Virginia Governor Considers Adjusting Gas Tax For Inflation

Virginia's transportation funding is getting top billing in the upcoming General Assembly Session. Gov. Bob McDonnell is working on his own proposal and some state officials say time is running out to find a solution.

The commonwealth has been diverting funds from road construction to road maintenance for the past 10 years, to the tune of $3 billion. By 2017, maintenance will likely need all of the construction funding. 

The state's gas tax supplies 30 percent of the transportation budget, but revenues are in decline because people are buying less fuel, says McDonnell. 

"We have a math problem. The math problem is that we've got dramatically less gas tax revenue coming in than we did five or 10 or 15 years ago," McDonnell says. "And the cost of asphalt has gone up 300 percent. And the demands of our citizens have gone up as well."

McDonnell believes the state should consider indexing the gas tax for inflation.

"One of the challenges with the gas tax is it s now worth 45 cents on the dollar what it was in 1986, when it was put into effect. And so, we re looking at whether or not … it should fluctuate with economic activity like every other tax in Virginia," McDonnell says. 

The tax will still be a declining revenue source no matter what, the governor added. McDonnell plans to be adamant when lawmakers convene in January that they can no longer kick the transportation can down the road, he says.