The Virginia General Assembly passed a sweeping transportation plan that would cut the state’s retail taxes on diesel and gasoline and replace them with a wholesale tax on fuel distributors, raise the state’s sales tax to help fund transportation projects and curtail plans to toll Interstate 95.
The measure effectively stops a plan by the Virginia Department of Transportation to toll Interstate 95, in an “an overwhelming sign of growing opposition to tolls on existing interstates,” according to American Trucking Associations.
“While not an outright ban on tolling, the Virginia General Assembly has made it clear that they do not support tolling and will not move forward with any plans to toll I-95 south of Fredericksburg,” ATA said in a statement.
State officials submitted a plan to the federal government last August to toll I-95 — the East Coast’s major north-south corridor — a move that was vehemently opposed by the trucking industry.
ATA and NATSO, which represents truck stops, called on Virginia Gov. Bob McDonnell (R) to sign the legislation.
“By looking at [and] then rejecting tolls in favor of more efficient revenue sources, Virginia lawmakers have provided a solid example for states looking to finance needed transportation infrastructure,” ATA President Bill Graves said in a statement.
The transportation plan will replace the current 17.5 cents-per-gallon tax Virginia motorists pay on gasoline and diesel fuel with a wholesale tax on fuel distributors of 6% on diesel and 3.5% on gasoline.
The measure, which is supported by McDonnell, also will raise the state’s sales tax to 5.3% from 5% and will dedicate more money from the general fund to transportation purposes.
“This is a historic day in Virginia. We have worked together across party lines to find common ground and pass the first sustainable long-term transportation funding plan in 27 years,” McDonnell said in a statement released Saturday.
In the statement, he noted a recent study by the Texas Transportation Institute that cited the high costs of gridlock on the economy. That study said that traffic congestion costs the trucking industry about $27 billion a year in lost time and wasted fuel.
The state’s Senate approved the measure Saturday after the House passed it late last week. The measure was a compromise between the House — which originally wanted to completely eliminate fuel taxes and replace them with a higher sales tax — and the Senate, which wanted to raise fuel taxes.
The bill also will raise the vehicle sales tax to 4% from 3%.