VA: Transit funding in limbo between House and Senate budgets

When the House of Delegates and Senate meet to resolve more than $1 billion in differences between their two budgets, they will also have to find a way to put together the two pieces that each holds to a puzzle to solve an impending financial crisis for the Washington Metro transit system that makes Northern Virginia's economy run.

The budget that the House Appropriations Committee adopted on Sunday afternoon would provide $153 million that the Washington Metropolitan Area Transit Authority needs to operate and maintain the Metro system over the next two years, using one-time money from the general fund that pays for core state government services.

The budget that the Senate Finance & Appropriations Committee adopted two hours later would provide $190 million to the Metro capital projects fund over 17 months from additional sales tax revenue that Northern Virginia localities would receive from the proposed repeal of the state sales tax exemption for data centers and a proposed increase in the regional lodging tax. The money would cover the $136 million per year that represents Virginia's minimum share of Metro's request for $460 million from the entire Washington region to avoid a capital budget hole in two years.

The question for budget negotiators will be how to do both.

"We're definitely diving in and looking for more details," said Kate Mattice, executive director of the Northern Virginia Transportation Commission, which represents six localities that receive Metro train and bus service.

"We recognize that we need an operating fix immediately and a capital fix in the future, so we're looking forward to seeing how this plays out during the budget conference negotiations," Mattice said Tuesday.

The commission has worked with a state legislative study committee and a separate Washington area Metro initiative to find ways to solve both halves of Metro's financial need, while also creating new sources of revenue for other public transit services in the region, including the Virginia Railway Express commuter train system, and other transportation needs statewide.

Three of the leaders of those efforts are now part of Gov. Abigail Spanberger's administration: Finance Secretary Mark Sickles, Transportation Secretary Nick Donohue and Cannabis Authority adviser Adam Ebbin.

Donohue told a House committee this month that if the state doesn't provide additional operating money for Metro this year, the six Northern Virginia localities served by it will have to pay for it.

"We need to work to find a sustainable long-term solution for that," Donohue told the House Transportation Committee on Thursday. "In the absence of action by this body, the bill still comes due, and it will just fall on property taxes in the Northern Virginia region."

But legislation to carry out two different proposed transit funding solutions — one focused statewide and the other regionally — failed to survive in a General Assembly session focused on affordability and the political perils of raising taxes or imposing new fees on consumers.

As a result, the House relied on the money it already had available for the next two-year budget, while the Senate dropped a political bombshell by proposing to repeal the data center tax exemption. Ending the exemption on Jan. 1 would unloose more than $1 billion in forgone state sales tax revenues, as well as millions of dollars more in additional local government money for transportation and public education.

Together, Senate Finance estimates repealing the data center exemption would generate $1.3 billion in state and local revenues in the second year of the budget.

"This investment would benefit Virginians statewide without imposing fees or tolls on them at a time of uncertainty," Senate Finance Chair Louise Lucas, D- Portsmouth, said on Sunday.

The Senate plan would provide an additional $291.7 million in state sales tax revenues for the Commonwealth Transportation Fundto benefit all modes of transportation, including more than $15 million in operating funds for Metro and $19 million for transit systems across Virginia.

Separately, $156.1 million in additional sales tax money provided to localities in Northern Virginia over two years would go to the Metro capital fund as a dedicated source of revenue that could be used to pay off bonds for big capital investments. The Senate budget also proposes to increase the transient occupancy tax in Northern Virginia from 3% to 4% to generate $34.3 million for the capital fund.

"Together, these changes provide (Metro) with additional funding that will continue to grow in future years," said Sen. Jeremy McPike, D- Prince William, chairman of the capital outlay and transportation subcommittee.

The potential effects of the Senate proposal are hard to read in Northern Virginia because not all localities are part of the Metro compact. The six localities that are — the counties of Arlington, Fairfax and Loudoun, and the cities of Alexandria, Fairfax and Falls Church — also are members of the Northern Virginia Transportation Authority, along with Prince William County and the cities of Manassas Park.

Abigail Hillerich, a spokesperson for the authority, said it is still trying to determine "any implications" for its members.

"We have questions and are looking forward to more information," Hillerich said.

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