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Virginia Governor Bob Mcdonnell

Transportation Nation

Virginia House and Senate Negotiators Strike Transportation Funding Deal

Wednesday, February 20, 2013

Virginia capitol building (photo by Thruhike98 via flickr)

In a final attempt to reach a compromise on measures to raise substantial new revenues for transportation before the scheduled adjournment of the legislative session, Virginia House and Senate negotiators struck a deal that replaces the state’s gas tax with a lower tax on the wholesale price of gasoline, but raises the sales tax.

The deal eliminates the state’s seventeen-and-a-half cents per gallon gas tax, replacing it with a three-and-a-half percent wholesale tax. It also raises the state sales tax to pay for roads, but not by as much as the governor wanted.  The sales tax would increase from 5 to 5.3 percent under the deal reached by a conference of ten legislators. A $100 registration fee for hybrid and electronic vehicles is also included.

The deal, which would raise approximately $869 million a year when fully implemented, now heads to the House and Senate for floor votes by the end of the week.  While passage in the Republican-led House seems certain, the deal may run into trouble in the Senate, where Democrats and Republicans each hold 20 seats.  Some Democrats remain unhappy with the plan to use general fund (sales tax) revenue to pay for transportation.

“The reduction in the gas tax makes no sense to me,” said Sen. Chap Petersen (D-Fairfax). “Obviously I want to raise money for transportation… but it’s a little bit of a shell game, quite frankly. Historically we’ve used sales tax for education and this is a major step in the other direction.”

Petersen calls the $100 registration fee for alternative fuel vehicles “asinine.”

“We want people to drive fuel efficient vehicles.  Why would we penalize them?” he said.

To appease Northern Virginia lawmakers, the negotiators included Governor McDonnell’s proposal to use $300 million in increased sales tax revenue to finance the Silver Line rail extension to Dulles Airport.

The $5.5 billion Silver Line project is managed by the Metropolitan Washington Airports Authority, which has lobbied Richmond for funding in order to offset projected toll rate increases on the Dulles Toll Road.  Those tolls are supposed to pay for 75 percent of Phase II of the Silver Line’s construction cost under the current financing arrangement.

‘When it comes to the Silver Line the $300 million is vital to future toll mitigation.  I would hate to think this opportunity would be lost,” said MWAA chief executive Jack Potter.

The negotiators’ deal created an unexpected potential difficulty for the Silver Line extension. The agreement requires that Loudoun County approve a countywide commercial and industrial tax (C&I) in order to be eligible for state transportation dollars for local projects. However, in 2012 the county created two special tax districts around its future Silver Line station stops.  Supervisor Matt Letourneau (R-Dulles District) says an additional C&I tax would make the county uncompetitive with surrounding jurisdictions in attracting businesses.

“If the Legislature moves forward with this proposal it would force us to reexamine our funding mechanism for Metro [Silver Line] and create a great deal of doubt,” Letourneau said in an interview with WAMU 88.5.

Loudoun's participation in the Silver Line project is vital to eventually extending rail to Dulles International Airport.

In addition to the special tax districts for the coming commuter rail, Loudoun’s Board of Supervisors has in place a special tax district for businesses along its busy Rt. 28 corridor. A C&I tax of 12.5 cents per $100 assessed property value would render the county at a steep disadvantage to neighboring Fairfax, Letourneau said.

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Transportation Nation

Virginia Transportation Funding Plan Dies in State Senate

Wednesday, February 06, 2013

Virginia capitol building (photo by Thruhike98 via flickr_

Governor Bob McDonnell’s five-year, $3.1 billion transportation funding package died on the floor of the Virginia State Senate on Tuesday night, as divided lawmakers decided to sent the proposal back to committee after defeating two Republican floor amendments.

After more than an hour of debate it became apparent there were not enough votes to support the governor’s plan to eliminate the state’s gas tax (17.5 cents per gallon) and replace it with a higher sales tax to fund road and rail construction and maintenance.

The bill was largely blocked by Senate Democrats from northern Virginia who were unhappy with McDonnell’s plan to use general fund revenue that also pays for schools, public safety, and other programs.

