McDonnell wants part of sales tax revenue for roads

Posted to: News State Government Traffic - Transportation Virginia
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By Julian Walker
The Virginian-Pilot
© January 14, 2011

RICHMOND

Using an investment bank, borrowing and redirecting some sales tax revenues. Those concepts are prongs of the transportation package Gov. Bob McDonnell is presenting to the General Assembly.

Part of it has already been revealed. More will be presented today.

One of the proposals would keep a "small portion of the discretionary sales tax" in Hampton Roads and Northern Virginia for transportation projects, a source with knowledge of the package said. That doesn't involve a tax increase, the source added, but would come from existing sales tax revenue.

Last month, McDonnell detailed his roadmap to put $4 billion into state transportation needs. About $2.9 billion of that would come from the issuance of debt, some of it previously approved by the legislature.

The governor left recent meetings with bond rating agencies in New York assured his borrowing plan won't harm the state's credit rating.

Despite that, some lawmakers remain concerned about the effect that debt would have.

McDonnell also proposed a transportation investment bank, which he wants to seed with $150 million in surplus money and an additional $250 million found in an audit of the state highway department.

That bank would function as a revolving loan fund to help localities pay for road projects.

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

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If the money for NoVa and HR

Submitted by LarryG on Fri, 01/14/2011 at 8:00 pm.

If the money for NoVa and HR is perceived as being taken out of the state allocations for the counties, I can see this as being dead on arrival... most legislators from rural Virginia are not going to be real happy with that idea.

" The proposals announced

Submitted by LarryG on Fri, 01/14/2011 at 7:46 pm.

" The proposals announced Friday would redirect 0.25 of the 5 percent sales tax paid on retail purchases in the northern Virginia and Hampton Roads regions from general statewide use back to those areas. The projects the money would fund would be determined by regional transportation authorities."

http://www.bloomberg.com/news/2011-01-14/plan-rebates-state-sales-tax-to-va-metro-regions.html

so it "appears" that the money is the money that the State collects in sales taxes in those regions and uses at the state level - which some of it goes back to the localities (I think proportionately but not sure because SOQ education money is not proportional but done by the weighted composite index.

not totally clear at this point

Audacity defined

Submitted by Mike Barrett on Fri, 01/14/2011 at 5:30 pm.

Well LarryG, since I have not heard back on this forum, I must say that my research to date reveals that the match comes from the share of the sales tax revenue that the localities receive. So the audacity of this proposal is amazing; in essence, this shifts existing local sales tax revenue that now finances local schools, public safety, and courts and justice, to pay for the state's roads. What's next? Will local taxpayers be required to pay the electricity bill for the Capitol?

Kicking the Can

Submitted by RLS on Fri, 01/14/2011 at 2:09 pm.

WIthout increasing the funding available all the Governor is doing is kicking the responsibility for funding STATE road projects back to the localities, who already have to cut their budgets for essential services. Maybe he can also propose that the localities be allowed to print their own money as well. Or at the very least get rid of the Dillion Rule. All this is is another UNFUNDED MANDATE hoisted upon the localities.

it's actually an interesting

Submitted by LarryG on Fri, 01/14/2011 at 12:12 pm.

it's actually an interesting proposal. It basically allows the region to decide if they want to use some of their discretionary tax money for transportation - vice expecting the "state" to fund their needs.

And I presume - opens the door to allow the localities to say they like the idea but need more and then it would be up the region to decide if they want to increases taxes on themselves for regional needs - as opposed to expecting the state to increase taxes on everyone and then believing that their region would get more than their proportionate share through political manipulation.

So it sort of puts the question about taxes and transportation on the citizens in the regions ...

If that was/is Gov. McDonnells actual intent - KUDOS!

Discretionary money

Submitted by Mike Barrett on Fri, 01/14/2011 at 3:29 pm.

So LarryG, you obviously have superior knowledge on this topic, and therefore I would ask you to enlighten the rest of us. What is the definition of discretionary tax money? Since the statement was referring to the sales tax, is this the portion currently reserved to the locality in which the sale took place, or is it a portion of the state's share? Perhaps you know and would share the answer with the rest of us.

I can answer that one.

Submitted by keithh41833 on Fri, 01/14/2011 at 6:02 pm.

dis·cre·tion - Adjective
1. Available for use at the discretion of the user.
2. The ability to decide what is in the best interest or of the greatest benefit to the user.
3. To have the ability to make choices.

The commonwealth is the 'user' in this case. Tax money is the type of money that has been obtained by the commonwealth by acts of The Virginia General Assembly and taken from the citizens of the commonwealth in the form of such things as income taxes, gas taxes, and user fees. As the commonwealth is in control of this money after it is collected, and, as the user, it is allowed to make choices and decide how best this money could be spent to get the maximum benefit for such expenditure. Anything else Mike? Always glad to help out

masterful deceit

Submitted by Mike Barrett on Fri, 01/14/2011 at 12:08 pm.

Yes, and in a bold sleight of hand, they include a provision in the constitution to preclude using transportation funds for general fund expenses. What about the raid of the general fund to pay for transportation at the expense of K-12 education, public safety, courts and justice, and human services? And further, the requirement to make cuts will be passed down to local government to deal with. Masterful deceit.

Complications

Submitted by truthseeker on Fri, 01/14/2011 at 11:46 am.

As usual the GOP response to anything that is desperately required is cut something else. The concept of increasing the gas tax and tying it to the transportation fund is apparantly too simple. What exactly would be cut if sales tax revenue were used for transportation? Medicaid? Education? Public protection? These have already been pared to the bone, any more and the whole structural support will collapse.

ultimate irony

Submitted by Mike Barrett on Fri, 01/14/2011 at 10:52 am.

Yes, wouldn't it be particularly ironic if the "discretionary sales tax revenue" actually came from the 1% of the sales tax that already comes back to the local communities, thereby shifting the cost of building state highways to the local governments. So then local governments would get to replace that income that goes to support schools, public safety, courts and justice, and human services, with an increase in the real estate tax, or of course, they could make further cuts. Neat trick.