House Speaker William J. Howell says tolls on existing Virginia highways and the state tax on diesel fuel for cars are negotiable parts of Gov. Bob McDonnell’s plan to raise money for transportation, but the substitution of a higher sales tax to replace the state tax on gasoline probably isn’t.
Howell, R-Stafford, will introduce the legislation today on behalf of the governor, who wants Virginia to become the first state in the country to eliminate the gas tax and replace its revenue through an increase in the sales tax.
“I’m not sure that’s open to negotiation,” he said in an interview Thursday.
But the speaker said other parts of the bill, including McDonnell’s proposal to impose tolls on Interstate 95 in Sussex County without General Assembly consent, could change as the measure proceeds through the legislative process.
“I think it’s fair to say that everything is open to discussion,” he said, adding that tolls on I-95 and other existing state highways “are a different breed of animal” than those imposed to pay for new projects under the Public-Private Transportation Act.
Howell said the administration recognizes “an equity problem” in continuing a tax on diesel fuel for cars while eliminating the tax on gasoline for cars.
“We’re trying to do something on that,” he said.
The plan would continue the tax on diesel fuel for trucks.
The proposal that Howell will carry on behalf of the governor came under an intensified attack Thursday by anti-tax advocate Grover Norquist, who called the plan “a massive $1.22 billion tax increase that should be defeated by the General Assembly.”
Norquist, president of Americans for Tax Reform, also blamed a trio of Republican senators for undermining previous attempts by McDonnell to address state transportation funding without raising taxes.
In a letter to legislators, he singled out Sen. John Watkins, R-Powhatan; Senate Majority Leader Thomas K. Norment Jr., R-James City; and Sen. Frank W. Wagner, R-Virginia Beach, as “the culprits that have put Virginia in the transportation crisis it is currently enduring.”
Watkins has introduced legislation that would raise at least $734 million for transportation by increasing the wholesale tax on gasoline, reducing income tax rates for lower-earning Virginians, and offsetting the income tax cuts by eliminating tax credits and sales tax exemptions. His plan would result in an estimated increase at the pump of 14 cents a gallon.
Howell said Thursday that Watkins’ plan has no chance of success in the House.
“I don’t think so,” the speaker said. “We rejected proposals like that in the past,” and he does not see a different outcome now.
Senate Minority Leader Richard L. Saslaw, D-Fairfax, laid out a proposal this week that would boost the gas tax by 10 cents a gallon over two years, index the tax to inflation, and raise the sales tax by 1 percentage point to generate additional money for education as well as road maintenance.
McDonnell’s plan would raise an estimated $3.2 billion over five years, primarily by boosting the state and local sales tax 0.8 percent per $1 and drawing on the additional money generated for the state’s general fund budget.
The plan also would rely on additional revenue on Internet sales under a proposal pending in Congress that Norquist attacked Thursday.
Howell dismissed criticism, especially by Democrats, that his bill would divert money from other public services to pay for transportation, and end the state’s long tradition of funding transportation through user fees on fuel.
Howell said the governor’s approach is no different than using revenue for K-12 education from taxpayers who do not have children in public schools.
“Everybody in Virginia gets a benefit from having a good transportation infrastructure,” he said.
The speaker also challenged assertions that eliminating the gas tax would deprive the state of a significant amount of revenue from out-of-state motorists. Watkins’ proposal assumes that 30 percent of fuel tax revenue comes from out-of-state drivers, while state transportation officials estimate that out-of-state motorists account for 9 percent of mileage by cars.
The amount of gas tax lost from out-of-state drivers and the amount of sales tax gained from their purchases in Virginia is “a wash,” he said.
Watkins said the 30 percent estimate includes out-of-state trucks.
He shrugged off Norquist’s criticism Thursday, as well as Howell’s position that eliminating the gas tax is non-negotiable.
“I’m not going to draw lines in the sand,” he said. “We have a problem in Virginia that needs a solution. I am approaching it from the standpoint that everything’s on the table.”