Keith Laing writes that Gov. Bob McDonnell reduced the new registration fee from $100 because the legislature had added a 3.5% wholesale sales tax on fuel. The lower fee will apply to all "alternate fuel vehicles" according to the governor's press release.
Environmentalists remain displeased. "People who are doing their part to reduce oil consumption reward all of us with cleaner air and less climate pollution -- but now Virginia will turn around and punish hybrid car owners", stated the press release of the Chesapeake Climate Action Network.
The bond-rating firm reports in its U.S. Public Finance Weekly Credit Outlook (PDF, pg. 4) that the funding plan — expected to generate as much as $3.5 billion in additional revenue for transportation over the next five years — makes Virginia “the first state to address stagnant gas tax collections that have been increasingly insufficient to meet transportation funding needs, a problem faced by many states as they, consumers and automakers embrace higher fuel efficiency standards.”
It might appear ironic that the first state to eliminate it's gas tax would be praised, but from Moody's perspective, it was the total amount from all sources of revenue that the bill raised for transportation, including:
More irony can be found in the governor's signing statement:
“In 1983, President Ronald Reagan proposed and signed legislation to more than double the national gasoline tax,” McDonnell said in defending the tax increase.
How doubling the federal gas tax compares to eliminating the state gas tax will no doubt be lost on many readers. However, he may have referenced The Gipper because the total tax package was not received well by many of McDonnell's fellow Republicans.
The Wall Street Journal had editorialized on Feb. 24, "There's one thing uglier than a Democratic tax-and-spend spree. A Republican one. On (Feb. 22) Virginia Governor Bob McDonnell and a GOP-run legislature approved a five-year, $6 billion transportation bill financed almost entirely with higher sales and car taxes"
On a positive note, the VA tax plan did prompt neighboring Maryland to act on Gov. Martin O'Malley's bill, according to John Wagner in The Washington Post because Virginia "is led by a Republican governor and that competes with Maryland for jobs."