At least one senator’s frustration bubbled to the surface.  Republican Senator Frank Wagner, whose amendment to establish an eight percent gas tax was defeated as an alternative to the governor’s proposal, implored his colleagues to get behind some plan to create new revenues for the state’s immense transportation needs.

“You know, I told myself in 22 years I'd never get emotional over a bill. And I'm sorry I broke my own damn word. I'm emotional. We've been fighting this for ten years. Ten years now!” Wagner shouted. “I'm here tonight to get a transportation bill passed!”

The Senate is now left to consider a bill passed by the House of Delegates that maintains most of the key provisions of Governor McDonnell’s package, including the elimination of the gas tax. But the administration sounded pessimistic the House bill would fare any better.

“It was quite clear from the floor debate and from the fact they voted against every single transportation funding mechanism before them, and that they didn't even offer any solutions of their own, they have no intention of addressing transportation funding,” said Virginia Secretary of Transportation Secretary Sean Connaughton, who made it clear the administration blamed Democrats for the bill’s demise.

“We’re incredulous,” Connaughton said. “On a day that the Texas Transportation Institute comes out with its nationally known study that says the Washington region has the worst traffic congestion in the entire country, the Senate Democratic caucus voted against every Senate version of transportation funding to date.”

Without some form of compromise, the General Assembly will close its session in three weeks without approving any new transportation revenues.

“Unless the Democrats in the Senate work with us… things do not look very favorable right now,” Connaughton added.

“The governor can send down a bill at any time. That's his prerogative.  I would encourage him to find common ground among all the proposals that are out there and there are a lot of them,” said Delegate David Toscano, the leader of the Democratic minority in the House. “It looks like if the governor is not willing to compromise on very much, nothing is going to get done,” he said.

Toscano chided the governor's plan for relying on revenue from future Internet sales -- a marketplace equity bill --that Congress "probably won't pass." He added: "It was deficient in the first place."

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Transportation Nation

As Virginia Debates Transportation Funding Plan, EVs Put Gas Tax Under Microscope

Tuesday, February 05, 2013

Chevy Volt at the 2012 NY International Auto Show (photo by Kate Hinds)

As both chambers of the Virginia General Assembly prepare to work to find common ground after passing different versions of Governor Bob McDonnell’s major transportation funding plan, critics say the governor’s proposal to eliminate the state gas tax and replace it with a higher sales tax would not provide enough revenue to satisfy the state’s transportation needs.

On Monday the House gave preliminary approval to a measure that keeps most of McDonnell’s proposals intact, including eliminating the state’s 17.5 cents-per-gallon gasoline tax.  In the Senate, a key Republican lawmaker is proposing a different solution: a 5.5 percent sales tax on the wholesale price of gasoline tied to inflation.

The bill approved by the House killed the governor’s plan to impose a $100 registration fee on alternative fuel vehicles.  The proposals are scheduled for a final vote today.

The McDonnell administration argues higher fuel efficiencies continue to eat into gas tax revenues so the tax should be replaced, especially as the adoption of hybrid and electric cars is expected to reduce gas consumption.

The latest hybrid and electric models are currently on display at the Washington Auto Show, where proponents say they have become much more practical for everyday use since the first generation models.

Mahi Reddy, the founder of SemaConnect, a manufacturer of electric vehicle charging stations based in Bowie, Maryland, says EVs are indeed becoming more popular, although they only represent less than one percent of all vehicles on the road today.

“Previous generations of electric cars struggled because they used lead-acid batteries. They used nickel-metal hydride batteries,” Reddy said. “The new generation all use lithium batteries, the same lithium technology that is in your cell phone. So that means these batteries are much lighter, they have much more range, and these cars are much better engineered so they are practical cars you can use to commute to the office.”

In his view, the biggest obstacle facing EVs is the lack of charging stations.

A report by the Metropolitan Washington Council of Governments found our region has strong potential for EV growth, but an "underdeveloped charging network" is one of several problems.

But while the governor views improving fuel efficiency as a reason to dump the gas tax altogether, the Council of Governments executive director Chuck Bean takes the opposite position.

