McDonnell: Reforms needed to Virginia’s flat rate gas tax

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Ask the Governor

wtopstaff | November 14, 2014 4:54 pm

Amy Hunter, wtop.com

WASHINGTON – While Virginia Gov. Bob McDonnell says he won’t raise taxes in the state, he is open to changing the flat gas tax so that it’s tied to economic factors, such as inflation, meaning Virginia drivers could see the tax go up.

“If you have a tax that fluctuates with economic activity, I don’t see that as a tax increase,” McDonnell tells WTOP.

“My position the last three years is that we balance budgets without raising taxes. We’re not gonna raise taxes in Virginia. Now, I’m going to look at some tax reform ideas and some other things that we can do in order to fund transportation,” he says.

Virginia’s gas tax — which has gone unchanged since 1986 — is currently the state’s only flat tax rate, set at 17.5 cents per gallon. When gas prices rise and fall, the flat rate stays the same.

McDonnell says the state has a $300 to $400 million deficit in funding for road maintenance, and as a result funds allocated for construction are used to maintain the roads.

In January, McDonnell told WTOP he would not support any increase to the rate. Rather, he said he would like to increase the half-cent taken from the 5-cent sales tax to three-quarters of a cent.

Earlier this month, state Sen. John Watkins, R-Powhatan, proposed a plan that would increase Virginia’s gas tax from 17.5 cents a gallon to 31.5 cents a gallon. The 14 percent increase would eliminate the need to add more toll roads.

“The realities of the gas tax, which because it doesn’t fluctuate … like every other tax in Virginia, and because of alternative fuels and higher miles per gallon, you add all that together and the gas tax revenues, while they’ve gone up in terms of real dollars, in terms of actual purchasing power, they’ve gone down,” McDonnell says.

“The bottom line is we still have not addressed this issue of the maintenance crossover,” he says. “I’m open in looking at ways to fix the problem.”

McDonnell was a guest on WTOP’s “Ask the Governor” show on Tuesday morning. He answered questions about the prospect of early voting in Virginia, Maryland’s decision to leave the ACC and whether Virginia would follow suit and a new report that shows wages have gone down for Virginia families.

To read about those topics and more, check out the show’s blog below.

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