Richmond Update: The Transportation Bill
It's "Crossover" day, which means that each Chamber of the Virginia legislature has to complete all work on its own bills by midnight tonight.
Yesterday and today, the House of Delegates held marathon sessions to debate and vote on dozens of bills, including the most controversial issues of this year. The one bill that continues to attract the most public attention is Governor Bob McDonnell's transportation funding bill.
GOVERNOR'S TRANSPORTATION BILL
House Bill 2313 was introduced by Speaker of the House Bill Howell, which is a clear signal to everyone that the transportation bill is a priority for the Governor and the Republican Majority in the House. As a tradition, the Speaker of the House does not file bills under his name, as he needs to oversee every aspect of the Chamber's operations instead of spending a lot of time on his own legislative agenda.
Following two intense days of debates and amendments, the House today voted to approve the Speaker's bill on a 53-46 vote, with one member missing who would have voted for it. Among those who supported the bill were four Democrats, while 18 Republicans joined the remaining Democrats in opposition.
I voted against this bill today and I also voted against the floor substitute offered on the floor last night which became the basis for this bill. However, because I voted for a similar bill last week in the House Finance Committee, some have asked me why I voted differently on the floor today.
I realize the following description may be way too long, but given the attention this bill is receiving, I thought I would take some time to explain the substance of various pieces in the legislative package as well my thoughts on the policies.
1. The Gasoline Tax
The centerpiece of House Bill 2313 is the elimination of the current 17.5 cents per gallon motor fuels tax (for passenger cars but not for diesel used by heavy trucks).
Currently, every state and the federal government collect taxes on each gallon of gas we buy, and apply this revenue to fund transportation needs. With this bill, Governor McDonnell would make Virginia become the first state in the nation to get rid of this tax.
His "policy" reason for the proposal is that he believes gas tax is a declining revenue source due to increasing mileage (CAFE standards) in modern cars and the popularity of alternative fuel vehicles like hybrids and electric cars that use less gas. By continuing to rely on this source, the Governor believes that we cannot pay for all of the transportation needs that are outpacing the revenue received.
The Governor additionally believes that if we get rid of this tax, consumers should see a "significant break in the price of gasoline at the pumps."
I completely disagree with Governor McDonnell on this proposal, and I have told him so personally.
While I agree that gas tax is a declining source of revenue (thanks to President Obama's action to require increased CAFE standards for cars!), this tax is one of the very few user-fees that make sense to pay for our road repairs. Gas tax is the only stream of dedicated funds that we can rely on for transportation, so the Governor's proposal would be killing the goose that lays the golden egg.
Instead of getting rid of the gas tax, I believe we should increase it. Virginia's rate is the 40th lowest among states. Our 17.5 cents per gallon is less than the 23.5 cents that Maryland charges, or 20.5 cents in West Virginia or the whopping 38.9 cents per gallon charged by North Carolina.
Virginia last set the gas tax at 17.5 cent in 1986. It has not been touched since then. I support increasing the amount — either in cents or in percentages — and also indexing it to inflation so the amount would rise automatically depending on the economy.
2. Sales Tax Increase
In place of the lost revenues that would result by getting rid of the gas tax, Governor McDonnell would raise the sales tax by 0.8 cent from 5 to 5.8 cents per dollar, and apply the increase to pay for transportation maintenance.
Obviously, nobody likes to see their taxes increase and no politician wants to vote to raise taxes. However, if new revenues are needed to provide a core function of the government and we've exhausted all other options, than a tax increase could be necessary.
I don't have a philosophical or political problem with voting to increase the sales tax if this new revenue will indeed help fight our traffic congestion in Northern Virginia. But I do have a concern that this tax would be replacing the gas tax which is a dedicated stream of transportation revenue.
And I am also concerned that low income Virginians who might not own cars will have to pay more sales taxes when they won't be receiving a gas tax relief. A better trade for me would have been to keep the gas tax, and instead, get rid of the 2.5% tax on grocery store food that everyone — including low income Virginians — have to pay.
3. Dulles Metro Expansion
Currently, transportation receives 0.5 cent of every dollar in sales tax that the state collects. Governor's bill would divert an extra 0.25 cent from the sales tax to transportation, in addition to the new 0.8 cent sales tax increase, to ensure that a significant portion of the state's sales tax will be dedicated to transportation.
To sweeten the pot for Northern Virginia, Governor McDonnell proposes to apply the first $300 million collected from this shift in funds to pay for the Dulles Metrorail Extension Project. Naturally, this funding would help ensure that the Metro is completed on time and potentially keep the toll amounts to an affordable level.
My concern about this provision is that these moneys would be coming out of the state's General Fund which is the same pot used to fund our public schools and higher education, healthcare, public safety, environmental compliance and other core functions of government.
While transportation is important and is also a core function of government, the legislature decided long ago to create a separate "lock box" so that transportation could be funded out of a special Trust Fund that would not impact the General Fund. By diverting more money out of the General Fund to pay for traffic issues in addition to the funds in the Transportation Trust Fund, we would leave less for education and other priorities.
