McDonnell Says More Sales Tax, Surplus Will Pay for Transportation Plan

By WYDaily Staff Thursday, December 08, 2011

During his transportation conference today in Norfolk, Governor Bob McDonnell outlined his transportation policy and advocated a higher percentage of sales tax to fund it - a plan he'll bring before the 2012 General Assembly session.

Speaking to more than 700 industry and transportation agency professionals, the governor called for changes in laws dealing with the allocation of future surpluses to transportation. According to a press release, McDonnell proposes dedicating portions of revenue growth attributable to transportation infrastructure projects and increasing the portion of sales tax for transportation.

The proposed 2012 plan shows that McDonnell wants to increase sales tax allocated for transportation from .5 percent to .75 percent over the next eight years, beginning with an increase to .55 percent in the upcoming budget. That hike would generate over $110 million in new transportation funding going to maintenance.

The plan also proposes that the first 1 percent in revenue growth over 5 percent each year be dedicated to transportation, along with increasing transportation’s share of year-end surpluses to 75 percent. This measure will provide transportation with additional revenues without jeopardizing other key areas of need, according to the governor's office press release. Over the past two years, $100 million in surplus has been sent to transportation.

The establishment of an Interstate 85 Connector Economic Development and Promotion Zone to encourage businesses to invest in Virginia and use Virginia ports is in the proposed plan, wherein companies shipping goods through the port or engaged in maritime commerce can operate income tax free for their first two years in operation.

“Transportation and economic development and prosperity are inextricably linked,” Governor McDonnell said. “Whether it’s the infrastructure needed to move people and goods, or certain transportation-related industries poised for major growth and job creation, we must continue to make progress in improving our transportation networks if Virginia is to remain economically competitive.”

McDonnell said he is following up on last year's $4 billion investment in transportation over three years with another “aggressive transportation program to continue to get Virginia out of gridlock and spur our economic recovery.”

An independent economic analysis by Chmura Economics showed that once fully implemented, last year’s transportation package would grow the Virginia economy by over $13 billion and sustain an additional 104,000 jobs, according to the press release.

Over the next month, the governor will announce additional proposals and more details about this year’s transportation package as lawmakers ready for the 2012 General Assembly session.