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Correction: Proposed tax changes story

Published on NewsOK Modified: January 9, 2013 at 5:50 pm •  Published: January 9, 2013

McDonnell said his plan is "politically viable" but acknowledged it won't be easy.

"There will be people up here who find some things they like, some things they don't like," McDonnell said of his proposal. "There has to be a series of tradeoffs."

While Democrats have opposed using a greater share of the sales tax for transportation, Republicans have repeatedly shot down proposals to increase the gasoline tax.

"I hope that after a lot of posturing and a lot of failed attempts we can get something done," McDonnell said.

The largest single item in McDonnell's plan depends on action by Congress. According to the governor, Congress this year is expected to pass legislation giving states authority to collect sales taxes on out-of-state online and catalog sales. Taxpayers already are supposed to pay these taxes as a use tax on their income tax returns, but compliance is low. McDonnell proposes earmarking a portion of this revenue for transportation, raising just over $1.1 billion over five years.

The governor also wants to raise $547 million over five years by increasing vehicle registration fees by $15. An annual $100 fee on alternative fuel vehicles would raise an additional $66.6 million.

McDonnell said his proposal will "make a game-changing investment" in the state's transportation system. Because state law gives highway maintenance priority for gas tax revenues, very little money has been available in recent years for new construction.

"Instead of building new roads, we're doing paving and potholes," he said, adding that his plan would end that problem by 2019.

House Speaker William J. Howell, R-Stafford, called McDonnell's plan bold and said he has long considered the gas tax "a dinosaur." Howell, Republican Del. Tim Hugo of Fairfax County and Republican Sen. Steve Newman of Lynchburg are sponsoring the legislation.

Del. Vivian Watts, D-Fairfax and a former state secretary of transportation, said she was "not impressed" with McDonnell's final effort to do something on transportation before his nonrenewable four-year term ends next January.

"It's not nearly enough money," she said. It also puts too much emphasis on highway maintenance, lets out-of-state motorists drive on Virginia's highways without paying their fair share and does not do enough for the heavily congested "urban crescent" from the Washington D.C. suburbs, through Richmond to Hampton Roads.

Americans for Tax Reform, the conservative organization headed by Grover Norquist, also criticized the proposal.

The group said in a statement, "The plan as it stands now fails in its goal to prioritize transportation spending while avoiding tax increases."