Virginia legislators have reached an agreement to increase the state gas tax by 10 cents per gallon over the next two years, with annual adjustments to changes in inflation going forward. The deal will also expand regional gas taxes already in place in Northern Virginia, Hampton Roads and the I-81 Corridor to other areas of the state. The agreement also raises certain real estate transfer and hotel taxes in Northern Virginia to restore revenue diverted in 2018 to fund Metro. An additional bill will raise the local sales tax in the Richmond area and dedicate the revenue for local transportation needs.
The conference agreement reached on March 5 will be passed just in time to meet the March 7 deadline to adjourn the state’s regular legislative session. The compromise bridges the gap between the Senate’s proposal of an 8 cents per gallon increase in the state gas tax and the Assembly’s plan to increase it by 12 cents per gallon. Gov. Ralph Northam (D) has been a proponent of transportation investment this session and is expected to sign the package of bills.