Senator Creigh Deeds
Senator Creigh Deeds Newsletter
February 21, 2013

Dear friend,

 

The 2013 Session of the General Assembly will soon be history. Many issues have been addressed and changes, good and bad, have been made in the law. My own legislative agenda has met with success and failure. As we go into the last couple of days, a small amount of important work remains.

 

Transportation has not been addressed in a significant way by Virginia's government since 1986. Both Democrats and Republicans have talked about the issue over the years with limited results. As a result, a huge number of our bridges and tunnels are structurally failing and our construction budget is almost bankrupt. This year we may finally see a breakthrough.

 

The Governor's proposal introduced at the beginning of session met different fates in the House and Senate. The House adopted the major elements of his approach, while the Senate came forward with a bolder approach. The outline of a compromise is now in place. While the details have not been finalized, this could be a plan that will allow us to develop sustainable funding for transportation for a number of years to come. As a legislator, I am mindful we cannot allow the perfect to be the enemy of the good. There are components of the plan that individually would never get my support, including the ill-advised $100 surtax on hybrid vehicles. However, we have never been this close to adopting a plan to improve transportation funding.

 

The compromise will generate about $880 million by 2018, when it is fully implemented. The amount includes as much as $198 million from existing general fund sources. The plan eliminates the current 17.5 cent per gallon gas tax and replaces it with a 1.3 percent increase in the sales tax on motor vehicles, a 3.5 percent motor fuels tax at the rack, or wholesale level, and a 6 percent wholesale diesel fuel tax. The plan increases the state sales tax by 0.3 percent, which will be dedicated to support rail and transit, including Phase 2 of the Dulles Corridor Metrorail Project. The compromise is dependent to a large extent on passage of the federal Marketplace Equity Act (MEA), which would create a tax on internet sales. The Governor's initial plan included this provision as well and assumed Congress would permit the states to retain the funds generated by the tax. The compromise stipulates that if Congress does not act by January 1, 2015, the wholesale gasoline tax will increase to 5.1 percent. In addition to raising revenues for transportation, the money generated from the MEA and the sales tax increase will also benefit K-12 education. The plan is expected to generate over $200 million by 2018 for our public schools.

 

In my view, the plan is too complicated. Legislation should be transparent, and people should be able to understand easily the bill's implications. In the beginning, the Governor's plan attempted to raise money, without really raising money, for transportation. This plan contains an element of that approach: it eliminates the 17.5 cent per gallon gas tax, but it replaces it with a wholesale tax. The new tax will be a growing source of revenue as opposed to the per gallon tax. I am uncertain what effect, if any, the change in tax structure will have on gas prices. Despite my misgivings, this is a solution that appears to have the support of Democrats and Republicans, Delegates and Senators, and also the Governor.

 

We all need to recognize that politics is about compromise. I would prefer a less complicated and more transparent approach to funding transportation, one that has fewer conditions and moving parts. But this might be our best chance to accomplish something. The full text of the bill has not yet been released, and I look forward to reading the details.

 

The other major decision facing us as the General Assembly session winds down is Medicaid expansion. Under the Affordable Care Act the states have an opportunity to expand Medicaid coverage. For the first three years, the federal government will pay 100 percent of the cost, and over the next six years the federal government will pay at least 90 percent of the total cost of expansion. Over the initial six year period of Medicaid expansion, the federal government will invest $1.72 for every penny Virginia invests, which translates into $5 million in Virginia every day over the next six years. The investment, which will bring health insurance coverage to between 200,000 and 400,000 people, will create in excess of 30,000 jobs in the Commonwealth. In my view, we cannot afford to wait.

 

Most people agree that at some point we will have to expand Medicaid. The debate has revolved around whether reforms can be made that will ensure accountability and state control over how the money is spent. It is my understanding that the Governor's Secretary of Health of Human Resources has spoken with the U. S. Department of Health and Human Services and is reasonably certain we can get these reforms enacted quickly. At this point, it is largely a debate over timing. The question of expansion may delay passage of the budget. In general, the House has taken a position that we should wait until the reforms are enacted to expand Medicaid. The Senate recommends expanding and reforming Medicaid simultaneously. The Governor's position is consistent with the House of Delegates. In the next two days I hope this issue will come to a resolution so we can adjourn on time.

 

This past week saw the untimely death of former Delegate Chip Woodrum. I served with Chip during my years in the House and considered him a very close friend. He was among the smartest, most articulate people I have ever known and was a master legislator. Chip loved Virginia, the House of Delegates, and his hometown, Roanoke.  He was a gentleman of the first order and leaves behind a loving family. Chip Woodrum will be missed. We are all better for having known him.

 

In these last few days of the regular 2013 Session of the General Assembly, do not hesitate to contact me if I may be of assistance or if you have any ideas or input you want to share. It continues to be a high honor for me to serve in the Senate of Virginia. I can be reached at district25@senate.virginia.gov or (804) 698-7525. After adjournment sine die, I can be reached in Charlottesville at (434) 296-5491 or in Hot Springs at (540) 839-2473.

 

Best,

 

Creigh Deeds

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