A recipe for road relief?
Election-jittery legislators produce a bill that some local officials find hard to swallow

by Jessica Sabbath
for Virginia Business
April 2007

There’s no motivator quite like the threat of getting fired. Crippling traffic jams weren’t enough to persuade legislators to compromise on transportation funding. Last year’s 246-day, $250,000 session produced no results either. In the end — it took the political threat of the upcoming elections before the legislature would compromise.

After lengthy inner-party fighting and Republican losses in the gubernatorial and U.S. Senate races in 2005 and 2006, the GOP-controlled General Assembly brokered a transportation funding deal this year, which would borrow $2.5 billion for transportation and provide self-help plans for the state’s most crowded regions. The deal comes just months before all 140 seats of the General Assembly are up for election.

Political pandering and bantering began immediately after the bill passed. Its final form is uncertain until the April veto session. Yet, whatever course the bill does follow will certainly play a major role in the November elections. The following is a breakdown of the bill’s components and debates surrounding it.

Statewide portion
Speaker of the House of Delegates William J. Howell’s transportation bill includes accountability reform at the Virginia Department of Transportation, makes it easier for local governments to impose impact fees on new development, increases fines on reckless and intoxicated drivers and designates $500 million from the general fund surplus for one-time construction projects. The only statewide fee increase is a $10 annual increase in the annual vehicle registration fee. These are the easy parts of the bill.

More controversial is use of the general fund to pay back a suggested $2.5 billion debt for transportation projects. The debt would be paid with an annual $184 million contribution from the general fund that supports education, public safety and health-care programs. Proponents of the bill say that because $184 million equals about 1 percent of the entire general fund, the contribution will not affect spending on other programs.

Opponents argue that $184 million is no small number — an amount close to the state contribution for the state police or the combined general fund budgets for seven of Virginia’s colleges and universities. Legislators would be forced, opponents say, to choose repaying the debt over fully funding other core services during an economic downturn.

The statewide revenues would bring in an estimated $530 million to $623 million each year. Almost 30 percent of that money would go to debt service, 34 percent to maintenance and the remainder would be available for new construction. In addition, bond proceeds would bring in an additional $300 million a year, with the stipulation that 17.3 percent must be used for transit projects, 4.3 percent for the Rail Enhancement Fund and the rest on interstate and primary highway construction.

Northern Virginia regional plan
Local governments in nine Northern Virginia localities could raise $400 million for the region by passing a package of taxes and fees. They include a 2 percent hotel tax, a “congestion relief fee” of 40 cents per $100 of assessed value on homes sales, a 2 percent car rental increase, a commercial real estate assessment of 25 cents per $100 of assessed value and a $100 one-time new driver’s license application fee that would exclude teenagers.

The plan would require that 40 percent of the money be distributed to participating localities. The remaining 60 percent would go to the Northern Virginia Transportation Authority, which would be required each year to use the money to pay off debts and give $50 million to the Washington Metropolitan Area Transit Authority, $25 million to the Virginia Railway Express and $20 million eventually to the Dulles Corridor Metrorail Project.

Northern Virginia leaders railed against the plan. For instance, they complain that it shifts the state’s responsibility onto the localities, and they worry that the proposed increase in commercial real estate taxes could hurt their competitiveness.

Others question the fairness of asking for increased taxes in an area already considered a “donor” region for transportation dollars. Corey A. Stewart, chairman of the Prince William County Board of Supervisors, criticizes the state’s current funding formula for roads. Northern Virginia provides 40 percent of the state revenue, but receives only 17 percent of transportation funding. “It’s not only unfair to the residents who live here because the county is doing the state’s job, but then to penalize all businesses for a problem that was caused by the state is just so inherently unfair that it’s insulting,” says Stewart.

Hampton Roads regional plan
Seven of the region’s 12 localities would need to pass the bill to create the Hampton Roads Transportation Authority. Local governments could pass a package of taxes and fees to raise about $200 million a year for the region’s transportation network. That amount includes a 2 percent increase in the regional gas tax, $10 annual increase on license and car inspection fees, 2 percent rental car fee, 10-cent fee per $100 of assessed value on commercial real estate, 1 percent initial vehicle registration fee and a 5 percent tax increase on car repairs.

The authority would be required to use the money for projects identified in the Hampton Roads 2030 Regional Transportation plan. Del. Chris S. Jones, R-Suffolk, a chief engineer of the Hampton Roads plan, says these projects are the region’s most important. “These have been the projects for years that [local governments] have deemed as being critical to the region and its economic competitiveness,” says Jones.