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Thursday, June 26, 2008

Gas tax increase passes in Senate

In the House, Republicans lambasted the governor's proposal, which is unlikely to be approved.

RICHMOND -- The Virginia Senate passed legislation Wednesday that would increase the state's gasoline tax and other levies to generate funds for transportation programs, but that bill and a proposal from Gov. Tim Kaine face near-certain deaths in the House of Delegates.

The General Assembly's special session on transportation began to resemble a slow-motion train wreck Wednesday, as the Democrat-controlled Senate passed a tax increase bill and the Republican-run House attacked Kaine's plan. The session will extend into next week, but lawmakers in both parties voiced doubts that they will come up with significant new money for road and transit needs.

"There is no consensus in this General Assembly among any group on how to approach transportation," said Senate Minority Leader Thomas Norment, R-Williamsburg, shortly before the Senate passed a tax-increase measure (Senate Bill 6099) on a party-line vote of 21-16.

The bill would increase the state's 17.5 cents per-gallon gas tax by a penny a year over the next six years.

The bill also would increase the retail sales tax by 0.25 percentage points and the vehicle sales tax by 0.5 percentage points, and reduce the sales tax on groceries by 0.5 percent. It also calls for regional tax increases to fund projects in Northern Virginia and Hampton Roads.

"I don't know any other way to fix this," said Senate Majority Leader Richard Saslaw, D-Fairfax County, the bill's sponsor. "I don't know any other way out of this except raising and spending money."

The bill likely will face a hostile audience in the House, where GOP leaders oppose statewide tax increases and have been critical of Kaine's proposal to increase taxes and fees for transportation. Republicans on the House Rules Committee roundly criticized Kaine's bill Wednesday and aggressively questioned Secretary of Transportation Pierce Homer and House Minority Leader Ward Armstrong, D-Henry County, about the plan.

The Rules Committee took no vote on Kaine's proposal Wednesday, but will meet again today.

Kaine called the special session and proposed a plan aimed at reducing a highway maintenance funding shortfall and revamping regional transportation plans for Northern Virginia and Hampton Roads.

Kaine's plans would increase the sales tax on vehicles, vehicle registration fees and the grantor's tax on home sales to generate maintenance funding and other transportation revenue.

House Majority Leader Morgan Griffith, R-Salem, questioned Kaine's decision to seek an increase in the grantor's tax and apply most of the revenue to mass transit.

He said the overall package of tax increases would hit his constituents hard.

"The people out there in my district, at least, are worried about the economy and they're struggling to see how they can make things work," Griffith said.

Republicans also said they want to make sure the Virginia Department of Transportation is spending dollars more efficiently and have called for an independent audit of the agency.

But Armstrong said an audit won't help the state find enough money to offset a maintenance funding shortage that will approach $400 million in the upcoming fiscal year.

The state will have to shift funds from its construction budget to cover the deficit.

"You're not going to fix this problem by telling VDOT, 'Quit buying Post-it Notes,' " Armstrong said.

Lobbyists for auto dealers and home builders told the committee that they oppose Kaine's bill and said the tax increases would have harmful effects on their industries.

"The business is tough," said Don Hall, the president of the Virginia Automobile Dealers Association. "People are hurting."

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