FUNDING: Va. passes revolutionary transportation funding plan

Major threat averted in final hour as Senate approves $3.5 billion measure

Funding News The Washington Post February 25, 2013
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When Virginia State Democrats launched a threat at Gov. Robert McDonnell, a blistering tone quickly turned into a response coated in aloe vera. McDonnell wrote a scathing letter on his reluctance to expand the federal and state Medicaid program because of growing costs, but once liberal politicians in the Senate balked and targeted McDonnell’s revolutionary $3.5 billion transportation plan, conditions quickly soothed.


McDonnell promised to expand Medicaid, and the Senate followed by passing the highway-funding package on the last day of the state legislature’s 46-day gathering. The plan replaces the state’s 17.5-cents-a-gallon gas tax with a 3.5% wholesale tax on motor fuels that will keep pace with the economy and inflation.


“This isn’t any bill, this is the only bill, and we did not reach this decision lightly without hundreds of hours of anguish and numbers crunching,” said Senate Majority Leader Thomas Norment Jr. “It is the only solution we could come up with.”


The solution also has other funding-generating mechanisms. The deal’s major component boosts the sales tax on nonfood merchandise from 5% to 5.3% and gives a bigger piece of existing state revenue (about $200 million a year) to transportation. It also creates a regional funding mechanism that boosts the sales tax to 6% in northern Virginia and Hampton Roads, and requires those funds to be spent only on transportation projects in those areas.

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