TRANSPORTATION FUNDING DEBATE CONTINUES

With only a few weeks left in the 2007 legislative session, the debate over transportation funding remains in the forefront. The primary "vehicle" for obtaining some funding this year is HB 3202 which passed the House this week and will be under review by the Senate next week. Since the Senate rejected an HB 3202 equivalent last week, it is likely that HB 3202 will receive quite a few amendments, forcing the creation of a conference committee to try and resolve differences.

HB 3202 is lengthy, detailed and complicated. Below is a summary of the major provisions in the bill as it stands now. The entire text of HB 3202 can be found at: HB 3202

STATEWIDE PLAN

HB 3202 would allocate the $339 million in unallocated surplus money from last year as a one time appropriation to complete several high priority projects.

As currently written, HB 3202 would transfer $250 million a year in existing general fund revenues (this is the equivalent to ¼ cent of sales tax) to the Transportation Trust Fund "on an ongoing basis" beginning in 2008. The bill does not change the Code provision that allocates the sales tax or other revenues sources to transportation. Therefore, the $250 would have to be reallocated in every budget cycle. This money would go through the Transportation Trust Fund allocations.

The proposed legislation would generate an additional $246 million a year for transportation by:

• Increasing the vehicle registration fee by $10 a year 
• Imposing an abusive driver fee on motorists who commit various driving related offenses 
• Equalizing the state tax on diesel fuel with the tax on gasoline (the state tax on diesel is currently 16 cents per gallon while the tax on gasoline is currently 17.5 cents per gallon) 
• Increasing registration fees and penalties for heavy and overweight commercial trucks 
• Dedicating 50% of future non-designated budget surpluses to the Transportation Trust Fund. This is currently estimated at $64 million a year.

An important note: Only $64 million of the $246 million in "new" revenues would flow through the Transportation Trust Fund. The remaining $163 million would go to pay the debt service on transportation bonds.

Those bonds, authorized up to $2 billion, would be issued at a rate of $300-400 million a year (for a total of $1.3 billion) between 2008 and 2012. A second issue of bonds ($700 million) would begin in 2012. 15.7 % of the bond proceeds go to transit, the remainder would be allocated under the transportation trust fund formulas.

REGIONAL PLANS

HB 3202 would generate additional funding for transportation projects by authorizing local "self help plans" in Northern Virginia and Hampton Roads. Highlights of these regional plans are set forth below:

Northern Virginia 

The Northern Virginia plan would generate up to $383 million a year in transportation funding for the Northern Virginia Transportation Authority and effected localities. The proposal would affect the following localities: the Counties of Arlington, Fairfax, Loudoun and Prince William; and the Cities of Alexandria, Fairfax, Falls Church, Manassas and Manassas Park.

Money derived from the plan would go to the Northern Virginia Transportation Fund. Money in the Fund would be allocated as follows:

• First call on the Fund would be to pay debt service on bonds. 
• The next $50 million would go to the Washington Metropolitan Area Transit Authority. 
• The next $30 million would go to Virginia Railway Express. 
• Once "Phase Two" of the Dulles Rail project begins, at least $20M each year would be dedicated to that project. 
• 45% of remaining revenues would go directly to participating localities to be used for urban and secondary road improvements.

Transportation projects are to bid through the private sector for construction. 

The plan would also empower the Northern Virginia Transportation Authority to impose tolls for newly constructed or reconstructed highways under their control.

Effected localities would be authorized to impose the following additional fees and taxes upon an affirmative vote of a majority of the members of their local government body:

• Drivers Licenses - A fee of $100 for the initial issuance of a driver's license. (does not include minors who have successfully completed a driver safety course approved by the Department of Motor Vehicles) 
• Grantors Tax - A tax of .40 for each $100 of value on each property or land transaction in effected localities, such as the selling of a house. 
• Rental Car Tax - A tax of 2% on all vehicle rental transactions 
• Commercial Real Estate Tax - A tax of .25% of the fair market value of all commercial and industrial properties in the effected areas. (includes all multi-unit residential properties)

Effected localities must vote to participate in the plan on or before January 1, 2008.

Hampton Roads 

The Hampton Roads plan would generate approximately $209 million a year for the Hampton Roads Transportation Authority. The Authority would have a broad array of powers regarding the planning and construction of highways, bridges and tunnels in the effected region.

The plan would also empower the Hampton Roads Transportation Authority to impose tolls for any "new or improved highway, bridge, tunnel or transportation facility constructed by the Authority."

The Hampton Roads plan would affect the following localities: the Counties of Isle of Wight, James City and York and the Cities of Chesapeake, Hampton, Newport News, Norfolk, Portsmouth, Suffolk, Virginia Beach and Williamsburg.

These localities must vote to participate in the plan on or before September 1, 2007. 

The plan would authorize effected localities to impose the following additional fees and taxes:

• Drivers Licenses - An additional fee of $20 on the initial issuance or renewal of a drivers license 
• Vehicle Registrations - An additional vehicle registration fee of $10 (in addition to the increase proposed in the statewide plan) 
• Vehicle License Fee - A one time license fee equal to 1% of the retail value of all vehicles at the time they are first registered in an effected locality 
• Vehicle Inspection Fees - An additional vehicle inspection fee in the amount of $10 
• Transient Occupancy Tax -  A $5 per day tax. 
• Grantors Tax - A tax of .30 for each $100 of value on each property or land transaction in effected localities, such as the selling of a house. 
• Rental Car Tax - A tax of 2% on all vehicle rental transactions 
• Commercial Real Estate Tax - A tax of .25% of the fair market value of all commercial property and real estate.

LAND-USE/LOCAL GOVERNMENT REFORM

HB 3202 contains several provisions that would significantly alter the way local governments handle land use and transportation issues. The major provisions are highlighted below:

• Urban Development Areas - Counties with a population greater than 50,000, or a population growth rate of greater than 20% from the last census, would have to amend their comprehensive plans to allow for "Urban Development Areas". UDAs would be "appropriate" for higher density development because of their proximity to transportation, other development and infrastructure.
• Urban Transportation Service Districts - Counties with a population of 90,000 or more may create Urban Transportation Service Districts that must have a density of one residential unit or greater. Counties that create UTSDs can assess impact fees and will receive money from VDOT equivalent to the per lane mile maintenance payments that cities and towns receive for road maintenance in those areas. VDOT would be required to transfer surplus equipment to the locality.
• Secondary Streets - Prohibits any new secondary streets from coming into the VDOT system. New "local subdivision streets" would have to be maintained by the County or a homeowners association.

VDOT REFORM

HB 3202 contains several provisions to "reform" VDOT and improve "accountability.

• CTB - Provides that the legislature will appoint some of the CTB members.
• VDOT Commissioner - the Commissioner would be hired by the CTB for a four year term subject to the approval of the Governor.
• Accountability - Creates the Joint Commission on Transportation Accountability, in the legislative branch of government, to:
  • Make performance reviews of state agencies with transportation responsibilities
  •  Study operations, practices, and duties of state agencies with transportation responsibilities
  • Make reports to the General Assembly on the operations and function of state agencies with transportation responsibilities.