Existing Car Insurance Taxes Would Help Fund Va. Transit Plan

By | March 28, 2007

Virginia Gov. Timothy M. Kaine has proposed $3 billion in borrowing for statewide transportation projects, one-fifth more than legislators sought, using existing taxes on car insurance premiums to pay off debt.

Kaine, a Democrat, also left intact regional transportation provisions for the state’s most populous and gridlocked regions — northern Virginia and Hampton Roads — allowing them to generate up to about $440 million and $215 million, respectively.

His amendments to the most substantial transportation funding reforms in a generation also reduce the burden on localities in the regions and provides elected leaders in those regions with a broader and optional palette of tax and fee increases.

Counting the more than $500 million the statewide plan would provide annually and if all the local taxes are enacted in the regional plans, Kaine’s amendments could yield about the same $1.2 billion annual total for transportation that the GOP plan projected.

The Republican-dominated House and Senate will vote on the amendments on April 4, and Republicans expressed guarded support for the amendments Monday.

“The (Republican) caucus certainly reserves the right to look at it, but the general tenets, I think, are very good. The big stuff looks very good,” said Del. M. Kirkland Cox, R-Colonial Heights, who delivered the GOP response.

“The tone from the governor was very good from the beginning,” he said.

Sen. Kenneth W. Stolle, R-Virginia Beach, said Kaine can count on broad GOP support in the Senate as well.

“We are hopeful we can garner broad support among the Republican Caucus and the entire Senate,” he said.

With all 140 seats in the House and Senate up for election in November and Democrats sensing an opportunity to overtake the GOP majority, the transporation issue and the prospect of angry voters stuck for hours on jammed roads in the state’s most populous areas dominated the 2007 legislature.

Kaine’s most conspicuous change to statewide transportation funding boosts borrowing from the $2.5 billion through 2016 in the plan as it passed the General Assembly to $3 billion.

Kaine’s amendments call for repaying the debt using about $150 million a year from one-third of the existing tax on automobile insurance premiums. He said it was a much more reliable source of revenue for repaying bonds than the tax paid to record deeds, wills and lawsuits that the GOP plan pledged for debt repayment.

Lawmakers already had agreed to earmark that source of money for transportation.

“We do have an experience, though, in knowing how much those auto insurance premiums produce,” Kaine said at a news conference. “We could look at the past 20 years of that and easily do a projection for what they’ll produce in the next 10 or 15 years.”

It also uses about $65 million annually from the tax paid to record real estate deeds, wills and lawsuits, dedicating about two-thirds of it to mass transit projects.

Kaine’s amendments for the statewide aspects of the bill impose harsh new recurring fines on repeat traffic offenders but deletes a legislative provision that counted traffic offenses incurred before the bill takes effect in designating motorists abusive drivers. They also increase the vehicle registration fee by $10 a year and boost the tax on a gallon of diesel fuel from 16 cents to 17.5, the same as a gallon of gasoline.

In years when the state enjoys a budget surplus, two-thirds of it would be earmarked for transportation under Kaine’s amendments. Based on recent trends from years when the fiscal year ended with an unspent balance, that could add about $86 million for transportation in flush years.

Kaine and fellow Democrats had voiced strong objections earlier to the Republican legislative plan that shifted to transportation about $185 million annually from the general fund, which supports such state obligations as police, health care and outlays for public education.

“He’s certainly whittled it down from where the Republican majority had started, and the majority of what is being taken goes to mass transit,” said House Democratic Caucus Leader Brian J. Moran of Alexandria.

“I think it’s a compromise that will be favorably received by a majority of Democrats and Republicans in the General Assembly,” Moran said.

In his principal change to the regional plans, Kaine’s amendments no longer require localities to boost taxes on commercial real estate to pay for regional projects. The tax, which businesses and local elected officials had called a “poison pill” that would scuttle the regional plans, is now one of three tax or fee options counties and cities in the two regions can consider.

The other two revenue options would be available in both regions: a $10 increase in the auto registration fee; and “impact fees” on development of commercial or residential real estate.

In addition to the optional fees, the regional authorities under Kaine’s plan would impose seven higher fees and taxes.

In northern Virginia, six of the nine local governments that would form a regional authority in the economically bustling Washington, D.C., suburbs would have to approve joining and enacting the seven higher fees and taxes.

In Hampton Roads, seven of the 12 localities would have to approve banding into an authority to levy the taxes and fees.

“Changes Governor Kaine has made to this bill … are meaningful in our eyes,” said Norfolk Mayor Paul Fraim, who appeared with Kaine and about a half-dozen other local officeholders at the news conference. “We believe now we can gain a consensus across Hampton Roads, across the local governments to adopt this Hampton Roads transportation authority.”

Christopher Zimmerman, chairman of both the Northern Virginia Transportation Authority and the Arlington County Board of Supervisors, said he believed Kaine’s amended plan also would pass muster in his region.

“The way the bill had been originally passed, it simply wasn’t going to be implemented by any jurisdiction in northern Virginia,” Zimmerman said. “It is by no means perfect, it’s not exactly the way we would have done it, but it’s something we can work with.”

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