4. Vehicle Registration Fee
As a conservative Republican, Governor McDonnell has surprised many by not only proposing to increase the sales tax, but by also offering to increase fees to pay for transportation. He proposes to raise the vehicle registration fee by $15 per car, and dedicate the new funds to intercity passenger rail and transit.
I support this part of the Governor's bill as it would help offer mass transit and other public transportation options, especially in fast-growing population centers of Northern Virginia and Hampton Roads.
5. Alternative Fuel Vehicle Fee
Another fee that Governor McDonnell has proposed is not as positive for me. He wants to impose a new $100 fee for every alternative fuel vehicle to be placed into the Commonwealth Mass Transit Fund to help fund transit options.
While I applaud the Governor for his political courage to propose new fees, I believe this is a completely upside down approach to policymaking. Alternative fuel cars such as hybrids, electric, natural gas and clean diesel, are the types of innovations that will help our nation wean off of fossil fuels and lead us toward energy independence from overseas suppliers.
Yet, if a consumer chooses to invest in these environmentally-sensible vehicles, they should not be punished by our state. The Governor's proposal does exactly that, by imposing a new fee that owners of less fuel-efficient cars, minivans, SUVs and trucks would not have to pay.
6. Internet Sales Tax
Finally, the Governor's proposal anticipates millions of new revenues to be brought into Virginia to pay for transportation once Congress passes the "Marketplace Equity Act," which would allow states to collect out-of-state sales taxes on purchases made online.
Governor McDonnell's bill proposes to allocate potential revenues from this new legal authority to transportation, public education and local governments in a ratio, which could raise hundreds of millions of new funds for transportation.
My problem with this provision is that this is speculation at best as because this is phantom money we're talking about.
I happen to know a little bit about this issue as I spent several years working on this bill as a Congressional staffer. Based on my personal experiences and from discussions with experts who are working on this issue in Washington, DC, there is little chance that this bill will become law.
Here is how I summed up my view in a press interview about the inclusion of this far-fetched issue in the Governor's transportation package: "It's almost legislative malpractice for us to be relying on what Congress may or may not do to solve our transportation problems."
GOVERNOR'S BILL IN HOUSE FINANCE COMMITTEE
As one of 22 members of the House Finance Committee, I had the privilege of being able to debate and vote on House Bill 2313 before the other 78 Delegates. The bill as introduced was 38 pages long with extremely complex provisions and cross references to multiple code sections.
When we sat as the House Finance Committee, a substitute amendment was offered which made a few changes to the bill, but the basic outlines were the same as described above. Some of my Democratic and Republican colleagues had prepared amendments to improve the bill, such as keeping the gas tax in place and replacing the gas tax cut with a food tax cut.
Another amendment would have added a new provision to create a Northern Virginia taxing authority that would raise and spend transportation funds within our own region. Another amendment would have proposed a new wholesale tax for gasoline so that distributers of gas, instead of the end user (consumer) would pay for this tax.
I would have happily supported any of these amendments which I believe would raise more revenues for transportation in a sensible way and without creating the problems I mentioned above.
Unfortunately, the Chairman of the House Finance Committee ruled that all of these other amendments were not germane to the bill, so the only amendment that was accepted was the Committee substitute, which was nearly identical to the introduced bill.
However, the Chairman as well as the Speaker of the House who introduced bill committed to entertaining all of these amendments on the House floor once the bill was moved out of Committee.
When the bill was introduced, I told the Governor that I would keep an open mind and look for ways to make the bill better from my perspective.
That is why, although I opposed the bill on the substance, I voted to move the bill out of the Finance Committee and onto the House floor. I thought it was my duty to keep the process moving forward so that everyone in the House could weigh in with their concerns and have a robust debate with amendments being offered.
Yesterday and today, the full House — with all 100 Delegates present — had the opportunity to debate, amend and vote on the Governor's bill on the floor.
Through the process, a few minor amendments were made to improve the bill slightly, such as to strip out the hybrid fee and to add language that would allow for the consideration of a Northern Virginia taxing authority.
Even with these changes, however, my main concerns with the bill remained. That is why, when the vote was called to accept the substitute and to vote it out of the House, I voted against this bill.
House Bill 2313 is now before the State Senate, and it is unclear what will happen there.
Interestingly, however, late this evening the Senate was unable to vote out its version of the Governor's transportation bill from the Senate floor. Instead, the Senate debated two varying substitutes to the Governor's bill, but neither received enough votes to pass. Both Senate substitutes would have kept the gas tax intact, in opposition to the Governor's proposal.
Now that the House bill has survived but the two Senate bills have been blocked, it is anyone's guess as to how the process moves forward. We will know soon enough as we have only three more weeks left in this legislative session.
I will be sure to update you on all the details. In the meantime, please let me know if you have any questions about this or any other issue pending in Richmond.
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