Creigh Deeds: Session update
The 2013 Session of the General Assembly began on an unseasonably mild January 9. This is the short session, meaning that the legislature will be in session only 46 days. Adjournment is scheduled for the 23rd of February. We are charged with adopting amendments to the 2012 – 2014 budget and dealing with over 2000 bills. Needless to say, it will be a busy session. It has been my experience that delegates and senators try to do as much work in a short session as in the longer 60-day session.
This year’s session will not lack big issues. Chief among them is whether we lift the 31 year moratorium on uranium mining. The moratorium was put in place in 1982, following a 1979 discovery of a large uranium deposit in Pittsylvania County. Geologic surveys have shown that uranium deposits exist throughout the Piedmont of Virginia. A group of Southside businessmen interested in mining uranium are spearheading an effort this year to lift the moratorium. The introduced bill is limited to the Pittsylvania County deposit, but as uranium exists elsewhere in the Commonwealth, it will certainly have a precedential value and be of interest to all Virginians. I remain concerned about the proposal to lift the moratorium, and you can expect I will be paying close attention as the legislation is debated.
Transportation remains a big issue for Virginia. Because state law requires that we cover maintenance costs before we build, the state dollars designated for construction have been flowing in ever increasing amounts to the maintenance fund. The dwindling construction dollars are used to obtain federal matching funds, which are derived from the federal gas tax we pay at the pump. The construction fund is expected to be depleted in just a matter of years, which means we will forfeit Virginia’s share of federal gas taxes. Already, the significant construction projects for the past several years have been funded either by federal stimulus dollars or through bonded indebtedness. I expect a number of bills to be filed in the area of transportation. Historically, very few bills of significance, especially those that come with a price tag, have been adopted by the General Assembly in a state election year.
On the eve of this session, the Governor made a dramatic proposal to raise new money for transportation. The Governor’s plan would:
eliminate the gas tax and replace it with a 0.8 percent sales tax increase
divert 0.25 percent of current sales tax revenue from the General Fund to the Transportation Trust Fund (TTF)
take advantage of a proposed change in federal law to allow states to tax out-of-state internet sales to further supplement the coffers of the TTF
establish a $15 annual vehicle registration fee to support rail
create a $100 fee for alternative fuel vehicles
Altogether, he says that his plan will generate over $3.2 billion for transportation over the next five years. This sounds like a significant investment.
The gas tax is projected to generate $3.5 billion by FY 2018. Currently, about a third of that is paid by non-residents, because it is paid by those who buy gasoline and use Virginia highways. The new sales tax revenue generated by the .8 percent increase is almost $5 billion. Less than one-fifth of that revenue would come from non-residents. So, to a large extent, the bulk of the revenue in this most significant portion of the Governor’s plan would be paid for by residents of the Commonwealth of Virginia.
The $811 million in additional sales tax money diverted from the General Fund would come from other core services, such as public education, higher education, public health, and public safety. The Governor would generate a billion dollars for the TTF and about $138 million for localities by taxing all internet sales. Unfortunately, the federal legislation to enable Virginia to do this has been defeated in the U.S. Congress before. If Congress fails to pass this legislation, a third of the Governor’s new dollars evaporate.
The vehicle registration fee would generate about $545 million. Many people have been concerned that alternative fuel vehicles do not contribute their fair share to the use of the highways. However, the alternative fuel vehicles only amount to 1.2 percent of registered vehicles in Virginia. This fee would generate about $67 million for mass transit. Certainly any transportation plan needs to encompass more than just our highways, and I support the Governor’s effort to identify dedicated funding sources for transit and rail.
The Governor’s proposal will compete with bills introduced by other legislators, and it is difficult to know at this point which ideas will advance. But it is important to understand that the Governor, albeit very late in the process, has put significant ideas before the General Assembly. I certainly cannot support the idea of putting the prime responsibility for funding transportation on the consumer rather than on those who use the highways. In my view, the sales tax is a regressive tax, and I do not believe it is a good idea to increase it for transportation. My position remains unchanged with respect to taking money out of the General Fund and away from other core services for transportation.
However, I applaud the Governor for coming up with a series of ideas. It is my hope that we can work together to develop a long-term, sustainable plan for funding transportation. As I discussed in this column in past years, I honestly believe the future vitality of Virginia’s economy rests on smart investments in transportation.
Creigh Deeds is a member of the Virginia State Senate.