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General Assembly passes sweeping roads legislation

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Virginia will end gas tax and raise state sales tax to pay for millions in road work

Landmark News Service and Staff Reports

RICHMOND — The 2013 General Assembly achieved something on Feb. 23 that has eluded Virginia legislators for more than a quarter-century: a deal on a sweeping revenue package to raise hundreds of millions of dollars for state road needs.
In so doing, they delivered a potential legacy-shaping victory to Gov. Bob McDonnell, who swung for the fences going into his last full legislative session in office by pitching a broad plan to revamp how Virginia funds its transportation system.
But it didn’t come before several tense last-minute moments caused by political maneuvering on a Medicaid component of the separate state budget bill.
The road bill that the Senate passed last Saturday on a 25-15 vote, a day after the House advanced the measure 60-40, didn’t much resemble McDonnell’s initial proposal built on swapping the current gasoline tax for a higher sales tax.
The compromise legislation replaces the state’s 17.5-cents-per-gallon gasoline tax with wholesale taxes on gasoline and diesel, and raises the state’s sales tax rate to 5.3 percent from 5 percent, among other revenue-raising provisions.
It also boosts several regional taxes in Hampton Roads and Northern Virginia to generate extra money for priority road projects in those regions.
“This vote is an important moment for Virginia’s economy, Virginians’ quality of life and our political system,” McDonnell said after the bill passed the Senate. “We have demonstrated that, in Richmond, we cut the rhetoric and we get results for the people.”
The plan will raise $880 million a year by 2018, or $3.5 billion over five years.
Sen. Bill Carrico (R-Grayson County), said he voted for the transportation proposal because he believed it was in the best interests of the people of Southwestern Virginia.
It avoided a shift of transportation funds to Northern Virginia, he said, while at the same time the new revenue collected would not cost his constituents more to operate their vehicles.
The studies on the economic impacts on consumers found that an average driver could save $62.50 per year from the change to the gas tax, Carrico said. The 0.3 percent added to sales tax means a family of four making $40,000 a year will pay an extra $33 in taxes, according to the studies.
That amounts to a savings of $29 a year, under this scenario.
One change that snuck in at the end was the 1.3 percent titling tax on buying a new vehicle, Carrico said. That would add $161 to the purchase price. If the consumer pays off the vehicle as a loan spread out over five years, that would break down to $3.70 extra a month.
Serving on the transportation subcommittee in the House for 12 years, Carrico watched as Northern Virginia legislators either tried to shift transportation their way or change the Commonwealth Transportation Board to favor them. That would have happened again, if the General Assembly hadn’t approved sustainable funding for transportation. He wanted to make sure that the road construction funds for Southwest Virginia projects were protected.
As a bonus, the transportation proposal added a method for raising another $40 million for U.S. 58 projects, Carrico said.
“The benefit outweighs the cost and for most people, it’s a cost savings,” he summed up.

Medicaid Discord
Legislators left a vote on Virginia’s two-year, $87 billion budget, with its disputed Medicaid-expansion language, for the scheduled last day of the session.
The night of Feb. 22, Senate Democrats delayed a vote on the transportation bill as they awaited a clear signal from McDonnell that he’d accept the amendment to proceed on a path toward expanding the Medicaid program to include 250,000 to 400,000 more Virginians.
Medicaid discord threatened again to derail things the next day, when an advisory opinion from Attorney General Ken Cuccinelli made the rounds in the morning. It was sought in response to a provision in the budget bill that called for creation of a special commission with 12 members, 10 from the legislature, to monitor reforms to the Medicaid program before expansion occurs.
Cuccinelli opined that the legislature can’t delegate its authority on expansion to a “subset of the members of the General Assembly,” as was planned. His memo said the Virginia Constitution requires the affirmative vote of House and Senate members — at least 51 in the House and 21 in the Senate — to authorize budgetary bills and the like.
The budget bill approved later in the day passed the House 83-17 and the Senate 31-8, although 12 GOP senators later took a formal vote registering their displeasure about the Medicaid provision.
Legislative negotiators and staffers scrambled at midday to revise the Medicaid language in response to Cuccinelli’s opinion. Revisions adopted say Virginia shall proceed with expansion if certain conditions are met, namely federal approval of Medicaid reforms that Virginia wants. Both Democrats and Republicans claimed that they prevailed on that one.

Dissent in Senate
Although the legislature worked around Cuccinelli’s concerns — his opinions aren’t legally binding — Medicaid expansion is far from guaranteed in Virginia. Minutes after the budget vote, Republican Del. Bob Marshall of Prince William County vowed to pursue litigation on the basis of the constitutional questions that Cuccinelli raised.
Democrats gave ground on their opposition to diversion of $200 million from the general fund for roads, something McDonnell and Republicans wanted, while Republicans agreed to a tax increase that was hard for them to swallow.
Some Republicans didn’t, on the grounds that it would further financially burden citizens. Senators Ralph Smith (R-Bedford County) and Bill Stanley (R-Franklin County), both of who represent parts of Carroll County, voted against the budget.
“In a time when their dollar is not going as far as it once did, in a time when unemployment is higher than we would like it to be,” Smith said, “the General Assembly is saying: ‘Well, you make out the best way you can but we’re going to take a bigger chunk of your wages.’ “