Funding Transportation in the 21 st Century

1. Funding Transportation in the 21st Century (It’s harder to do then you think.) Neal Menkes Virginia Municipal League November 29, 2007

2. Can we talk? • Political Process • “Windows of Opportunity” • Prove the need • Determine amount of resources • Who pays? How much? • Seal the deal • Land use

3. 1986 Special Session • Called to respond to Governor’s “Blue Ribbon Commission” • Increased taxes; provided funding for mass transit, airports, roads, and port facilities • Gas tax increased 2.5 cents to 17.5 cents per gallon • Motor vehicle sales and use tax increased 1.0 percent to 3.0 percent • Motor vehicle license fee increased by $3.00 • State sales and use tax increased by 0.5 percent to 4.5 percent

4. Changes in 1986 didn’t keep up with demand

5. 2004 SessionSenate passes first transportation funding package (by either chamber) in 18 years • SB 635 authorized an estimated $1.6 billion in new transportation-only taxes for the 2004-2006 biennium. • In the Senate budget: • $949.0 million for highway construction • $347.0 million for FRAN debt service • $177.0 million for mass transit • $51.0 million for ports • $29.0 million for aviation • The House budget included $132. 7 million in new general fund revenue for transportation in 2004-2006

6. 2005 SessionWindow of Opportunity is open! • Governor introduces $824.0 million package -- $373.6 million GF and $450.5 million NGF • NGF dollars are from surplus revenues and changes to 2005 and 2006 TTF forecast • GF dollars include $350.0 million of one-time revenue • GF dollars to go for transit, public-private partnership fund, local partnership fund, & elimination of road project deficits • New rail partnership fund created. Federal dollars to go to maintenance for first time ($97.4 million)

7. 2005 Session“Reliable & Sustainable Revenue” • House puts together a transportation initiative; pushes more money to NVA and Hampton Roads (HB 2771); passes abusive driver bill (HB 1563) • Includes an additional $81.3 million from the General Fund • Senate passes resolution to put together another Blue Ribbon Commission; cuts $160.0 million from Governor’s proposal

8. 2005 SessionCompromise Crafted • General Assembly passes $848.1 million transportation package -- $347.6 million GF and $500.5 million NGF • General fund dollars: $240.0 million is one-time; $107.6 million from dedicated of insurance taxes attributable to car insurance premiums. • No agreement on Blue Ribbon Commission • No abusive driver fees

9. 2006 SessionEveryone agrees to disagree • Senate creates bi-partisan START group in 2005 to identify the principles and actions needed to create a modern transportation system • Introduces legislation (SB 708, SB 373, SB 374, and SB 423) to address funding, planning and local land use issues • $1.0 billion per year in dedicated revenue • Includes $369.8 million of one-time GF

10. 2006 SessionEveryone agrees to disagree • Governor proposes $624.5 million GF, including $285.5 million of on-going GF support and new transportation taxes ($850.0 million in FY 2008) • Supports changes in planning and land use • Overall package is similar in scope, amounts and policy to Senate package

11. 2006 SessionEveryone agrees to disagree • House $360.9 million package in FY 2008 relies on general fund revenues and abusive driver fees • $360.9 million from general fund sources • $136.8 million in abusive driver fees • House spending plan includes $64.6 million for NVA and $47.3 million for Hampton Roads regions to launch a transportation debt program using 10-year notes • Other uses of the funds include maintenance, a local congestion relief fund, transit, FRANS debt service, local cost sharing, and TPOF

12. 2006 SessionEveryone agrees to disagree • Good News • All parties agreed on support for new construction, transit and local revenue sharing. • Bad News • No consensus on use of debt, general fund revenues, abusive driver fees, and taxes • In late Spring, Senate passed measures (Senate Bills 5013, 5014, 5015, and 5016) setting up a new statewide funding scheme and regional funding mechanisms for NVA, Hampton Roads and others. All these bills died in House Finance.

13. 2006 SessionAnd We End Up With • General Assembly approves one-time general fund appropriation of $339.0 million in state budget • Money is contingent upon subsequent passage of a comprehensive funding package • Several START recommendations were enacted.

14. James Freeman Clarke: Quotes: PoliticsA politician thinks of the next election - a statesman, of the next generation.

15. 2007 Session • The General Assembly approved $500.0 million from the general fund as a one-time appropriation. • $305.0 million to the TPOF • $65.0 million for specific rail projects • $60.0 million for transit capital projects • $50.0 million for Virginia Port projects • $20.0 million for local revenue sharing

16. House Bill 3202 • HB 3202 includes a statewide and regional funding mechanisms. • The statewide component provides $222.4 million in FY 2008, relying on abusive driver fees, vehicle registration fees, liquidated damages, insurance premium taxes, recordation taxes, and an increase in the diesel fuel excise tax • There is also a $3.0 billion bond package for state projects.

17. HB 3202 – Regional Plans • The Northern Virginia and Hampton Roads plans are similar but not identical. • Both include vehicle rental tax, commercial real estate tax at different rates, grantor’s tax, safety inspection fee, initial vehicle registration fee, sales tax on auto repairs, and regional vehicle registration fee • NVA has a 2% transient occupancy tax. Hampton Roads has a 2% regional gas tax.