House to consider tax plans in two weeks

By Tara Donaldson

By Tara Slate Donaldson

Times-Democrat Staff Writer

The full House of Delegates will vote on two competing tax proposals in two weeks when legislators return to the Capitol. The first is the much-heralded gas tax increase sponsored by Fairfax Sen. Dick Saslaw (D-35th), which is likely to be rejected.

The second is a last-minute compromise orchestrated in part by Springfield Delegate Dave Albo (R-42nd), Centreville Delegate Tim Hugo (R-40th) and Herndon Delegate Tom Rust (R-86th).

The Senate plan would raise taxes and fees statewide to pay for transportation improvements but it also includes additional increases for Northern Virginia and Hampton Roads to fund local projects.

The House compromise features only local tax increases in Northern Virginia and Hampton Roads; it does not contain any statewide funds.

While the Senate plan is expected to meet its death in the House, the outcome of the House proposal is not yet known because the bill was introduced late Wednesday night and as of Thursday, most members had not yet seen it.

The Senate plan

On Wednesday, the Senate approved Saslaw’s tax plan on a 21-16 party-line vote. Thursday morning, a House committee voted to send it to the House floor so the entire House can debate and vote on it. However, the committee’s vote to send the bill on does not signal support; many of the Republicans who voted to bring the bill to the floor said they plan to vote against it.

Many House Republicans have instead supported plans to audit VDOT and other state agencies, using the cost savings to fund transportation.

Democrats have responded that while they don’t necessarily oppose audits, the cost savings won’t be anywhere near enough to fund hundreds of millions of dollars worth of transportation needs each year.

“I don’t know how you solve transportation problems of the magnitude we have in this state with no money,” Saslaw said on Wednesday.

Saslaw’s tax increase package includes a 1-cent-per-gallon gas tax increase each year for the next six years, a ¼-percent increase in the sales tax and a ½-percent titling tax on car sales.

He estimated that the gas tax hike would mean the average driver pays an extra $7.50 each year to fuel up.

To offset the extra pain at the pump, Saslaw’s plan would remove a ½-percent sales tax on food, which he said would save a family of four about $50 a year.

The Saslaw plan also includes regional packages for Northern Virginia and Hampton Roads. Northern Virginia residents would pay an extra ½-percent sales tax, a 40-cent increase in the grantor’s tax and an additional $5 per night on hotel rooms. That package would raise $340 million per year for Northern Virginia projects, Saslaw said. Hampton Roads residents would pay similar tax increases for their road projects.

“You’ve got to raise money,” he told the House Rules Committee on Thursday. “You’re going to have to gore somebody’s ox.”

House Majority Leader Morgan Griffith (R-8th), asked his fellow committee members Thursday to advance Saslaw’s bill to the House floor but without adding the committee’s seal of approval.

“It is the only vehicle we have that appears to have a chance of getting out of the Senate,” he said.

The House plan

But that was before Newport News Delegate Phil Hamilton (R-93rd) stepped forward. Hamilton is the chief sponsor of the compromise bill, though Albo, Hugo and Rust worked out the part of the deal that involves Northern Virginia.

The plan does not include any statewide taxes or solutions for the state’s transportation budget shortfall. Instead, it raises taxes and fees in Hampton Roads and Northern Virginia to pay for road projects in those areas only.

The bill is patterned after a similar plan that was adopted by the General Assembly last year but later vetoed by the Virginia Supreme Court. The court ruled the bill unconstitutional because it did not directly levy taxes but instead gave taxing power to the Northern Virginia Transportation Authority, an unelected body.

On Thursday, Albo said the current version of the bill includes an initial $100 fee for Northern Virginia residents applying for a driver’s license. Sixteen- and 17-year-olds who pass a safe driving class will be exempt. The plan also includes a 2 percent car rental tax in Northern Virginia.

In addition, Northern Virginia localities will have the option of increasing the grantor’s tax on home sales by 40 cents and of levying a 2-percent hotel tax.

“This has been a lot of work and a lot of compromise. This is the best I can get,” Albo said, adding later that the plan requires major concessions from all parties because it’s not what anyone had hoped for.

“This, in my opinion, is the only thing at the end of the day that’s got any chance of getting any money to Northern Virginia,” he said.

The bill’s fate is uncertain. House Rules Committee members voted on Thursday to send the bill to the House floor without a recommendation – the same action they took with Saslaw’s bill minutes earlier.

It appears as though the Republican-dominated House may pass some version of the bill but that the Democratically-controlled Senate will not.

Secretary of Transportation Pierce Homer did not speculate on whether Gov. Tim Kaine (D) would sign the measure but said the bill’s lack of a statewide solution is a major problem.

Another sticking point in the bill is a provision that would give Hampton Roads an extra share of transportation money – up to $250 million, from the state’s General Fund. That’s money that’s currently being used for schools, Medicaid and other projects around the state and the Senate Finance Committee already soundly rejected that idea in a different bill earlier in the week.

The Kaine plan

The other dominant tax plan, which was championed by the governor, was officially declared dead on Thursday morning.

Kaine’s plan would have raised the annual vehicle registration fee, the tax on car sales and the grantor’s tax to fund statewide road construction and alternative modes of transportation. The plan also included 1-percent sales tax increases in Northern Virginia and Hampton Roads to pay for regional transportation projects.

But the governor’s plan was met with hostility from the get-go. No one sponsored the bill in the Senate, which favored Saslaw’s plan instead. In the House, the bill was carried by Minority Leader Ward Armstrong (D-10th) but it had little support, even from fellow Democrats.

On Thursday morning, the same committee that advanced Saslaw’s bill quickly dispatched the Kaine proposal, killing it without debate.

Coming up

Legislators are taking next week off and will return to the Capitol on Wednesday, July 9, to consider the House and Senate plans, along with a variety of other smaller proposals.