Tax Rebates: Virginia Sales Tax Rebates Planned for Transportation

January 14, 2011 Updated: January 19, 2011

[xtypo_dropcap]V[/xtypo_dropcap]irginia Governor Bob McDonnell proposed sweeping transportation plans for the mid-Atlantic state on Friday, including $140 million in sales tax rebates to fund transportation projects in the state’s two most populous metro regions.

Under the plan, 0.25 percent of state tax collected from retail sales in northern Virginia and Hamptons Roads in the state’s southeast will be returned to the areas for road and bridge development use, Gov. McDonnell said in a statement.

The majority of the money—$90 million to $100 million—would flow to northern Virginia, which thrives due do its proximity to the nation’s capital and the location of several federal agencies, according to The Associated Press.

The rest of the tax rebates—$40 million—would be given to the seaside region of Hampton Roads, which boasts the state's largest city in Virginia Beach and has a heavy presence of military facilities.

Also included in Gov. McDonnell’s transportation proposal are a $4 billion injection into funding through the newly-created Virginia Transportation Infrastructure Bank as well as the issuance or acceleration of nearly $3 billion in transportation bonds.

Gov. McDonnell stressed the need for such transportation funding, saying, “Job creation will not be sustainable without a transportation system that is reliable. Transportation helps drive economic growth, and for too long Virginia has been stuck in neutral.”

"I'm asking all of you to support a plan that pumps billions into roads, creates tens of thousands of new jobs, adds no new debt, starts work now, and doesn't raise taxes,” he noted.

However, state Democrats rejected the feasibility of McDonnell’s plan, calling it a misallocation of state taxes and funds.

"That's absurd. It's not going to happen,” Democratic state Senator Richard Saslaw of Fairfax County said, according to the AP.

"We're not going to take money from the general fund to spend for transportation. Where's he going to take it from, public schools? It ain't ever coming out of committee."