Va House passes minor road funding change

RICHMOND, Va. (AP) -- Two Senate floor amendments that would have offered alternative Virginia transportation funding streams were rejected late Tuesday, leaving only a single House bill as Gov. Bob McDonnell's hope for a defining transportation reform legacy.

With nerves frayed after a 9-hour Senate session that stretched from mid-morning until after the dinner hour and both sides spoiling for a partisan fight in a Senate where each side holds 20 seats, prospects also looked bleak as the surviving plan arrives from the House 53-46 earlier Tuesday.

"I said I'd never get emotional over a bill and now I've broken my own damn word," a frustrated Sen. Frank Wagner, R-Virginia Beach, said after his floor amendment to replace Virginia's 17½ cents-per-gallon fuel tax with an 8 percent wholesale tax died on a 7-28 vote. Thirteen of his fellow Republicans opposed his bill.

A few minutes earlier, Sen. Stephen D. Newman's amendment to replace the declining 27-year-old volume-based fuel tax with a 5.5 percent tax died on an 18-22 vote.

McDonnell, in the final year of a non-renewable four-year term and hoping to become the first governor this century to enact a significant and sustainable new revenue supply for the state's underfunded roads, wants to generate an additional $3.1 billion over five years chiefly through raising the sales tax paid on all retail purchases. It, too, would end the per-gallon gasoline tax but leave it on diesel fuel.

The House bill would accomplish that, but it not only has the adamant opposition of Senate Democrats, some anti-tax Republican conservatives in the House and Senate oppose it because of its reliance on higher sales taxes.

Newman's amendment would have generated anywhere from $2 billion to $2.5 billion over five years. While conservatives — including tea party hero Ken Cuccinelli, the Republican gubernatorial nominee-apparent — warmed to it, Senate Democrats dismissed it as woefully inadequate. McDonnell on Tuesday labeled it "a whopping tax increase" that he would not sign.

Wagner's bill would have generated $3.8 billion for transportation by 2018, something Senate Democratic Leader Richard L. Saslaw called a step in the right direction. But not one Democrat supported it.

"We sit here today and say, 'Ah, this bill isn't right. This isn't what we wanted. This isn't what we're looking for.' Well, where's the other substitute?" Wagner demanded, glaring across the aisle at Democrats.

"I hoped for and expected a debate — competing ideas in a 20-20 Senate — and no, what I find is 'This isn't good enough.' Well, what is good enough? Where is it? I don't see it," he said.

Sen. A. Donald McEachin, D-Henrico, said one problem with Wagner's bill — as with Newman's proposal and the incoming House version — is its diversion of sales tax money from the general fund, which covers state services such as schools, health care and public safety, to cover the transportation's ever growing needs.

"All we did today was reiterate our position that the general fund needs to be protected and at the same time something meaningful needs to happen in terms of transportation," McEachin said.

The House bill directs a small but escalating share of the existing 5 percent sales tax — initially about $50 million a year — to transportation. Because it increases incrementally, however, Democrats note that by year five, it would total about $250 million.

Both Senate versions plus the House bill also rely on about $1 billion over five years in Virginia sales taxes collected from online and catalog sales, assuming that Congress will pass a federal law authorizing it. McEachin argues that the new sales tax revenue should be reserved for the general fund, and Republicans — including the governor — fundamentally reject the claim.

"We've had $450 million of surplus over the past three years I've been governor. The general fund has been growing at anywhere from $800 million to $1 billion a year. Does the senator say we can't afford another $50 million a year?" McDonnell told reporters Tuesday morning.

While Democrats say McDonnell's bill won't fly in the Senate, McDonnell was just as insistent that the sales tax remain the centerpiece of any new transportation finance reform bill.

"I prefer the sales tax to the gas tax because the gas tax is in a long-term decline," McDonnell said, noting greater automotive fuel efficiency and a trend of people to drive less as gasoline prices increase.