“In terms of transportation funding all of the options need to be on the table; gas tax, sales tax. We are really in a crisis of transportation funding and need to be very creative,” Bean said. “I would hesitate to reverse or eliminate any taxes because there is simply a great need for more funding.”

The potential of these vehicles does raise another potential challenge to funding transportation: as the U.S. vehicle fleet is comprised of more EVs and regular vehicle fuel standards improve, the gas tax will lose even more of its purchasing power. That would leave states looking for other revenue streams like higher tolls, more borrowing, higher vehicle fees, or higher sales or property taxes to pay for roads and rails.

The smart growth community says there is no way for Virginia to build its way out of its infamous traffic congestion and taht the solution lies in changing land use policies and urban planning strategies to maximize the potential for transit, walking, and bicycling.

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Transportation Nation

Virginia Governor Proposes Eliminating State Gasoline Tax

Wednesday, January 09, 2013

Virginia Governor Bob McDonnell (photo via flickr)

Virginia would become the first state in the country to eliminate its gasoline tax if a major transportation funding plan proposed by Governor Bob McDonnell (R) is approved by the General Assembly.

Revenue from the state gas tax of 17.5 cents per gallon, last raised by lawmakers in 1986, would be replaced by an increase in the state sales tax. That rate is currently 5 percent; the governor wants to raise it to 5.8 percent.

McDonnell’s proposal would also increase by half the portion of the sales tax already dedicated to road maintenance and operations. However, during the first three years, that tax would provide $300 million for the Silver Line rail project to Dulles International Airport -- a $5.5 billion project that Virginia has funded only $150 million to date.

“Transportation is a core function of government.  Children can’t get to school; parents waste too much time in traffic; and businesses can’t move their goods without an adequate and efficient transportation system,” said McDonnell at an afternoon news conference, flanked by members of the General Assembly who will dissect his sweeping proposals during the 45-day legislative session.

If lawmakers pass the governor’s entire plan, which also includes higher vehicles registration fees and a $100 charge on electric and natural gas vehicles, Virginia would receive more than $3 billion over five years to fund road construction and transit development, including intercity passenger rail.

A primary aim of the funding package is to stop the yearly transfer of construction dollars from the Commonwealth Transportation Fund to required maintenance projects, a process that will leave the fund empty by the end of the decade.

“My transportation funding and reform package is intended to address the short and long-term transportation funding needs of the Commonwealth. Declining funds for infrastructure maintenance, stagnant motor fuels tax revenues, increased demand for transit and passenger rail, and the growing cost of major infrastructure projects necessitate enhancing and restructuring the Commonwealth’s transportation program,” McDonnell said.

The governor has indicated in recent weeks that the state gasoline tax’s diminishing returns minimizes its effectiveness in raising new revenues.  Higher vehicle fuel efficiency standards, among other factors, have eaten into the tax’s buying power. The 17.5 cents per gallon tax currently accounts for about one-third of the state’s transportation funding, although the tax has lost 55 percent of its purchasing power when adjusted for inflation since 1986, the last time it was raised.

Instead of raising the tax or pegging it to annual inflation adjustments, the governor wants to eliminate it, although the state diesel tax would remain in place. Virginia would then abandon a fundamental premise of transportation funding: motorists who use the roads pay for the roads in the form of taxes.

“If this were adopted it would mean there would be no relationship to the extent to which people use the transportation network and what they actually pay for it," said Bob Chase, the president of the Northern Virginia Transportation Alliance, which favors road construction as a solution to traffic congestion.

"It's a dramatic proposal to shift funding from the gas tax to the sales tax, and we're going to have to look at what it means when you disconnect the tax from the actual use of the roadways,” said Stewart Schwartz, the executive director of the Coalition for Smarter Growth and frequent critic of the McDonnell administration’s funding priorities.

The General Assembly has for years evaded the responsiblity of injecting significant new tax revenue into transportation. While all observers agree the state’s needs total in the billions, there is no consensus on the best way forward. To Schwartz, prioritizing road construction amounts to squandering precious funds that could be used to develop public transit systems.

