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Gov. Kaine Readies for Transportation Funding Battle

Mon April 14, 2008 - Southeast Edition

ASHBURN, Va. (AP) Gov. Timothy M. Kaine knows this movie by heart: Virginia lawmakers fight over funding for new roads on and off for months before calling it quits and heading home frustrated and empty-handed.

He didn’t enjoy the way the long-running legislative melodrama ended in 2006, and he’s not sure the 2008 remake will be any better, but the governor is nothing if not an optimist.

Kaine will propose legislation soon that not only restores two regional transportation funding districts voided by the state Supreme Court but also covers growing cost overruns for highway maintenance statewide.

In an Associated Press interview, he said he will reconvene the House and Senate in May or June to consider it, and he won’t settle for anything that doesn’t include enough money to keep pace with increasing road repair and upkeep costs.

“It needs to be simple, it needs to fix statewide problems and it needs to be sufficient, and that’s kind of where I was when I started this in ’06,” he said.

Kaine said he might revive an idea he offered two years ago: boosting the sales tax on automobiles from 3 percent to 5 percent to match the tax on all other retail purchases.

“I’ve always thought equalizing the sales tax on autos is the way to go,” Kaine said.

He would not commit to a veto if the General Assembly restructures the defunct Hampton Roads and northern Virginia authorities and stops there.

“Regional-only is not sufficient,” he said emphatically and repeatedly during a trip to a town hall meeting in Loudoun County on March 31.

“I’m not going to be part of a kind of ’we’ve-done-it-halfway’ approach, trying to stretch a little bit over a lot. We did that and it didn’t work,” he said.

That puts him at odds with Republican legislative leaders who want to restructure regional taxing authorities in Hampton Roads and northern Virginia created to generate money exclusively for highway projects in those areas.

Together, the two regional taxing authorities oversaw a menu of taxes and fees designed to generate about $640 million annually. They were at the heart of the 2007 transportation law, the first major boost in road funding in a generation. In February, the court ruled the regional arrangements unconstitutional because unelected boards collected the levies.

Kaine said he agrees with Republican House Speaker William J. Howell that there is urgency to devising new, constitutional regional funding systems, but Kaine and his Democratic allies and the Republicans differ on how.

The Republicans prefer that local governments within a transportation region impose the taxes. The Democrats say the legislature should use its taxing authority and not shift the political burden of raising taxes onto city and county governments. But if the state imposes the taxes, Republican lawmakers note, it can reroute the money as the legislature has done with other transportation revenues to keep the state budget balanced.

There’s no agreement, however, over how, when or even whether to add a statewide tax for state maintenance needs.

Kaine and the Democrats contend that the costs of maintaining the state’s nearly 70,000 mi. (112,650 km) of highway will consume all money available for new road construction by 2015. Even the special taxing districts that would fund projects to relieve gridlock in the state’s most congested regions would eventually be bled dry, Kaine said.

This year, maintenance will cost $260 million more than the $1.25 billion in revenues reserved for it. That overrun, known as the “maintenance deficit,” is more than counties received from the state for new local roads this year. By law, maintenance deficits are taken out of cash available for new road construction. Next year, the deficit will top $388 million, and by 2014 it will approach $600 million, according to a Department of Transportation estimate.

Last year’s transportation law included punitive surcharges on abusive drivers in hopes they would make the highways safer and generate about $65 million annually for maintenance. The fees, limited to Virginia residents, failed on both counts and were so unpopular that its expedited repeal took effect in late March.

Kaine said he also is listening to other ideas for covering the maintenance shortfall. Among them are a boost in the 17.5 cents-per-gallon fuel tax or a state gasoline sales tax. For two weeks, Kaine has been privately prospecting with Democratic and Republican legislative leaders for the makings of a compromise with no signs of success.

House Republican Whip Kirk Cox of Colonial Heights said he found the administration’s maintenance deficit forecasts unduly dire and dubious. Howell called it a “perceived funding problem” and questioned whether it was a Democratic ploy to concoct an issue they can use against GOP House candidates in the 2009 legislative elections.

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