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One-third of all auto insurance premium fees
are to be dedicated to transportation projects.

Virginia Governor’s transportation plan includes insurance fee hike

Virginia Governor Timothy M. Kaine is proposing an increase in the state’s auto insurance premium fee and a hike in the auto sales and use tax as part of a broad multi-year transportation initiative.

The $3.7 billion four-year plan is intended to fund transportation improvements, encourage smarter transportation planning, give local communities more zoning control and relieve traffic congestion. It would increase local highway construction programs by about 90 percent. It also doubles the amount spent on mass transit options.

The revenue side of the plan relies on increasing fees paid by those who use the state’s roads. In Kaine’s words, the plan is crafted so that “those who benefit from these transportation improvements are the same people who pay for them.”

It calls for a 2.25 percent increase in the auto insurance premium fee, which would raise an estimated $1 billion. One-third of all auto insurance premium fees are to be dedicated to transportation projects. “Virginia is currently the 41st lowest state in the nation in terms of average auto insurance premiums, and the fee increase will add only $18 to the cost of a policy for a typical Virginia driver,” Kaine maintained.

In addition, the plan would boost the motor vehicle sales and use tax from 3 percent to 5 percent, which brings it in line with the state’s sales tax on other items and with those in neighboring states.

He is also seeking higher fees for heavier vehicles and stiffer fines on traffic offenses.

“This initiative identifies stable, long-term funding streams that meet our transportation needs. Our plan will provide over an additional $1 billion a year for transportation, coming from a combination of new revenue and public-private partnerships,” Kaine said.

Kaine’s office said his plan reflects both the sense of urgency and the demand for accountability expressed by Virginians who spoke out during 11 town hall meetings he has hosted since last November.

“This is a fiscally responsible plan that addresses our transportation challenges in creative ways,” Kaine said. He said the state will insist on accountability and provide local officials with tools to better link transportation and land use planning. “We will partner with localities and the private sector, relying on modest, reliable revenues generated by those who actually use our transportation network,” he said.

The plan also includes a “lock up” on the state’s transportation funds to prevent them from being used for other purposes.

He said he would work in a “bipartisan way” to address the state’s transportation challenges during the upcoming session.

Topics Auto Virginia