"Instead of addressing metropolitan area needs, the administration is spending $1.2 billion on Rt. 460, $200 to $400 million on the Charlottesville Bypass, and proposing to spend billions on the Coalfields Expressway and an estimated $2 billion on a Northern Virginia outer beltway,” he said.

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Transportation Nation

Virginia Governor Promises Action on State's Transportation Funding Woes

Thursday, December 06, 2012

Interstate 495 - Virginia (photo by Doug Kerr via flickr)

Virginia Governor Bob McDonnell offered no specifics in his “comprehensive transportation funding and reform” plan to raise an additional $500 million per year to prevent the state from running out of money to build roads by 2017.

Speaking in Fairfax County at his annual transportation conference, Governor McDonnell called on lawmakers to stay in session next year until they find a solution to Virginia’s long-term funding woes, which are exacerbated by the transfer of money from the state’s construction fund to required highway maintenance projects.

“I don’t think we can wait any longer,” McDonnell said. “I don’t think I can continue to recruit businesses to Virginia and see the unemployment rate go down unless we are able to get a handle on and provide some long-term solutions this session to that problem.”

The Republican governor, who is one year from leaving office, did not specify what he will ask lawmakers for when they convene in Richmond in January.

“I’ll tell you when we’re ready… before the session,” the governor said in brief remarks to reporters following his speech. “These are plans that take a lot of work to put together.”

He refused to take a position on whether the state’s gas tax should be increased, although he indicated that doing so alone would not generate adequate revenue. The tax of seventeen-and-a-half cents per gallon, which currently accounts for about one-third of the state’s transportation funding, was last increased in 1986. It has lost 55% of its purchasing power when adjusted for inflation.

Improved automobile fuel efficiency and the rising costs of highway construction materials have reduced the gas tax’s buying power, McDonnell said.

“A key ingredient of asphalt has increased by approximately 350% over that same time,” he said.

Critics contend the McDonnell administration cannot be trusted to direct new revenues wisely. One of the most vocal critics points to a record of highway construction instead of transit projects as evidence, especially from the $4 billion dollar package approved for the administration by the legislature.

“He squandered most of that,” said Stewart Schwartz, the executive director of the Coalition for Smarter Growth. “It’s gone to rural highway projects that have very low traffic demand and are not high priorities given the traffic congestion within northern Virginia and Hampton Roads.”

Schwartz listed State Rt. 460 in southern Virginia, the Coalfields Expressway, bypasses in Charlottesville, and plans for an “outer beltway” in northern Virginia as examples of poor spending priorities by the administration, while transit projects like the Silver Line Metro rail and existing roads like I-66 need help.

“They are not targeting the areas of greatest need. You are not getting the best bang for your buck. You are spending a few billion dollars on the wrong things,” said Schwartz.

New revenues would likely be directed to construction projects under the state’s transportation trust fund, which currently loses hundreds of millions of dollars annually to required maintenance.  The trust fund’s formula directs fifteen percent of its monies to transit projects.  The remainder is for road building.

Governor McDonnell denied his administration is neglecting transit and other modes of transportation.  “It’s going to be a multi-modal approach.  Road, rail, and mass transit, all of those will be beneficiaries of a funding plan,” he said.

 

 

 

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Transportation Nation

Virginia Breaks Ground on I-95 Express Lanes

Tuesday, August 07, 2012

(photo by Martin DiCaro/WAMU)

Virginia broke ground on a plan to improve and expand 30 miles of High Occupancy Toll lanes along a stretch of the state's I-95 corridor.

Like the 495 HOT lanes, the I-95 Express Lanes will be located adjacent to the regular, non-toll lanes, giving drivers a choice: take the chance of getting stuck in traffic or pay a dynamically-priced toll for a faster ride. The goal is to enhance existing lanes while adding a third HOT lane to 14 miles in the northern most stretch of the corridor and two new lanes to the nine miles at the southern end.

The $1 billion project is scheduled for completion in December 2014. The I-95 Express Lanes are the result of another public-private partnership between the state and Fluor-Transurban, the company that is building the soon-to-be completed 495 HOT lanes. Transurban is paying for nearly 90 percent of the project while applying for a federal loan of $300 million to assist in the financing.

