Va. House, Senate make 11th-hour roads bill overhaul

RICHMOND, Va. (AP) - House and Senate Republicans proposed wholesale overhauls Monday to Gov. Bob McDonnell's legacy transportation funding initiative just one day ahead of a drop-dead legislative deadline.

In the Senate, the amendment from the conservative sponsor of McDonnell's original bill substitutes a 5.5 percent sales tax at the wholesale level to gasoline and diesel and scraps McDonnell's proposed overall retail sales tax increase from 5 percent to 5.8 percent.

Sen. Stephen D. Newman, R-Lynchburg, said his bill would generate only about $2 billion to $2.5 billion over five years, short of the $3.1 billion that McDonnell's bill would yield.

A House substitute bill eliminates McDonnell's proposed $100 fee on new hybrid cars and allows for regional transportation projects. It retains McDonnell's general sales tax increase and his abolition of the 17½ cents-per-gallon gasoline tax.

Its sponsor, Del. S. Chris Jones, R-Suffolk, said his bill would bring in about $52 million less than McDonnell's bill over five years.

Both proposals would also end a proposal to impose sharp tolls on a stretch of Interstate 95 through a low-income region of the state south of Petersburg by mandating legislative approval of tolls on Virginia interstates.

Another amendment in the House, by Del. David Albo of Fairfax, was rejected. It retained the proposed tax on gasoline, but instead of tying it to volume, it would be indexed to cost, allowing it to increase with inflation. It eliminates the remaining state taxes on groceries. It would have retained McDonnell's hybrid fee.

The Jones amendment and Newman's Senate rewrite both face votes for final passage on Tuesday.

The bombshells hit on the eve of "crossover," the annual deadline for each legislative chamber to finish work on its own bills. In the House, that left bleary-eyed delegates to make sense of the changes as a 10-hour floor session stretched late into Monday night.

The McDonnell administration made clear its preference for its own bill to Newman's in a statement from spokesman J. Tucker Martin Monday evening. Later, Martin proclaimed the governor "very pleased with the positive actions" of Jones' amendments.

Newman's amendment hit first, when the Senate adjourned at midafternoon, with the McDonnell administration spending most of the afternoon vetting the changes. The administration concluded it prefers its own version to Newman's.

But McDonnell's package was not only a target for the Senate's 20 Democrats, it also troubled conservative Republicans in the Senate.

"This was an opportunity on the right and on the left to perfect his legislation," said Newman, who sponsored McDonnell's original funding measure.

Attorney General Ken Cuccinelli, a tea party favorite who is unopposed for this year's Republican gubernatorial nomination, is among the GOP conservatives backing Newman's amended bill.

"The proposed sales tax on gasoline will replace a gas tax that is no longer the best means of raising revenue for transportation," Cuccinelli said in a release praising Newman's bill. The volume- based tax, unchanged since 1986, has atrophied as a revenue source because it doesn't track increases in gasoline prices and it declines as vehicles become more fuel-efficient and as people drive less. He said it also had a greater chance of passage than McDonnell's initial measure.

"I am comfortable with this proposal setting the current sales tax rate on gasoline at a revenue-neutral level," Cuccinelli's statement concluded.

There was also bipartisan grumbling over McDonnell's retail sales tax increase would have applied to staples such as refrigerators, shampoo and clothing - items lacking the direct tie to highway usage that a fuel tax carries.

"The governor's idea raised sales taxes on everybody and rewards people like me who drive gas hogs," Sen. John Watkins, R-Powhatan, said of Newman's wholesale-level sales tax. "This is a more realistic approach to moving this ahead."

Senate Democratic Leader Richard L. Saslaw said Newman's bill remains as unpalatable to his caucus as McDonnell's because both bills use money from the general fund, which covers such core state services as education and public safety, for transportation

In the House, partisan divisions were just as sharp as Democrats sought to amend Jones's proposal. Del. Mark Sickles, D-Fairfax, chided Republicans for suggesting the gasoline tax raises too little money.

"If it's such a horrible tax, I find that an odd argument coming from the other side," Sickles said.