Monday, May 12, 2008
Kaine to try again on vehicle sales tax increase to pay for roads
Republican leader calls tax increases "ill-timed."
RICHMOND – Gov. Tim Kaine rolled out another plan today to increase taxes and fees for transportation, with much of the new revenue going toward highway maintenance.
Kaine’s plan, which figures to face stiff opposition from Republican legislators, would increase the tax on vehicle sales and the grantor’s tax on home sales and add another $10 to vehicle registration fees. The governor said the increases are necessary to cover mounting maintenance costs that are eating into the state’s highway construction budget.
The General Assembly will consider the governor’s proposal in a special session that will begin June 23.
The state will divert more than $260 million from its road construction to cover maintenance costs in the fiscal year that ends June 30 and another $388 million in the upcoming year. Administration officials said that maintenance deficit will mushroom to $575 million by 2014 without new maintenance revenue.
Kaine said the maintenance deficit is both a financial problem and a safety issue, citing last year's collapse of an interstate bridge in Minneapolis as an example of the perils of neglecting infrastructure needs. "The consequences of not focusing on maintenance are very obvious and potentially severe," Kaine said in a press conference.
Some GOP lawmakers have accused Kaine’s administration of exaggerating the severity of the maintenance deficit in order to strengthen his case for tax increases. Others have said that lawmakers should use existing revenue to pay for rising maintenance costs.
Kaine’s plan would increase the sales tax on vehicles from 3 percent to 4 percent. It is the third time in as many years that Kaine as pursued an increase in the tax, often referred to as the “titling tax.” He failed to win support for earlier proposals.
Vehicle registration fees would increase to $49.50, the second $10 increase in as many years. The grantor's tax would increase by 25 cents, from 10 cents per $100 to 35 cents per $100.
Kaine appears to face an uphill battle winning support from the Republican-controlled House of Delegates. House GOP leaders said they oppose statewide tax increases, particularly in a sluggish economy.
"It's unfortunate because the people of Virginia are hurting right now," said House Majority Leader Morgan Griffith, R-Salem. "The economic times are a little bit touchy and I think it's ill-timed, but the governor has the prerogative to call us back into special session and waste the taxpayers' money if he so desires."