Under the agreement, Virginia gets an expanded commuting corridor with fully electronic toll lanes connecting Fairfax to Stafford County for contributing less than 10 percent of the project’s cost, while Transurban will receive the toll revenues for 75 years. The state's financial exposure is limited.

“The contract we signed with the state is a very equitable contract. We are taking the traffic risk,” said Transurban General Manager Tim Steinhilber. “Once we build the road, if no one comes to use the road then we don’t make any money. We lose money.”

Naturally, Transurban expects to turn a profit.  If profits exceed a certain threshold, the state may share in toll revenues. At the other end of the spectrum, if HOV-3 carpoolers exceed a thirty-five percent threshold under certain circumstances, the state would have to subsidize those trips to ensure Transurban doesn’t take a bath on the free rides. There is a similar safety net in the 495 HOT (high occupancy toll) lanes contract.

“Traditionally across the country, HOV lanes are underutilized. We are working with the state to encourage carpoolers because that takes cars off the road and reduces congestion for everyone,” said Steinhilber. “If we get to the point where the state would start [subsidizing] the HOVers, it’s a win-win.”

At a groundbreaking ceremony at the Dale City rest area Tuesday, state and federal officials -- including Virginia Governor (and possible Republican Vice Presidential choice) Bob McDonnell -- touted the project’s estimated economic benefits: 500 construction personnel with an overall impact of $2 billion by supporting 8,000 regional jobs. One thousand trees will also be planted along the corridor that is designed to eventually seamlessly connect to the Capital Beltway at I-495, quickening trips to job centers in Tysons Corner, Va. Express buses will also have free access to the toll lanes.

(photo by Martin DiCaro/WAMU)

“If you can’t move people and you can’t move goods quickly to market, you are not going to get businesses coming here and you aren’t going to get tourists.  It’s going to impair the quality of life for all of us,” said Gov. McDonnell.

When asked by Transportation Nation if northern Virginia is becoming overly reliant on highway expansion projects to solve its dreadful congestion problems, McDonnell responded that the state is trying different solutions.

“We are trying to do everything,” he said. “We are going to have a number of projects up here that will use mass transit. We’ve been advocating rail to Dulles.”

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Transportation Nation

Where Did I Put That $1.5 Billion? Oh! There It Is...

Monday, September 27, 2010

(Washington, DC -- David Schultz, WAMU) It may sound hard to believe, but the state of Virginia just found $1.5 billion in transportation funding it didn't know it had.

The money appeared after an audit of Virginia's Department of Transportation (VDOT) initiated by Governor Bob McDonnell (R). The audit found what McDonnell described as a windfall of unused and underutilized cash.

Among its findings:

*Amid a severe recession - in which the state laid off more than 1,000 VDOT employees, and in which the state controversially closed dozens of highway rest stops because it couldn't find $9 million to keep them open - VDOT was sitting on a cash reserve fund totaling $200 million. McDonnell proposes drawing down this reserve fund by more than half.

*VDOT has been regularly allocating funds to inactive local construction projects. These projects were only partially funded so they weren't under construction, but the funding they did have sat idle.

*After the recession began, VDOT became very hesitant to commit funds to new projects. For example, in fiscal 2009, almost $1.6 billion was available to VDOT for maintenance projects. But it only spent three quarters of that, carrying the rest over to the following fiscal year.

McDonnell called these fiscal practices "unacceptable," and blamed his predecessor, Tim Kaine, currently the head of the Democratic National Committee.

But Democrats are taking what could be a damning indictment and trying to turn it into a badge of honor. Kaine said in a statement that the audit shows his "tight-fisted" polices helped VDOT weather the financial crisis. And State Senator Dave Marsden, a Democrat from Northern Virginia, questioned why McDonnell would want to reduce VDOT's reserve fund when that money gets used for emergencies like blizzards, hurricanes, etc.

So, to recap: McDonnell, a Republican, wants to spend money faster and is criticizing Democrats for being too fiscally timid. Democrats, meanwhile, are criticizing McDonnell for being a spendthrift. Got it?

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