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Virginia Gov. McDonnell proposes transportation funding overhaul, gas tax elimination

Yesterday, Virginia Gov. Bob McDonnell unveiled a major proposal to fund transportation, which included a plan to eliminate the state's gas tax and instead create a new transportation-dedicated sales tax.

The plan would provide more than $3.1 billion in transportation funding over the next five years, tie transportation to economic growth and replace the gas tax with a 0.8 percent increase in the state's sales tax dedicated to transportation funding, according to a press release issued by McDonnell's office.

McDonnell's proposal also calls for transit funding reform. The proposal would change the current transit funding formula, which is based on agencies' operating costs, to one based half on a transit agency's size and half on performance factors.

In addition, the governor's plan would improve the Port of Virginia's "competitiveness" by eliminating "bureaucratic hurdles" to enable it to compete with private companies and act as a catalyst for economic development, the release states.

If approved as proposed, Virginia would become the first state to eliminate its tax on gasoline. McDonnell's proposal allocates additional general funds to transportation,  capitalizes on revenue being lost on out-of-state sales, and creates a long-term revenue source to fund the state's highway, rail and transit needs, the release states.

Currently, Virginia has a transportation maintenance funding shortfall, which means that in fiscal-year 2013, $364 million must be transferred from the state's construction account to pay for road maintenance. That transfer amount is projected to grow to $500 million by FY2019 unless new funding is provided. McDonnell's plan would fix the problem by generating $844 million in new funding per year for transportation by FY2018, and would provide an additional $1.8 billion for highway construction, administration officials said in the release.

"Declining funds for infrastructure maintenance, stagnant motor fuels tax revenues, increased demand for transit and passenger rail and the growing cost of major infrastructure projects necessitate enhancing and restructuring the Commonwealth's transportation program and the way it is funded," McDonnell said.

Currently, Virginia's gas tax is 17.5 cents per gallon. The motor fuels tax on diesel would remain unchanged because of heavy trucks' impact on highway deterioration.

Contact Progressive Railroading editorial staff.

More News from 1/10/2013