GOP says Kaine's road tax plan will go nowhere

RICHMOND

Minutes after Gov. Timothy M. Kaine unveiled a plan Monday afternoon for an almost $860 million tax increase to help transportation, House Republican leaders declared it all but dead.

"I don't see anything positive in the plan that could make it something that could be considered," said House Majority Leader Morgan Griffith, R-Salem. "It's all tax, tax, tax."

So begins the latest chapter in the state's six-year quest for money to build new roads, improve existing ones and ease gridlock in Hampton Roads and Northern Virginia.

Kaine, a Democrat, said the reputation of the legislature to solve problems rests in its willingness to increase taxes to improve roads, rail and mass transit. "The General Assembly must act because its reputation, and our reputation, are at stake," Kaine said during a news conference.

The governor has called a special session of the General Assembly for June 23 to take on transportation funding.

Kaine said new money is needed to enhance the quality of life, ensure the safety of bridges, and improve emergency services and hurricane evacuation in Hampton Roads.

He'll head to Woodbridge today for the first of 10 town-hall meetings he has scheduled across the state in coming weeks to explain his plan and build public support for it. He's slated to speak at 7:30 p.m. Thursday at the Hampton Roads Convention Center in Hampton and at 6:30 p.m. June 3 at the Virginia Beach Convention Center.

Kaine offered his tax plan after weeks of consulting with senior Democrats and Republicans in the House and Senate. He said his proposal represents a compromise that incorporates a bevy of taxes that lawmakers have closely considered and many of them have approved since 2002.

The plan is a blend of new statewide levies and a special penny-on-the-dollar sales tax increase only in Hampton Roads and Northern Virginia. The current 5 percent sales tax would be increased in those regions to 6 percent, except for food and over-the-counter medicines. The increase would generate $168 million next year in Hampton Roads and $306 million in Northern Virginia.

The Hampton Roads revenues would help finance several major regional projects, including an expansion of the Hampton Roads Bridge-Tunnel.

Statewide, Kaine proposed that the 3 percent sales tax on new and used cars be increased to 4 percent. It would generate $172.5 million in new revenue next year.

Annual vehicle registration fees would increase by $10. For most cars, the new cost would be $49.50, producing $70.3 million next year. The increase, if approved, would mark the second time in two years that registration has been boosted by $10.

Those revenue sources would help pay for the upkeep of existing state roads.

Kaine also would increase the grantor's tax on parties that sell homes by 25 cents per $100 of the sale price, producing $142 million. The levy is now 10 cents per $100. The increase would cause the seller of a $250,000 home to pay an additional $625 in taxes.

That money would be used for mass transit, road needs related to economic development projects and at the port of Hampton Roads and airports across the state.

Kaine said the bill he presents to the General Assembly will include "lock box" provisions to guarantee that the new taxes are dedicated to transportation. He said "the revenue source expires" if the money is not used for roads, rail or public transportation.

The safeguard is important because polls have indicated that voters do not trust state officials to use transportation taxes for their intended purposes.

House Republican leaders in recent years have opposed increasing taxes for transportation. The General Assembly approved a compromise last year that allowed transportation authorities in Hampton Roads and Northern Virginia to raise local taxes for road projects.

The Virginia Supreme Court struck down the plan in February, however, ruling it unconstitutional for unelected authorities to impose taxes. The decision left lawmakers searching for a new transportation plan.

Kaine also called for the elimination of the Hampton Roads Transportation Authority, which was supposed to develop the region's big projects, including new bridges and tunnels. The Northern Virginia authority would remain intact.

The regional authority also was to hold the billions of debt that would be needed to build Hampton Roads' projects - debt that cities said they could not handle on their own.

Norfolk Mayor Paul Fraim, who has been head of the authority, said the region needs to push together for a solution that all can agree on. If eliminating the authority is required, "then please, abolish it," he said.

State officials will have to clarify how debt would be held, he said.

Kaine characterized the plan as "my best effort," but invited lawmakers to improve it.

Senate Majority Leader Richard Saslaw, D-Fairfax, said he will continue his effort to modestly increase Virginia's gasoline tax, which he sees as the most reliable revenue to maintain roads.

Saslaw said if Republicans block a funding solution for roads, "they're going to pay dearly at the next election."

Many House leaders want nothing to do with new taxes, however. Passage of Kaine's plan depends on the defection of some Republican delegates who would have to defy party leaders and vote for the plan.

Del. Kirk Cox, R-Colonial Heights, said the tax increases are inappropriate while the economy is weak.

"To do this, I think, in a recession and with families struggling," he said, "is unfortunate."

 Staff writer Tom Holden contributed to this report.

Warren Fiske, (804) 697-1565, warren.fiske@pilotonline.com

Julian Walker, (804) 697-1564, julian.walker@pilotonline.com