April 12, 2019
I-81 and Other Projects Get Funding Boost
For Virginia’s communities to thrive, the state needs to make ongoing investments, and that includes safe, well-maintained roads and highways. In Virginia, serious investments must include a serious discussion about revenues. For lawmakers, this is a discussion worth having and acting upon. Throughout the 2019 General Assembly session, state legislators debated bills to provide substantial funding to the I-81 Corridor Improvement Plan, and approved legislation to do so as part of last week’s reconvened session. Chapters 837 and 846 create a new fund for the plan, using revenues from increased truck registration fees, diesel surcharges on heavy trucks, and diesel fuel taxes, as well as a new regional fuels tax for areas along the I-81 corridor. The fund will generate about $1.5 billion in new state and regional revenues over the next six years, directing new resources to transportation projects in Virginia.
In recent years, the state has faced significant transportation needs. With a shortage of available resources, officials have relied on a competitive scoring system to determine which projects to fund. This new package dedicates a new stream of funding to transportation in the commonwealth, which will lessen these pressures. The new funding will primarily be directed to I-81, although other areas of the state will see additional resources as well.
According to a principle that has traditionally guided transportation funding decisions, those using and benefiting from a transportation service should generally be expected to pay more of the costs. For the new I-81 law, the taxes and fees have an obvious and direct connection to road usage. This represents an improvement over transportation funding plans – including Virginia’s 2013 transportation law – that instead rely on general sales tax revenues that have a weaker relationship to who benefits from better roads.
Many of these revenues will be paid by industry, although others will be paid by everyday drivers. In particular, the new regional fuels tax along the I-81 corridor will be paid by all drivers who fill up in that area. Fuels taxes tend to be regressive, however – people with low income pay a larger share of their income toward these taxes than people with high income. State lawmakers should consider ways to lessen these impacts – especially because of the already upside-down nature of Virginia’s state and local tax code.
Refundable tax credits like the Earned Income Tax Credit (EITC) are one of the most effective ways to address these impacts and offset taxes paid besides just state income tax. Recently in Ohio, for example, increases to their state’s gas tax were paired with increases to the state’s EITC to help offset increased fuel taxes paid by low- and moderate-income working families. Unfortunately in Virginia, lawmakers left out the proposal to make Virginia’s EITC refundable when negotiating the tax deal.
When considering needed investments in our transportation infrastructure, state lawmakers did the right thing in making sure that needed resources were a part of the final package. Families and businesses across Virginia rely on roads and highways to get around. And in the coming years, this revenue stream will fund improvements along some of our commonwealth’s busiest interstates, making Virginia a safer place to work and live.
Budget & Revenue