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Warren Fiske
By Warren Fiske September 30, 2011

Rough road with Senate causes detour

No issue has generated more debate and less consensus in the General Assembly over the past decade than how to pay for Virginia's growing transportation needs.

The Senate -- which has fluctuated between Democrat and Republican control -- has backed tax increases, arguing the state needs a long-term, reliable new funding source for roads. The solidly Republican House has rejected tax hikes and groped for alternatives.  

Gov. Bob McDonnell spent 14 years as a leading Republican in the House. So it was not surprising that when McDonnell ran for governor in 2009, he spurned new taxes and offered other ways to pay for roads, such as selling the state's liquor operations to private businesses.

McDonnell's transportation plan also included this promise: "As governor, Bob McDonnell will dedicate 75 percent of annual budget surpluses to transportation needs (after constitutionally-mandated deposits)."

We decided to see if he's kept his word.

First, a little background. Virginia's budget year ends every June 30. Under state law, a surplus exists when money is left over. When that happens, laws kick in that earmark the vast bulk of the surplus; chunks must go to the Rainy Day Fund and reserves for disaster relief and to improve water quality. The General Assembly often adds to that list by approving budgets that allocate in advance other portions of surpluses that may occur.

McDonnell's promise to dedicate 75 percent of surpluses to transportation speaks to that small portion that is not obligated. That's why there are parentheses in his promise bearing the words "after constitutionally mandated deposits."

For the last few years, the General Assembly has been dedicating 67 percent of unreserved surpluses to transportation. So McDonnell's promise to increase the share to 75 percent, while sounding impressive in brochures, would only net about $10 million for road building during an average year.

McDonnell's office says the governor has carried out his vow, noting his endorsement of a bill last year that would have obligated a 75 percent share to the Transportation Trust Fund. The legislation passed the House and died in the Senate Finance Committee in early 2010.

"The governor kept his promise by bringing the proposal forward, but ultimately the General Assembly has final say on legislative proposals," Tucker Martin, McDonnell's chief of communications, told us in an email.

The Senate has never been comfortable dedicating surpluses to transportation and did not want to step up the practice. The reason is that the surplus comes from the state's general fund, which draws largely from income and sales taxes to pay for education, health and public safety. Transportation is funded by a different set of revenues: federal grants and state taxes on gasoline, vehicle sales and licenses.

Many senators have argued that the surplus should be returned to general fund programs. Some Democrats have said McDonnell's plan takes money from education to build roads.

On June 30, 2010, Virginia ended its fiscal year with a $403.2 million surplus. After the required payments, only $49 million was left. McDonnell, heeding the preference of the Senate Finance Committee, recommended that two-thirds of the sum -- $32.7 million -- go to transportation. But he tried another tactic to increase road money.

The state, coming out of recession, raised its revenue projections by $150 million for the 2011 budget. McDonnell proposed that $100 million of it go to roads. Senate budget writers rejected  his proposal, insisting the cash stay in the general fund.

For the budget year that ended June 30 of this year, Virginia had a $544.8 million surplus. After the required payments,  $100.8 million will be left over. McDonnell will make his recommendations for that money in December.

Our Ruling:

McDonnell pledged to dedicate 75 percent of unreserved budget surpluses to transportation. He endorsed legislation that would mandate such action, but it was defeated in the Senate, which will go no higher than a 67 percent share for roads.

Faced with that reality, the governor proposed only 67 percent of the 2010 budget surplus -- $32.7 million -- go to roads. He tried to send an additional $100 million in general funds to transportation but the Senate refused, saying the money belonged to education, health and public safety programs.

The gridlock over long-term funding for roads continues, causing the governor to change some of his transportation plans. It's possible that the Senate could return to Republican control in this fall's election, giving McDonnell an improved chance to increase the share of surpluses earmarked for roads. But for now, we rate his promise a Compromise.

Our Sources

McDonnell for Governor, Statewide Transportation Plan, July 21, 2009.

Email interview with Tucker Martin, communications chief for Gov. Bob McDonnell, Sept. 23, 2011.

Legislative Information Services, HB970, SB600, 2010 General Assembly session.

Interview with Robert Vaughn, staff director of Virginia"s House Appropriations Committee, Sept. 29, 2011.

Richmond Times-Dispatch, Virginia ended fiscal year $544 million in black, Aug. 19, 2011.

Richmond Times-Dispatch, McDonnell says most surplus cash spoke for, Aug. 20, 2010.

Governor"s office, Governor McDonnell announces $544.8 million surplus fiscal year 2011, Aug. 18, 2011.

Governor"s office, Remarks of Gov. Bob McDonnell to the joint meeting of the Senate Finance, House Appropriations and House Finance Committees, Aug. 19, 2010.

Secretary of Finance, Review of General Funds and the Virginia Economy for Fiscal Year 2011, page 12, Aug. 18, 2011.

Secretary of Finance, Review of General Funds and the Virginia Economy for Fiscal Year 2010, page 12, Aug. 19, 2010.

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