Plan will create hundreds of road projects-Virginia Gov

WASHINGTON Tue Jan 22, 2013 11:46am EST

WASHINGTON Jan 22 (Reuters) - Scrapping the state gasoline tax and restructuring transportation financing will allow Virginia to proceed with hundreds of highway, road, bridge and transit projects, Governor Bob McDonnell said on Tuesday.

The Republican governor said the overhaul he unveiled two weeks ago in his state of the state address could raise $1.28 billion more to pay for 158 highway projects and another $1.07 billion in new funds for rail and transit work. Virginia could proceed with $500 million of existing projects currently at risk of being delayed by a revenue downturn, he added.

States levy various taxes at the pump to pay for their transportation programs, which come on top of a federal tax of 18.4 cents per gallon. As cars become more gas efficient, and drivers turn to alternatives such as electric vehicles, gas sales are dropping, dragging down those revenues.

McDonnell is seeking to eliminate the state's 17.5 cent-per-gallon gasoline tax and increase the sales tax by 0.8 percent, along with putting more of the existing sales tax revenue toward transportation and charging additional vehicle registration fees. He also proposed streamlining the state's transportation department and basing some transit funding on performance.

At the same time, he is counting on the U.S. Congress passing a law that would require on-line retailers to remit sales taxes, which states say will net them millions of dollars. Members of Congress last month assured a state lawmakers group they would pass such a bill in 2013.

Virginia's new river of funding could flow toward extending the area's Metrorail commuter train to Dulles airport, a project bedeviled by so many delays and political and money fights that the federal government had to step into mediate, McDonnell said.

He also said he would put the money toward building up train service to Roanoke and Norfolk, improving the heavily traveled Interstate 66 and Interstate 95, and replacing bridges and paving roads statewide.

Virginia's statehouse is seeking improvements to the state's infrastructure, but not all legislators are on board with McDonnell's plan.

Last week, Republican State Senator John Watkins unveiled his own proposal to turn to user fees, prohibit tolls on existing roads without legislative approval, repeal income tax credits for clean fuel vehicles and eliminate some sales tax exemptions.

His bill is one of at least eight transportation-related bills making their way through the legislature, according to the Washington Post, and Watkins said, "I expect lively debate on this and my colleagues' proposed solutions to our transportation woes."

Almost every day McDonnell sends out an announcement of groups supporting his proposal, listing mostly area chambers of commerce and paving, contractors and building associations.

"Every corner of the commonwealth will reap the benefits of safer roads, quicker commutes and increased access to public transportation if this plan is adopted," McDonnell said in a statement on Tuesday.

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