More than $100 million a year in auto insurance premium taxes would be redirected to finance $1 billion in road and transit projects in Northern Virginia, Hampton Roads and the Interstate 81 corridor through a bill authored by Prince William Delegates John A. “Jack” Rollison, R-52nd District, and Robert G. Marshall, R-13th District.
Unanimously approved Wednesday by the House Appropriations Committee, a new version of their bill calls for the bond debt to be carried by Virginia instead of regional authorities like the Northern Virginia Transportation Authority.
The bonds are financed by tax revenue matched dollar for dollar by private, regional or local dollars.
The change caps how fast debt can be issued because Virginia’s debt capacity cannot be exceeded. The highest amount of debt that could be financed statewide each year is $150 million in fiscal year 2004, $350 million in 2005 and 2006, and $200 million in 2007.
For the first year, the debt service is estimated to be $11.5 million for the $150 million.
“It is a bill that would allow us to jumpstart four major projects in Northern Virginia,” Rollison said.
Those projects, each of which could get $80 million each in bond revenues, are Dulles transit, Interstate 66 improvements and rail extension, and high occupancy vehicle/high occupancy toll lanes for interstates 95 and 495. Virginia Railway Express could also take out $30 million in bonds for fleet upgrades.
The bonds are contingent on the economy picking up and matching dollars being found. For example, the I-495 improvements could be matched by toll money and the VRE bonds could be matched by its regional controlling boards like the Potomac and Rappahannock Transportation Commission, Rollison said.
The insurance tax revenue has to be replaced in the general fund by new revenue created by “moderate” economic growth, he said.
That hurdle is spelled out by the latest House budget forecasts: With 45 percent of budget proposals this year as one-time fixes, the state budget is estimated to still have a $900 million shortfall after this year on the assumption of 5 percent economic growth, said House budget director Robert Vaughan. That shortfall takes into account the redirection of auto insurance tax.
If lawmakers can close that gap a year from now and preserve the tax dedication to transportation, localities would start seeing money July 1, 2004.
Directing the auto insurance tax to transportation is not a new concept. The shift was signed into law under the Virginia Transportation Act of 2000 but the money was quickly taken back into the state’s general fund with the recession.
All localities in Virginia will get the tax proceeds based on population. Areas not covered by the three bonding districts will get the money put into their primary highway funds.
Manassas Sen. Charles J. Colgan, D-29th District, has a similar transportation bill that uses money off the top of the region’s existing road dollars to take out revenue bonds. The Senate Finance Committee has not taken it up yet.
Marshall said the bill answers objections raised last year during the sales tax referendum fight.
In other action Wednesday, a schools sales tax bill died.
Fairfax Delegate Jim Dillard, R-41st District, had his bill to raise the sales tax half a cent for education defeated in the House Finance Committee on a 10-9 vote.
“We’ve had poll after poll that shows people are more inclined to support someone who supports a tax increase for education than someone who is not, so I don’t see how it hurts anybody,” Dillard said.
Staff writer Chris Newman can be reached at (804) 649-8710.