Government Affairs

General Assembly Update

February 25, 2010

HOUSE SUBCOMMITTEE KILLS FUEL TAX INDEXING BILL

Yesterday, a House Finance subcommittee killed SB 343, which would have indexed the gas tax. Nevertheless, delegates said they believe it’s a good idea and they hope for a special transportation session this year to work on it.

Sen. Emmett Hanger’s bill would have linked the state gas tax, which is 17.5 cents per gallon, to federal CAFÉ (Corporate Average Fuel Economy) standards for fuel efficiency in cars.

One analysis of the bill says the motor fuels tax would essentially increase by 4 cents per gallon by 2020 under Hanger’s bill.

As cars get more fuel-efficient, the state receives less money in its transportation fund because Virginia’s gas tax is a flat per-gallon fee. Hanger calls the bill “preserving our base.“

“What’s telling to me is if you look out a few years based on the trend in fuel efficiency, if you go out four or five years we will have lost an additional $200 million a year in our trust fund,“ he told a subcommittee of the House Finance Committee.

The subcommittee decided to carry over Hanger’s bill, which essentially kills it for this session. But delegates, including Republicans who have opposed raising taxes for transportation, said they like the concept and hope to revive it later in the year. “I think there is some concern on the timing, but I think you may well be onto something here. There is a concern with a diminishing return on the gas tax,“ said Del. Tim Hugo, R-Fairfax. “We have to have some sort of revenue to build the roads.“

Hugo said there may be a special transportation session. Gov. Bob McDonnell had said early in the session that he might consider a special session, rather than deal with one of his campaign issues, transportation, during the regular session. Hugo said if there is such a session, he hopes Hanger brings back his bill.

Del. Lee Ware, R-Powhatan, agreed. “We’re moving in a new time. We’re watching roads disintegrate. This is potentially a very fruitful way to go.“

Hanger said he hasn’t heard anything definitive on a special session, but would like to see a bipartisan commission form some recommendations before any session.

Several lobbying groups testified in support of Hanger’s bill, calling it by a term that this session almost guarantees a bill’s friendly reception: a “jobs bill.“

After the meeting, Hanger said he thinks his proposal will get more support as people realize the state needs the money. “People are going to have to understand clearly that we don’t have enough money in the coffers” to maintain roads, he said. “I heard a lot of receptivity to it I’m encouraged.“