A Republican-controlled Senate panel backed a massive tax increase on Tuesday that Virginians will pay at the pump to generate $4.5 billion for roadwork in the next five years.
The amended bill raises the gas tax by 5 cents, from 17.5 cents to 22.5 cents, with future increases tied to the cost of road construction. It also creates a 1 percent sales tax on wholesale gasoline and gives localities the option to levy a 1 percent local sales tax to raise an addition $700 million for transportation projects.
"A proposal like this has been long overdue," said Sen. Don McEachin, D-Henrico.
The Senate measure is a complete rewrite of the bill that Gov. Bob McDonnell proposed, which would have eliminated the gas tax while pushing a relatively modest 0.8-cent sales tax increase. The governor's package passed the House last week, and the two chambers now have less than two weeks to find a compromise.
The new package lost significant Republican support, including the Senate majority leader and the bill's sponsor. But it won over stubborn Senate Democrats, who have repeatedly rebuffed Republican attempts to compromise, and the bill passed the Finance Committee 9-6. Four Republicans voted for it.
In pushing for $1 billion a year in new revenue for roads, Sen. Frank Wagner, R-Virginia Beach, crafted an amendment to bait Democrats with a package too juicy to turn down. Any bill needs at least one Democrat on board to pass in the evenly divided Senate.
McDonnell wants a much larger portion of the sales tax, 0.25 cents, to go toward road work, in addition to a relatively modest 0.8-cent sales tax increase, and the Republican governor is unlikely to turn his legacy-defining legislation into a giant tax hike. Still, he urged the Senate to pass the measure to move the bill forward, sensing comprehensive transportation funding reform is within reach for the first time in decades.
"I fully expect a final transportation bill to be more fiscally responsible and balanced," McDonnell said.
The measure moves to the full Senate, where it faces a Wednesday deadline for action. If it passes as expected, a small group of lawmakers from both chambers will meet behind closed doors to hammer out an agreement that can pass both chambers.
That will be a delicate process, as the House and Senate proposals are far apart, and conservative Republicans have balked at any tax increase, while Democrats want more revenue than McDonnell has offered.
"Hopefully we can craft something that gets us 51 votes in the House and 21 votes in the Senate," Wagner said. "I'm as optimistic this year as I've ever been."