In 2022, the General Assembly disregarded two long-standing principles of funding transportation projects in the Commonwealth. Republican Gov. Youngkin followed down that path this year.
The General Assembly has dedicated sources of revenue to be used for transportation, with general government functions being financed by general income and sales taxes and other special funds. The revenue sources for transportation include taxes on gasoline and other fuels, motor vehicle licensing and titling taxes, operating licenses fees, and 0.5 percent of the 4.3 percent state sales tax. Localities in specified regions of the state are authorized to levy an additional 0.7 percent sales tax to be used for transportation. The concept of having funding for transportation and general government separated was so ingrained in the legislature that there have been attempts in the past to create a “lockbox” for transportation funds to avoid their being used for other general government purposes. The latest such attempt was in 2018.
By statute the legislature has stipulated broadly how transportation funding will be distributed: by system, by highway district, etc. It has also authorized the issuance of bonds by the Commonwealth Transportation Board and other entities. However, with few exceptions, the main one being the widening of U.S. Rt. 58, the legislature has stayed away from designating the specific projects to be funded. It has left that function to the Board, relying on guidance from the Virginia Department of Transportation. It was a prudent choice. Otherwise, the funding of specific projects would be largely based on politics, rather than need.
Even with the General Assembly abstaining from specifying projects to be funded, politics, of a sort, crept into the process. The costs of the projects approved by the Commonwealth Transportation Board far exceeded any foreseeable revenue, and the Board had difficulty setting priorities. In 2014, the legislature enacted legislation in which it declared, “it to be in the public interest that a prioritization process for projects funded by the Commonwealth Transportation Board be developed and implemented to improve the efficiency and effectiveness of the state’s transportation system, transportation safety, transportation accessibility for people and freight, environmental quality, and economic development in the Commonwealth” and directed the Board to develop such a system. Thus, the Smart Scale system was born. In that system, potential transportation projects are evaluated on the basis of “key factors like how they improve safety, reduce congestion, increase accessibility, contribute to economic development, promote efficient land use, and affect the environment.“
In summary, going into 2022, these were the basic principles for funding transportation projects: 1. Use sources of revenue specifically designated for transportation purposes; 2. Allow the Commonwealth Transportation Board to set priorities for which projects would get funded.
The 2022 General Assembly ignored both principles. The legislature provided $554 million in general fund appropriations for the following specific projects:
- Widening I-64 between the Bottoms Bridge exit in New Kent to James City County–$539 million (Item 447.10, Chap. 1 (HB 29) and Items 452 and 485, Chap. 2 (HB 30)). This project did not qualify for state transportation funding under the Smart Scale program. Nevertheless, businesses and localities along the corridor lobbied heavily for the state funding. See more detail here.
- Extending Nimmo Parkway, Virginia Beach–$10,000,000 (Item 447.10, Chap. 1 (HB 29)). This is a local project, not funded by state transportation funds. Inclusion of a general fund appropriation in the budget was probably helped by having the chairman of the House Appropriation Committee be from Virginia Beach.
- Replacing the Robert O. Norris Bridge–$5,000,000 (Item 452, Chap. 2 (HB30)). This bridge spans the Rappahannock River, linking Middlesex and Lancaster counties. The Commonwealth Transportation Board approved the replacement of the bridge in 2021. This general fund appropriation supplements transportation funds for the preliminary engineering.
These actions put not only the nose, but at least the head, of the camel in the tent.
In his budget proposals for the 2024-2026 biennium, Gov. Glenn Youngkin would push the camel further into the tent. He proposed general fund appropriations of $70 million to accelerate the widening of I-81 northbound lanes and $20 million for the Transportation Partnership Opportunity Fund (TPOF). The latter fund is used to provide transportation-related grants linked to economic development projects. Its primary source of funding is a portion of the interest accrued by the main Transportation Trust Fund. Both the House and the Senate in their budget amendments rejected the proposal for a $20 million general fund infusion into TPOF, but accepted the $70 million general fund appropriation for I-81.
Youngkin’s proposal represents a complete turnaround from his position a couple of years ago. In 2022, the governor proposed a three-month holiday in gas taxes with a gradual return to the regular level. Democrats killed the proposal. A couple of months after that defeat, he was complaining that the state tax on gasoline brought in too much money to the highway construction fund. Now, less than two years later, he proposed pumping $90 million of general fund dollars into those transportation funds that supposedly were getting too much from the gas tax. For a discussion in BR of the governor’s earlier position, see here.
Lest Northern Virginia feel left out in this dispensing of general fund dollars for transportation, the House included in its version of the budget almost $150 million over the biennium in general fund appropriations for the Metro system. The Senate did not include any additional funding for Metro. The Metro funding is bound up with the negotiations among the House, Senate, and the governor over the proposal by the governor to build a sports complex in Alexandria.
However the negotiations over Metro funding turn out, it looks as if the transportation funding camel is in the general fund tent.
