Interstate 81 Improvements Come with Tax Increases

The 2019 Legislative Session of the Virginia General Assembly recently ended and of notable interest was the adoption of a plan to fund improvements to Interstate 81.  Concerns over the Interstate’s reliability and safety prompted the legislation.  Over the years, the General Assembly has failed to pass a bill on improvements due to the high cost and opposition to raising money for fixing the road.  Last year, a study commissioned by the General Assembly indicated that over $2 billion worth of projects were necessary to improve the roadway.  At the end of February, the legislature left Richmond without having made any real plan to move forward on the Interstate improvements.  However, earlier this week, the General Assembly approved amendments made by the Governor to raise the money needed.

The General Assembly’s plan will raise approximately $151 million for the I-81 Corridor Improvement Fund. The new money comes from a 2.1% fuel tax increase, which amounts to roughly six or seven cents a gallon, as well as some statewide fees. The increase in the gas tax in the region will produce about $60 million. The remaining new funding for the I-81 Corridor will  come from raising truck registration fees as well as diesel and road taxes. Those statewide increases will also benefit the I-64 and I-95 corridors, as well as the Northern Virginia Transportation Authority and other interstate projects. The money raised for I-81 will free up millions of dollars for other road projects in the planning districts along I-81. Likewise, the improvements will increase safety and likely create economic opportunity throughout the western part of Virginia.

To put the proposal into perspective, the gas tax in West Virginia amounts to about $.30 a gallon. Virginia’s gas tax, which fluctuates based on the wholesale price of gasoline, is less than $.17 a gallon. While a number of factors play a role in the price of gasoline, the increased tax in West Virginia is perhaps not apparent to the public because wholesalers absorb a large portion of gas taxes. While some people will not be happy about the increase in gas taxes, this action will hopefully help resolve the high number of accidents, lengthy delays, and Virginia’s crumbling infrastructure.