IW to oppose tax cuts
Published 6:48 pm Friday, February 4, 2022
Isle of Wight plans to oppose two tax cuts under debate in Virginia’s House of Delegates that — in the words of a member of its Board of Supervisors — could have “catastrophic” and “crippling” impacts on the county and the greater Hampton Roads region.
House Bill 297, sponsored by Del. Joseph McNamara (R-Roanoke) proposes to suspend any regional fuels tax in Virginia for one year, starting July 1.
In 2014, the General Assembly authorized 14 Hampton Roads localities, including Isle of Wight, to impose a regional fuels tax for the purpose of raising funds for highway improvement projects — and created the Hampton Roads Transportation Accountability Commission to allocate the resulting revenues. HRTAC, as the organization is known, is composed of locally-elected officials from each of the 14 localities, including Isle of Wight.
In 2020, changes to state law expanded regional gas and diesel taxes statewide. As such, motorists across Virginia now pay a statewide tax of 26.2 cents and a regional tax of 7.7 cents per gallon of gasoline. For diesel fuels, motorists pay 27 cents, plus a regional tax of 7.8 cents per gallon. According to the Department of Motor Vehicles, the resulting revenues from the regional taxes on gasoline and diesel fuels fund transportation projects in metropolitan areas like Hampton Roads.
Were the added regional taxes to go away, even for a single year, the Hampton Roads region would lose nearly $60 million, according to County Administrator Randy Keaton.
The money has been used to issue revenue bonds to fund regional projects like the I-64 high-rise bridge in Chesapeake and the $3.7 billion Hampton Roads Bridge Tunnel expansion.
“That would affect our credit rating,” Keaton said.
“This is just bad legislation for Hampton Roads …This will not work well with legal and financial commitments that have already been made by this region,” added Assistant County Administrator Don Robertson.
“In order to stay in those projects, it would come to each of the localities to try to figure out how to make up that shortfall … the cost would be catastrophic,” said District 4 Supervisor William McCarty, who serves as Isle of Wight’s voting member of HRTAC.
According to DMV spokeswoman Jessica Cowardin, the statewide and regional fuels taxes are now slated to rise every year on July 1 at a rate determined by the Consumer Price Index for all urban consumers (CPI-U) for the previous calendar year — which equates to a 7% increase July 1, 2022, based on the inflation factor released by the federal Bureau of Labor Statistics for 2021.
Gov. Glenn Youngkin campaigned on a pledge to suspend the tax increase for one year — but not necessarily to do away with regional fuels taxes in their entirety.
House Bill 380, sponsored by Del. Nicholas Freitas (R-Culpeper) further proposes to prohibit any county, city or town from imposing any license tax or fee on or after Jan. 1, 2023.
According to Robertson, Isle of Wight took in $832,000 from business license taxes alone in 2021 — revenue that would “go away forever,” he said, were the bill to pass.
“There are some bills that are extremely restrictive as it relates to your authority as board members to maintain the revenues that you need to provide the services, schools, and everything else that you provide,” Robertson said.
McCarty said the proposed tax cuts “sound good” but “have some very crippling impacts to localities.”
“We’re getting a raw deal,” added District 5 Supervisor Dick Grice.