Northern Virginia Transportation Plan

One aspect of the plan announced yesterday was the new funding for the Northern Virginia Authority that would stay here.

This would generate the following new money here (totals are yearly):

Commercial Real Estate Tax:  Raised 28 cents per $100 in value
NEW REVENUE:  $212 Million Per Year

Rental Car Tax:  2% Increase
NEW REVENUE:  $7.7 Million Per Year

Real Estate Sale Tax:  0.40 cents per $100 in value ($500,000 home sold would have a $2,000 tax)
NEW REVENUE:  $158 Million Per Year
*** Need to find out if this is on refinancing also or if this is only on homes sold***

New Drivers License Fee- $100 for new residents of the state.  No increase for Virginians renewing.
NEW REVENUE:  5.9 Million Per Year
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Overall, this part of the plan is very creative and pretty good.  With the commercial real estate tax, the rental car tax and the drivers license fee for new residents- none of those new revenues will impact anyone who lives here.   The home sales money should only impact people selling their homes, although I do have a question on whether this would also apply to refinancing.

I'm still very concerned about aspects of the statewide plan.

The Northern Virginia plan is basically the Tim Hugo and Dave Albo bills morphed into one, so congratulations to them for getting included here.  I called Hugo, and he is very excited about the plan and its chances for success.   Hugo thinks the two biggest hurdles to overcome are John Chichester and Dick Saslaw.  Hugo added "Saslaw would rather have a partisan train wreck than what is good for Northern Virginia."

Comments

I don't think Chichester will be a problem since he will probably not keep his Senate majority leadership if this fails in the senate. They would not have made this annoucement without Chichesters approval or at least a promise not to block it. The biggest challenge this transportation package will face still comes from within the house side because I can almost guarantee the conservative special interest groups will be threatening to primary those republicans who vote for the transportation package with increased fees although with McDonnell and Howell's backing it will probably just barely squeek through.

[Not Larry Sabato]

These are not fees. It is an increase in the real estate tax for commercial landowners, and an increase in the tax rate on rental cars.

The best way to tell a tax from a fee- a tax is based on percentage of something- a fee is a flat cost.

[Hans Bader]

The Real Estate Sale Tax is a bad idea, and will drive down home values a bit.

But the other taxes and fees in this transportation plan are necessary to get the tax-raisers in the State Senate to go along with the House of Delegates' insistence on using some general fund money to alleviate the transportation crisis.

Using the general fund for transportation will not harm existing non-transportation programs, like schools.

It may prevent the implementation of costly, new non-transportation programs, but it will not cut existing non-transportation programs at all.

Steven Pearlstein of the Washington Post and Jim Bacon of Bacons Rebellion have pointed out that this plan will leave plenty of money for education and other non-transportation uses.

As Pearlstein puts it,

"Nor should anyone worry too much about "robbing" general government coffers to pay for badly needed roads and road repair. The sum involved -- $250 million a year -- represents about 1.3 percent of annual spending from a general fund that has been growing, on average, at 6 percent a year. This is merely a rounding error."

Steven Pealstein, "Funding Sends Northern Virginia Down the Right Road," Washington Post, January 19, 2007, at pg. D1
(http://www.washingtonpost.com/wp-dyn/content/article/2007/01/18/AR2007011801839.html)

[Hans Bader]

The link to the Washington Post article by Steven Pearlstein analyzing the transportation plan is at:

http://www.washingtonpost.com/wp-dyn/content/article/2007/01/18/AR2007011801839.html

When is someone going to point out that the commercial real estate tax (or surcharge) is unconstitutional under the "uniformity" clause of the VA Constitution?

[Not Harry F. Byrd, Sr.]

Hey, isn't taxing commercial real estate at a different rate than residential unconstitutional?

[Bubby]

When is someone going to notice that I-81 congestion is 90% out-of-state commercial trucking which will bear NO additional costs for needed improvements to the highway?

[Not Harry F. Byrd, Sr.]

Seems like Pearlstein doesn't know that constitutions trump laws...

He said this:
********
Real estate developers and commercial property owners are already grumbling about the prospect of a transportation surtax that Northern Virginia cities and counties could impose on their property tax bills. But it's hard to work up too many tears for this crowd. Up to now, Virginia has been one of the few states that requires a single, uniform tax rate for both commercial and residential property, even though those are really separate real estate markets. In recent years, home values in Northern Virginia have been rising twice as fast as prices for office buildings and shopping centers, allowing localities to dramatically cut their tax rates. As a result, commercial property owners have enjoyed the benefit of lower rates without the full added burden of higher assessments. The proposed increase would simply require them to give back some of their recent windfall.
*****

Bubby: Diesel tax increase

[SE VA MWC Alum]

bubby thats what the diesel fuel equalizationis about., lol

Since most of the truck traffic is out of state and really jams up 81, I would be in favor of truck tolls.

