RICHMOND, Va. — Proposed reforms to the way Virginia finances its highways and bridges headed for a vote by the full House and Senate this week after legislative negotiators agreed Wednesday on a nearly $900 million annual package that represents the first overhaul of transportation funding in a generation.
The negotiators — five delegates and five senators — signed off on a compromise that would replace Virginia’s 17 1/2 cents-per-gallon gasoline tax with a 3.5 percent wholesale tax on gasoline. At current prices, that would equal about 10 cents per gallon.
It would apply a 6 percent tax on diesel fuel, equal to about 22 cents per gallon at Wednesday’s average statewide price of about $3.70 per gallon.
By applying the tax proportionally to cost, supporters argue, it becomes a more reliable source of revenue than the existing volume-based tax. As cars become more fuel-efficient and people drive less as a result of higher prices, per-gallon pricing has yielded consistently less money in recent years as costs of highway construction and upkeep have soared.
The compromise would also boost sales taxes from 5 percent to 5.3 percent, levy a $100 fee on hybrid cars and shift about $200 million a year in sales taxes to highway use in five years.
The proposal also increases the titling tax paid on newly purchased cars.
Negotiators also agreed in principle to as much as $350 million more for transportation in northern Virginia and $200 million for Hampton Roads, but details were still being worked out.
The same conference report heads to the House and Senate for a decisive vote as early as Thursday. While it’s quite different from the version Gov. Bob McDonnell proposed six weeks ago, it would become his most substantial policy triumph yet in the final year of his term if it passes and he signs it into law.
Altogether, it would generate an estimated $880 million annually after it’s fully implemented within five years.
Virginia’s transportation funding formula has been unchanged since 1986.
Lawmakers broke from their closed-door huddle smiling at the bipartisan accord reached after four days of talks.
“Even when we disagreed, we weren’t disagreeable,” said Del. S. Chris Jones, R-Suffolk, who led the House negotiating team. “We worked very hard on an agreement, and I think we’ve got a good package.”
Gone from McDonnell’s proposal was his proposal to increase automobile registration fees. McDonnell also sought to eliminate gasoline taxes altogether and replace them with an increase in the general retail sales tax from 5 percent to 5.8 percent.
Sen. Walter Stosch, R-Henrico and chairman of the Senate Finance Committee, said at a briefing for the full Senate that the compromise maintains a user-fee approach to funding transportation while also recognizing that “the current methodology is flawed because of the fact it is now a flat, non-growing source of revenue.”
“We had the same kind of compromise in 1986, when the user fee was ratcheted up and we utilized general funds for the first time,” Sen. John Watkins, R-Powhatan, said after the briefing.
There was no immediate response from McDonnell’s administration.
Senate Democrats and some Republicans agree higher gas taxes and sales taxes are needed to solve the state’s transportation problems. Others propose both statewide and local or regional increases in sales or income taxes in Northern Virginia and Tidewater.
Conservatives, however, quickly attacked the proposal as a tax increase.
“Get ready to pay up unless you speak up now,” Del. Robert G. Marshall, R-Prince William, said in a blast email to supporters. “Call your Delegate and Senator right away and urge them to vote against any bill that raises any tax.”
Follow WNEW on Twitter.
(© Copyright 2013 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)