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Senate Suggests Gas Tax That Isn't to Fund Roads

Posted on: Wednesday, 15 February 2006, 09:00 CST

By Christina Nuckols, The Virginian-Pilot, Norfolk, Va.

Feb. 15--RICHMOND -- Hang on to your gas receipts. They might help you avoid paying more taxes.

State senators revised their transportation funding plan Tuesday to offer refunds to motorists looking for relief from proposed gasoline taxes .

The refunds are part of an overhaul of the Senate's transportation proposal necessary to attract support from key Republican leaders in the chamber. The Senate is expected to vote on the package this week.

The plan still includes a proposed 5 percent sales tax on fuel that would be assessed on top of the existing 17.5-cents-per-gallon gas levy -- which could mean a 9-cents-per-gallon gas price increase based on current wholesale prices.

It would, however, allow car owners to collect their receipts and mail them into the Department of Motor Vehicles twice annually to collect a full refund on the 5 percent tax.

The Senate plan would generate nearly $4 billion over four years. That is comparable to a $3.7 billion proposal by Gov. Timothy M. Kaine that calls for a 2 percentage point tax increase on car sales and higher automobile insurance taxes. The House of Delegates is backing a package that would raise $2 billion over four years through assessing fees on bad drivers and diverting funds earmarked for schools and law enforcement.

House Republican leaders said they still don't support the Senate plan because it contains tax increases.

However, they welcomed the revisions as a sign that senators are ready to begin searching for a compromise that will yield additional cash for the state's congestion-choked highway system. "What's happening is what I had hoped would happen, that there would continue to be discussion and modification of the proposals," said Del. Phillip A. Hamilton, R-Newport News. "You've got three plans out there and the answer is not in any one plan."

Hamilton was skeptical of the gas tax refund proposal, saying it would result in more paperwork and require the DMV to hire more staff. No estimates were available from the Senate or the Kaine administration on the cost to administer the program.

Senators said state residents and out-of-state motorists could apply for a refund, which would apply only to personal vehicles, not those used for business.

"Obviously, you're counting on not everybody doing this," said Senate Minority Leader Richard Saslaw, D-Fairfax.

Senators predicted they would collect $513 million from the new tax on gasoline in the first year, with motorists seeking only $125 million in refunds.

However, as the program became more widely known, senators said refunds would eat up $275 million of the $569 million expected to be collected in 2010.

The plan also would raise the car sales tax to 3.75 percent, from 3 percent.

The other new levy in the Senate plan is a tax increase assessed on people who sell their homes or other real estate.

The Assembly in 2004 raised taxes on home buyers , but the tax on sellers has remained at 10 cents per $100 in value for 50 years, senators noted.

The Senate plan would triple the tax rate to 30 cents, and allow cities and counties to boost the assessment to 40 cents per $100.

For a $200,000 home, the increase would be $600 if the 40-cent rate were applied.

Local governments would be allowed to keep the revenues for projects in their communities, and regions could pool the money for major projects, targeting funds in high-growth areas with the most severe traffic congestion.

The Senate also approved a regional tolling authority for Hampton Roads that would establish tolls on the region's major bridges and tunnels to supplement state road dollars.

The money would be earmarked for major projects including the proposed third bridge-tunnel linking South Hampton Roads and the Peninsula and widening U.S. 460.

The Senate plan includes new fees on bad drivers, an idea already supported by Kaine and delegates.

The Senate's fees are lower, however: $200 for serious traffic offenses plus annual fees from $400 to $700 for drivers with eight or more demerit points.

As lawmakers pored over competing transportation plans Tuesday, former Gov. Jim Gilmore rallied anti-tax activists at a meeting a few blocks from the Capitol. Gilmore told the Tuesday Morning Group that lawmakers should shift money from government operations to road-building instead of "just willy-nilly raising taxes."

Gilmore also criticized state lawmakers for failing to fully eliminate the personal property tax on motor vehicles, a promise he made as candidate for governor in 1997.

House Majority Leader H. Morgan Griffith, R-Salem, said Republican lawmakers still hope to complete that initiative, but he said the tax cut is competing this year with transportation needs, programs to clean the Chesapeake Bay and raises for state employees. "That's part of the difference on being on the outside throwing grenades in, as opposed to being on the inside," Griffith said.

Staff writers Mike Gruss and Harry Minium contributed to this report.

Reach Christina Nuckols at (804) 697-1562 or christina.nuckols@pilotonline.com.

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Copyright (c) 2006, The Virginian-Pilot, Norfolk, Va.

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Source: The Virginian-Pilot

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