WASHINGTON Jan 8 Virginia's governor wants to
replace the state's gas tax with an increase in its sales tax
along with new fees on alternative-fuel vehicles in a bid to
wipe out the state's transportation funding shortfall.
"The gas tax is a stagnant revenue source," said Governor
Bob McDonnell in a statement on Tuesday.
"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."
McDonnell's proposal is a radical change. Virginia would
become the first state in the nation to drop its gas tax if his
plan passes, according to the governor's office.
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.
The U.S. Congress for years has wrestled with the same
issues Virginia faces. As gas prices rise, drivers turn to cars
with better fuel efficiency and pay less of the federal tax. The
trust fund filled with those tax revenues is perpetually on the
brink of going broke and the federal government has stepped in
repeatedly since 2008 with emergency funding.
A lack of a solution has prompted rating agencies recently
to downgrade some of the bonds states issued in anticipation of
road grants from the federal government. This summer, Congress
passed legislation authorizing transportation funding for two
years, but the risk of cuts "remains elevated," Randy Gerardes,
senior analyst at Wells Fargo securities wrote in a recent note.
McDonnell said his plan to eliminate the state's gasoline
tax of 17.5 cents per gallon and increase its sales tax by 0.8
percent, along with putting more of the existing sales tax
toward transportation and charging new registration fees, will
help provide more than $3.1 billion in funds for five years.
The governor also proposed creating a constitutional
amendment ensuring state transportation dollars are only spent
on transportation projects, streamlining the state's department
of transportation, and moving transit funding to a formula based
partly on performance.