Kaine Asks Virginia Legislators to Hike Taxes by $1B for Roads

Mon May 19, 2008 - Southeast Edition
CEG



RICHMOND, Va. (AP) Gov. Tim Kaine asked legislators to boost state taxes by about $1 billion a year to improve roads May 12, but Republican lawmakers said no.

Kaine proposed increasing the sales tax on cars from 3 percent to 4 percent and boosting the yearly registration fee from $39 to $49. He also proposes an increase in the tax assessed on home sellers statewide.

All proceeds from the “titling tax” on car sales and the $10 annual registration fee increase would be reserved solely for the upkeep and repair of the state’s nearly 58,000 mi. (93,300 km) of roads and bridges. It would boost the sale of a $20,000 car by $200.

The Democratic governor said maintenance costs each year are rocketing farther beyond money available for it and the deficit is covered by money allotted for new road projects. He said most of the state’s bridges are 40 years old or more, and at one point recalled the Minneapolis bridge collapse last year that killed 13 people.

“I’m saying let’s just make it plain: that money’s going into maintenance,” he said, noting that the state this year will detour about $375 million from construction to maintenance.

“Filling the maintenance deficit is a precondition,” he said.

For the state’s congested and traffic strangled economic engines of northern Virginia and Hampton Roads, Kaine proposes boosting the sales tax from 5 cents on the dollar to 6 cents except for food and medicine.

“This is not just a regional problem. Those two regions are the most economically powerful in the state,” Kaine said in a news conference. “It’s bad for Virginia if congestion is allowed to persist in those regions.”

Kaine’s regional sales tax boosts would replace a grab bag of fees and taxes the General Assembly approved a year ago that was voided by a unanimous state Supreme Court on Feb. 29. The court’s strongly worded opinion upbraided the legislature for unconstitutionally allowing unelected boards in northern Virginia and Hampton Roads to impose some of the taxes.

Kaine also proposes eliminating the option both regions were given to increase income taxes locally to generate revenue for transportation.

The “grantor’s tax” on home sales would increase the cost of a $200,000 home sale by $500 statewide and generate about $142 million a year, mostly for rail and mass transit.

With gasoline topping $3.70 a gallon and setting new price records daily, Kaine ruled out an increase in the state’s 17.5 cents-per-gallon gasoline tax.

He also said the legislation his office still is drafting will include a provision to ensure that none of the new money is diverted to other needs in tight budget times. If any of the new revenue is used for another purpose, Kaine said, the tax automatically expires.

Kaine also would abolish the Hampton Roads Transportation Authority, a legislative creation so widely reviled in the Tidewater region that it dominated all issues in last year’s legislative races there.

But just minutes after Kaine outlined his proposals for the first time, House Republican leaders rejected it.

“It’s tax, tax and more tax,” said House Majority Leader H. Morgan Griffith, R-Salem.

Griffith slammed the statewide plan as a crippling blow for already stagnant auto sales, an impossible burden on the housing sector with plunging real estate values and a sharp downturn in sales. It offers a double burden for Hampton Roads and suburban Washington, D.C., by adding a penny to most retail transactions.

The titling tax and the grantor’s tax will draw the fire of some of the most potent lobbying groups on Capitol Square, particularly the auto dealers’ and Realtors’ associations.

Del. M. Kirkland Cox, R-Colonial Heights, for weeks has questioned the administration’s projections that the maintenance deficit would climb to $600 million by 2014 and eventually devour all money for new construction.

“They’re taking recessionary numbers and extrapolating that over the next six to seven years. We’ve heard all of this before and I don’t believe that’s going to happen,” Cox said.

Griffith and Cox support reprising the same mix of regional taxes and fees approved a year ago but allowing localities to impose them, not the unelected regional authorities the court struck down.

Kaine’s hourlong news conference and the Republicans’ rebuttal crystallized the dispute between the positions of the two that will be argued forcefully statewide over the next five weeks.

Cox and Griffith, backed by Speaker William J. Howell, steadfastly reject the statewide maintenance levy that Kaine flatly called “a precondition” for any successful legislation.

“If you don’t fix the maintenance deficit, it makes the regional plans a sham,” he said.

It’s a battle cry Kaine will begin field testing at a series of town hall-type forums he will hold statewide to rouse public support for his road reforms heading into the June 23 special legislative session.