Gov. Ralph Northam wants to end state-mandated vehicle safety inspections and cut vehicle registration fees in half, proposals his administration says would eventually save Virginians more than $280 million per year.
But motorists would have to pay a few dollars more each time they fill up on gas under a proposal to increase the state’s motor vehicle fuels tax from about 22 cents per gallon to 34 cents per gallon over three years, putting Virginia more in line with Maryland and North Carolina.
By the third year, the gas tax proposal could generate more than $491 million in additional revenue for the state, according to projections released by the Northam administration.
The two-year budget proposal the governor unveiled Tuesday included significant transportation policy changes that Northam said would modernize an “outdated” funding system.
“Those who drive more should pay more,” Northam said as he presented his plans to the General Assembly’s money committees in Richmond. “With these changes we can maximize our rail investments, substantially increase transit funding and increase money spent on road maintenance from city streets to interstate highways.”
For those who drive regularly, the higher gas taxes could quickly cancel out the savings from the $20 inspection fee they’d no longer have to pay.
For example, someone driving a 2019 Toyota Camry could expect to pay about $37 in additional gas taxes annually, assuming the car was being driven 10,400 miles per year (an average used by state transportation officials) and getting 34 miles to the gallon. Drivers with older or larger vehicles with lower gas mileage would likely pay more.
But doing away with the annual trips to auto repair shops for a new state inspection sticker, Northam said, would save motorists about $150 million a year.
“Data show there is no connection between highway safety and these inspections,” Northam said. “That’s why 35 other states don’t have them.”
Departing Sen. Bill Carrico, R-Grayson, a former state trooper, disagreed, saying in an interview that eliminating the inspection program would make Virginia’s roads more dangerous. Carrico said that in his tenure with the Virginia State Police he saw firsthand that cars coming in from states without mandatory inspections were often in bad shape.
“People don’t understand when their brakes have run out. They don’t understand when their tires are being run down,” said Carrico, who did not run for reelection this year. “Even with taillights out. Nobody gets out and inspects their car before they drive it.”
The proposal to scrap inspections could have significant ramifications for the auto repair industry, which relies on the inspection process to pitch customers on other maintenance work that could be done. The Virginia Automotive Association, which represents the industry, did not immediately respond to requests for comment Tuesday.
Northam’s plan also calls for vehicle registration fees — which range from about $40 to $50 depending on the type of vehicle — to be cut by 50 percent, a change the administration said would save Virginians more than $134 million annually. That proposal would take effect in fiscal year 2022, the second year of Northam’s proposed budget.
Budget officials said the proposed changes would allow the state to keep $61 million in the general fund that otherwise would have been used to pay down transportation-related debt.
Taken together, the Northam administration said its transportation proposals are intended to shift the financial burden away from Virginia residents and onto out-of-state motorists buying fuel. Transportation officials are trying to find new ways to boost road funding in the face of gas tax revenue declines driven by the proliferation of fuel-efficient and electric vehicles.
“We support Virginians making environmentally friendly vehicle choices,” Northam said. “And yet we also recognize that drivers will continue to use more and more of our system while the system sees fewer and fewer dollars. This is not sustainable. And If we don’t address it now, it will be harder to fix in the future.”
Officials have said they expect Virginia and other states to eventually move to a system that charges motorists based on how many miles they drive, not the amount of gas they consume. The proposed gas tax increase was pitched as a temporary funding boost to alleviate the problem until that future model emerges.
Del. Vivian Watts, D-Fairfax, the incoming chairwoman of the House Finance Committee, said the governor’s gas tax proposal was “movement in the right direction.”
“The gas tax right now is the only way that we can reach the out-of-state motorists,” Watts said in an interview. “It does not make any sense at all to be subsidizing the out-of-state motorists.”
At the end of the three-year period, the gas tax rate would be tied to inflation, allowing revenues to increase further over time without state lawmakers having to vote for a higher rate.
Mike O’Connor, president of the Virginia Petroleum & Convenience Marketers Association, said his group was awaiting further details on Northam’s proposals before taking a position for or against them. He said he was concerned about the prospect of combining the higher tax rates with additional gas price increases that could come if Virginia remains committed to the Transportation and Climate Initiative.
That initiative — an effort by 12 states and the District of Columbia to reduce vehicle emissions through a cap-and-invest framework — could devastate the state’s gas station industry, O’Connor said.
“We would be very concerned if this was going to be on top of the Transportation and Climate Initiative,” said O’Connor, whose organization represents most owners of Virginia’s 3,472 gas stations.
In Virginia, the transportation sector is the largest contributor to greenhouse gas emissions, accounting for about 46 percent of the state total.
According to modeling presented to the press by TCI representatives alongside a long-awaited draft memorandum of understanding Tuesday, states that formally sign onto the compact could see incremental increases in fuel prices of between 5 and 17 cents per gallon in 2022, depending on what emissions cap was chosen.
Virginia formally joined TCI in September 2018, and last spring Northam vetoed a measure that would have blocked the state from participating in the initiative. Under the draft agreement, which is not binding, each state would set up a legislative or regulatory framework to auction off emissions allowances to fuel suppliers, with the pool of allowances decreasing over time.
“The administration recognizes that auto emissions are a leading contributor to greenhouse gas emissions and in turn climate change,” Deputy Secretary of Transportation Nick Donohue said when asked about TCI Tuesday. “Over the coming months Virginia will review the draft memorandum of understanding that TCI has released and will determine whether or not to sign the final MOU and seek any necessary legislation. At this time no decisions have been made.”
As the General Assembly’s money committees received Northam’s budget proposal, one lawmaker said he was concerned that the proposals seemed to hit drivers of traditional, gas-powered vehicles harder than those who are “pounding the roads with their hybrid vehicles.”
“It looks to me like they’re going to get away with paying less,” said outgoing House Appropriations Chairman Chris Jones, R-Suffolk, who lost his reelection bid this year.
Northam Transportation Secretary Shannon Valentine said there will be a “full legislative proposal” following Tuesday’s announcements that will go into more detail on charges for vehicles that are less reliant on gas.
“We are going to introduce a tiered system for fuel-efficient cars to be a part of that funding formula,” Valentine said.
Mercury reporter Sarah Vogelsong contributed to this story.