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Virginia buyers, Maryland drivers facing higher taxes

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Local,Maryland,Virginia,Steve Contorno,Taxes,Metro and Traffic

Virginians will soon pay more at the checkout counter, and Marylanders are bracing for higher gas prices as the Beltway neighbors invoke or consider imposing tax increases to fix their crumbling, crowded roads.

Virginia Gov. Bob McDonnell on Tuesday presented mostly minor amendments to a sweeping transportation funding reform package that will generate nearly $6 billion over the next five years by raising the sales tax from 5 percent to 5.3 percent statewide and to 6 percent in Northern Virginia and Hampton Roads.

Chief among McDonnell's amendments is one that would allow other regions to raise road money through tax increases, but only if those areas reach certain population thresholds.

By expanding the taxing authority to the entire state, the governor believes he avoids constitutional concerns raised by Attorney General Ken Cuccinelli, a Republican candidate for governor who called the roads bill an "enormous tax hike." Cuccinelli previously said the state was not allowed to tax one region more than another, but he indicated Tuesday that he was satisfied that McDonnell's amendment corrects the problem.

McDonnell faced mounting pressure from conservatives to veto the bill. While he lowered the fee on alternative-fuel vehicles from $100 to $64 and pared down tax increases on buying a vehicle, selling a home and staying in a hotel, all of those changes will amount to about $40 million a year in taxpayer savings.

"We must invest in our infrastructure to ensure our continued economic prosperity, safe roads for our citizens to travel and an enhancement in their quality of life," McDonnell said.

The General Assembly returns to Richmond next week to consider the changes McDonnell proposed, and little adversity is expected.

"I wish we had this kind of bipartisan cooperation on every bill we took up down there," said Del. Mark Sickles, D-Franconia.

In Maryland, Gov. Martin O'Malley's 2014 budget proposal included no tax increases, but the General Assembly is considering hiking the gas tax to pay for roads.

A Democratic proposal would place a 1 percent wholesale tax on gasoline starting July 1, increasing the cost at the pump by about 4 cents per gallon. That wholesale tax would increase to 2 percent in 2015, and to 3 percent in 2015, meaning motorists will pay 12 cents more per gallon over today's prices. Maryland Democrats would also index the state's flat 23.5-cents-per-gallon gas tax to inflation.

The hike could push some Marylanders to cross the Potomac for gas. Virginia is getting rid of its 17.5-cent gas tax and replacing it with a 3.5-cent wholesale tax on gasoline, which should lower gas prices.

Both states are counting on receiving new revenue through an online sales tax, but that requires congressional approval. If Congress fails to act, the wholesale gas tax will jump even higher in both states.

Once Virginia's transportation package gets final approval from lawmakers, though, it is still likely to face a legal challenge.

"Anybody with 60 bucks can sue," said Del. Dave Albo, R-Springfield. "If this thing gets overturned, there's only two other options: raise taxes statewide and then our money goes outside Northern Virginia, or do nothing."

scontorno@washingtonexaminer.com

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