The Virginia General Assembly concluded its veto session on April 3.  Governor Northam submitted amendments to Senator Mark Obenshain's SB1716 and Delegate Steve Landes' HB2718 to increase the statewide Diesel Tax, Statewide Road (IFTA) Tax, Statewide Truck Registration Fees, create an I-81 Regional Fuels Tax and create an I-81 Committee.  This is important because it represents over a $1.5 billion new tax on businesses in the Commonwealth without going through any of the General Assembly's subcommittee or committee process.

 

The bills were originally introduced as I-81 vehicle tolling bills that allowed only cars to access a flat rate commuter pass to bypass actual tolling. The I-81 tolling provisions failed, and the bill was rewritten to create an I-81 Committee to continue to develop consensus on funding options and project prioritization for safety and capacity improvements to I-81 for the 2020 legislative session. The revised bill passed 97-0 in the House and 37-2 in the Senate.

 

However, Governor Northam recommended amendments to these bills one week before the April 3 veto session to add the four major tax increases. Speaker Cox and Senator Norment ruled the amendments germane. The patrons of the legislation, Senator Mark Obenshain and Delegate Steve Landes, allowed the amendments despite voting against the bills. The House and Senate narrowly adopted the Governor's amendments with no subcommittee hearings, committee hearings, public input or stakeholder consideration.

General Assembly Vote:

• House Adopted Governor's Amendments (60-39-1)
• Senate Adopted Governor's Amendments (22-14-4)

The VMA opposed the bills based upon the precedent they have now established by raising taxes without the normal legislative process or public input.  The VMA and its coalition, including the VA Forest Products Association, VA Loggers Association, and VA Manufactured and Modular Housing Association, opposed the bills because they fundamentally jeopardize Virginia's manufacturing competitiveness. It moves Virginia from 16th best in diesel and road taxation to 8th highest in the U.S. before including the new regional fuel tax. The Truck Registration fee also makes Virginia less competitive for fleet operators. Virginia will be uncompetitive against 6 of 9 competing southern states and its diesel and road (IFTA) taxes will be substantially above both the southern states and national averages and medians. The VMA supported the Regional Fuels Tax only.

 

 

So, to recap, the Governor's approved r ecommendations were:

 Also, the legislators that voted for this historic tax increase are as follows:

 

So, as the VMA considers how to respond to this tax increase, we need member feedback.  Specifically, should the VMA lobby to have the 2021 diesel tax and/or 2020 road tax increases repealed?  Please send us your thoughts to [email protected].

Sincerely,