But there are a lot of us talking about potential plans that may be able to get us the money that we’re going to need.  I don’t get excited about a plan that will pass the Senate, if that’s as far as it’s going to go. We have got to work with the House and the governor to come up with a plan that all of the chambers will agree on.”

Sen. Bryce Reeves, R–Spotsylvania, said he hasn’t fully read Watkins’ bill, but that he expects an emphasis on transportation and K–12 education in the 2013 session.

“I think there’s going to be a comprehensive effort to try to make some headway on transpo this year, and I think in a bipartisan way,” Reeves said, adding that he expects to see other bills on indexing the gas tax and devoting a portion of the general fund to transportation.

Part of the debate will be over tolls, specifically McDonnell’s proposals to toll I–95 south of Richmond.

The two organizations that represent local governments —the Virginia Association of Counties and the Virginia Municipal League—said recently that they oppose the current tolling plan.

VML said the state shouldn’t toll existing roads “as a method to fund ongoing transportation obligations.”

VACo’s 2013 legislative program proposes to require General Assembly approval for tolling interstates, which currently isn’t required.

Howell said that while he thinks tolls are a good way to finance “megaprojects,” like express lanes on I–95 to Stafford County, he feels that tolling existing roads is “a different situation.”

Stuart agreed.

While tolls are a user fee and generate needed revenue, Stuart said, no one likes to stop and pay a toll.

“There certainly have to be better ways to do it than that,” he said.

 Chelyen Davis:  540/368-5028

cdavis@freelancestar.com

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