[Alice]

$100 for a drivers license for new residents is outrageous, no other state charges anything like that.

The Republicans have held the legislature since 2001 and they still have not yet put out any decent transportation plan.

[Hans Bader]

If Not Harry F. Byrd is right, and the commercial real estate tax is legally dubious, what might they replace it with?

I'd like to get rid of the home sales tax increase, too.

Property taxes are already too high for homeowners.

Maybe they could replace them with a 0.25% local sales tax increase, or a local fuels tax.

Ideally, there would be no tax increases, but some may be necessary to get a transportation compromise through the General Assembly that also includes some badly needed funding from budget surpluses and the general fund.

On a state wide level, if they are going to raise taxes (and I am not saying that they should raise taxes), it would be better to raise the gas tax and fuel taxes, not the general sales tax, since the gas tax has fallen in inflation-adjusted terms, while the sales tax was increased substantially under the last governor.

[Ghost of Henry Howell]

Did Bob McDonnell actually review the Constitution before he signed off on the commercial-only RE tax increase?

[SE VA MWC Alum]

Hans agree with you on the gas tax-increase it to where its inflation adjusted value is halfway between its current value and its 1986 and then index it to inflation-CPI. plus it hits people who drive cars so the beneificiaries of the plan end up paying for it

[Bubby]

Ever since I got pancaked at a toll booth by a driver fumbling for change, I have had a deep and abiding hatred of toll booths. That hatred was deepened by a short affair with the Dulles Tollway. When the Richmond tollbooths on I-95 came down, there were people dancing in the streets.

The thought that we would bottleneck trucks at smoky toll plazas up and down the valley is a non-starter for me. RAISE THE ROAD FUELS TAX. When it gets high enough, we'll have plenty of people willing to talk about a great idea - Interstate Intermodal Rail. And in the short term, I will have new respect for a courageous legislature - doing the right thing.

If we're talking taxes it should be a "pay to play" model. As mentioned by a few above, they should be looking at a gas tax hike, not upping real estate taxes. Charging a residential sales tax would be at best a one time fee for potentially new motorists and at worst be a tax on someone who doesn't contribute to the congestion (telecommuting, public transportation, and the like). Any increase in taxes should focus the burden on those who use the resource, not on trying to offload the tax to someone else.

And I have to disagree with the assertion that a commercial real estate tax wouldn't effect "anyone who lives here". Those businesses are not just going to eat that loss - a good chunk will be passed on to consumers in one way or another.

[LoudounYoungDem]

$100 for a new license? That doesn't seem steep to anyone?

WaPo had both $100 and $10 printed today for the same fee. Which was a typo and which is true?

[Vivian J. Paige]

I find it interesting that this bill creates a separate rate for commercial real estate when Del. Kenny Alexander introduced a bill last year that did the SAME thing (due to the circumstances laid out in NHB's 12:47pm post above) and the bill never got out of committee.

[Ghost of Henry Howell]

Vivian:

This concept is not constitutional under the state's "uniformity" clause. Otherwise, every locality would have been doing this already (i.e. taxing commercial properties higher). Hello, MSM, anybody home?

[Nate de la Piedra]

100 Bucks for a new license seems way too much, that just isn't appropriate. Not cool, it'll act as an incentive for people that move to Virginia to keep their old drivers license and tags as long as possible, and that's just no good for anyone.

[Nipper]

I would have no problem paying $100 to gain a Virginia driver's license. It's the waiting in line for over 2-3 hours at our incredibly inept DMV's that kills me.

[Poli-Carp]

The last few times I've been to the DMV it has taken me no more than thirty minutes to get done and get out. The new computer systems they've introduced over the last few years have speeded things up considerably.

The plan w/ regard to commercial is constitutional....

To wit (that's legalese for "Check this shit out"): Article X, Section 1 says "All taxes shall be levied and collected under general laws and shall be uniform upon the same class of subjects within the territorial limits of the authority levying the tax..." The key verbiage is the term "same class of subjects." All residential must be at the same rate; al commercial, etc.

Also to wit: Article X, Section 4 says "Real estate, coal and other mineral lands, and tangible personal property, except the rolling stock of public service corporations, are hereby segregated for, and made subject to, local taxation only, and shall be assessed for local taxation in such manner and at such times as the General Assembly may prescribe by general law."