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AASHTO Journal

Virginia Gov. Reveals Proposal to Eliminate <br>Gas Tax, Fund Transportation through Sales Tax

A new proposal by Virginia Governor Bob McDonnell to replace the state's gas tax and fund transportation through a 0.8 percent sales tax increase was unveiled Tuesday. The proposal comes as a possible solution to a problem state transportation departments are experiencing all over the country: a decline in revenue from the gas tax, meaning less money for projects that are costing more.

McDonnell states that his plan, which would make Virginia the first state to eliminate the state gas tax, would bring in more than $3.1 billion in transportation funding for the state during the next five years. Currently, Virginia is facing a shortfall in funds for transportation maintenance and the state will need to transfer about $364 million from its construction budget to make up the difference in 2013. That number is only expected to go up with each passing year unless a solution is found culminating in 2019, when the state anticipates paying the same amount for construction as it does for maintenance (meaning it will then be primarily be working only to fix major problems, not building the necessary new infrastructure). McDonnell's plan would allow the state to keep up with transportation needs and fund both maintenance and new construction projects.

"This will be the single largest increase in dedicated funding for transportation in a generation, and will provide a true long-term sustainable and equitable solution to fund today's transportation needs and to meet the future demands for a safe, efficient, and economically viable transportation network," said Virginia Department of Transportation Secretary Sean Connaughton in a statement. "It will also end the unsustainable transfer of our funding for new transportation construction projects just to pay for maintenance. This crossover has taken more than $3.3 billion from construction projects to address maintenance deficits since 2002."

Upon his proposal introduction, McDonnell stressed the importance of transportation funding, and reiterated the problem that would exist if nothing is done.

"We simply cannot continue to do what we have always done and expect this problem to go away," McDonnell said. "The gas tax is a stagnant revenue source, and no changes to it will provide a reliable growth mechanism for transportation in the state. In short, if we stick to the same old means of funding transportation, we will find ourselves having the same debates and facing the same revenue shortfalls over and over again as inflation slowly eats away at the gas tax, cars get better mileage to meet CAFE standards and more alternative fuel vehicles hit the streets. Market forces clearly dictate that we have to change how we fund transportation. This is a math problem. The current revenue numbers do not add up to a safe, efficient, and sustainable transportation network. The time is now for an innovative and sustainable plan to meet our transportation needs and grow Virginia's economy."

The proposal now heads to the Virginia General Assembly, where it will be considered. If passed, the measure would become effective July 1. More information on McDonnell's proposal, including other changes in transportation funding, is available at bit.ly/VAsalestax. ​​​

1/11/2013
Questions regarding this article may be directed to editor@aashtojournal.org.