Va. Governor Proposes Transportation Tax Hikes

By Evan Moore | July 7, 2008 | 8:33pm EDT

( - Facing a $1 billion shortfall in state transportation funding, Virginia Gov. Tim Kaine has proposed a regional increase in the state tax on car sales and additional hikes in state automobile registration fees and other taxes.

The governor said the money would pay for needed maintenance on roads and bridges that are part of a transportation infrastructure already strained to the limit by explosive population growth in the Northern Virginia suburbs surrounding Washington, D.C., and in the state's Hampton Roads region.

"This plan will improve safety, it will provide relief to the two most congested parts of Virginia and it will provide a change in choices for commuters," the first-term Democrat said Monday.

Under the governor's proposal, the statewide motor vehicles sales tax would rise to 4 percent, and the state's annual statewide car registration fee would go up by $10 per car. The retail sales tax in the cities and counties that comprise Northern Virginia and Hampton Roads would also rise by 1 percent - and a tax on home sales would increase 25 cents on every $100 of value.

Though Kaine avoided proposing a hike in the state's gas tax, Virginia Republicans nevertheless voiced strong opposition to the governor's plan.

"(I)t is unfortunate that the governor's plan relies on regressive taxes that place a disproportionate burden on lower- and middle-class citizens," said state Attorney General Bob McDonnell, the top Republican officeholder. "This is not the way to improve transportation in Virginia."

McDonnell accused the governor of ignoring action the Legislature took in 2007 dramatically increasing levels of transportation funding.

"The General Assembly passed bipartisan legislation that provided for the largest infusion of new statewide funding for transportation in 22 years, and did so without a statewide tax increase," he said.

Abuser Fees, Regional Taxing and Budget Cuts

The 2007 bill, which Kaine signed into law, created "abuser fees" -- surcharges levied on the fines of traffic scofflaws - and new regional transportation authorities that had the ability to tax.

"Remarkably, today we hear almost nothing from the governor about what that plan accomplished," McDonnell said.

However, an uproar over traffic fines running $1,000 or more prompted the Legislature to repeal the abuser fees, and in February of this year, the state Supreme Court declared the regional transportation authorities taxation power unconstitutional.

Justices unanimously agreed with a suit filed by Del. Bob Marshall, a Republican from Manassas, which argued that the state could not give local authorities the right to tax - a power, it said, that belongs only to the state Legislature.

In an interview with Cybercast News Service , Gordon Hickey, the governor's press secretary, said Kaine rejects any further efforts to place the responsibility for tax hikes on local and regional officials, his spokesman said.

"One of the lessons that we've learned is that the Legislature needs to deal with the problem," he said. "They can't push the problem off on localities. It's a statewide issue, and it needs to be dealt with by statewide officials."

Hickey laid the blame for the tax increase on a rapid increase in the population of Northern Virginia and Hampton Roads.

"Northern Virginia is growing exponentially, and Hampton Roads is growing, as well. The rest of the state's transportation needs have been neglected," said Hickey. "As time goes on, that neglect sort of builds up, and something needs to be done."

Ray Wotring, executive director of the conservative Virginia Club for Growth, agreed that rapid growth has helped spur the transportation crisis. But it wasn't the only factor that created the shortfall, he said.

"Spending is where [the problem is]," Wotring told Cybercast News Service .

Wotring pointed to examples of what he called wasteful state spending in recently approved budgets, including renovations to the state General Assembly and the purchase of a new plane for the governor.

"In this last budget alone, you've got excessive amounts of waste. ... There's no need to talk about taxes when we refuse to address the issue of spending, which is (at) ridiculous (levels) in Virginia."

McDonnell, meanwhile, said Kaine was wrong to paint "the picture of an empty bank."

"State spending has increased 40 percent over the past 6 years," he said. "That averages out to be $3,369 per Virginia household. In the past 10 years the state budget has doubled."

Kaine has called for a special session of the Virginia General Assembly, beginning June 23, to address the transportation issue.

His plan is the latest in a series of initiatives to address the Commonwealth's transportation funding woes.

In 2002, during the administration of Democratic Gov. Mark Warner, the Republican-led General Assembly referred the issue of regional taxation to a voter referendum, and it was defeated. In 2004, Warner urged, and the Legislature passed, tax increases to pay for a projected general budget shortfall -- a shortfall that did not materialize when revenue returns came in.

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