Northam Looks to Hotel Tax, Real Estate Sales to Help Metro

Governor Ralph Northam on Monday offered his amendments to the General Assembly’s Metro funding bill, giving the state legislature a chance to reverse course on a bill that sought to divert money from improving the regional transportation network to aiding the beleaguered transit system.

The General Assembly’s bill redirected money from the Northern Virginia Transportation Authority, which funds hundreds of millions of dollars of transportation projects every year, and sent that money to Metro. That includes funding from the region’s grantor’s tax, its transient occupancy tax, and its gas tax, among other sources.

That bill passed the General Assembly nearly unanimously, including support from every member of Loudoun’s General Assembly delegation except Del. Dave A. LaRock (R-33) and Sen. Richard H. Black (R-13).

Northam’s amendments would rework the share of grantor’s tax and gas tax revenue that would go to Metro, greatly reducing the cuts that the authority will endure.

“We think this is great progress in the right direction, and I’m grateful to the governor for working with us and understanding our concern,” said NVTA Chairman and Prince William County Supervisor Martin E. Nohe. “I think this is a message that the governor understands that while it’s absolutely critical that we invest in Metro … we can’t fix Metro by abandoning our investments in other high-priority transportation projects.”

The General Assembly’s proposal to take money from the NVTA for Metro puts a heavier burden on Loudoun. The county is responsible for 7.5 percent of Virginia’s share of Metro costs, but generates 18 percent of NVTA’s revenue—so shifting money from the NVTA means Loudoun would pay a bigger share of Metro’s costs.

The authority is also already contributing to Metro—for instance, the authority has approved about $170 million in grant funding for Metro projects.

Under Northam’s bill, counties and cities with Metrorail service would see a 5-cent bump in the grantor’s tax, a tax on real estate transactions, up to $0.20 per $100 of sales value on real estate deeds and instruments. Instead of sending all of it to Metro, the revenues would be split evenly between Metro and the Authority.

That means the NVTA would see 10 cents of grantor’s tax revenues, instead of 15 cents as it is now—a cut of one-third, rather than losing that funding entirely.

For Northern Virginia jurisdictions that don’t have Metro, there would be 15-cent grantor’s tax, one-third of which would stay in the locality to fund transportation. The remaining two-thirds would go to the authority.

Nohe said even with the governor’s proposed amendments, there will be a “substantial reduction” in funding to the Authority—estimated at $30 million a year—but authority staff members say it’s manageable, and most NVTA projects can still move forward.

“There will unequivocally be some impacts, but we don’t really know what those will be,” Nohe said. “We haven’t made any final decisions about what will be funded, so we can’t really say what projects will fall off the bottom.” The NVTA is getting ready to adopt its first longer-term funding plan, a six-year plan akin to local jurisdictions’ capital budgets.

The state would also send only one-twelfth as much gas tax revenue to the Commuter Rail Operating and Capital Fund, which pays into Metro.

Gov. Ralph Northam, then a candidate for governor, greets supporters at a rally Friday, Nov. 3, 2017 at Crooked Run Brewing in Sterling. (Renss Greene/Loudoun Now)

To raise more money, Northam has proposed restoring an increase in Northern Virginia’s transient occupancy tax—a tax on stays in visitor lodging like hotels and beds-and-breakfasts—which was taken out of earlier versions of the bill. That tax is bumped up from 2 percent to 3 percent. Where previously that money went to the authority, all of that will go toward Metro.

In total, under Northam’s version of the bill, Loudoun would collect an 8 percent transient occupancy tax—two cents to the county’s general fund, three cents for promoting tourism in the county and travel, and the three cents for Metro.

County Chairwoman Phyllis J. Randall (D-At Large) said the governor’s version of the bill is much better, and the General Assembly’s version was “untenable.”

“I absolutely believe that the state should have had a larger contribution, but this better than we were,” Randall said. She also pointed out increases to occupancy taxes don’t impact Northern Virginia taxpayers as much, since those are levied mostly of people traveling to the region from elsewhere.

Randall led the charge to pass a unified statement from all of the Northern Virginia Transportation Authority jurisdictions calling on the governor to amend the General Assembly’s bill.

In both versions of the bill, comparatively little money—about $30 million of Virginia’s estimated $154 million share of Metro’s annual funding gap—would come from the state government. The bulk of the funding would come from the Northern Virginia region.

The bill also establishes a Metro reform commission, and would restrict funding from Virginia if Metro’s expenses grow by more than 3 percent annually.

The General Assembly will convene a special session April 11. The governor’s office has not yet responded to a request for comment.

4 thoughts on “Northam Looks to Hotel Tax, Real Estate Sales to Help Metro

  • 2018-04-10 at 4:52 pm

    The best answer is a tax district around the entire metro system in Virginia. But that is exactly what the politicians’ developer puppet-masters want to avoid. They don’t want to pay extra taxes on their own billion dollar developments. They want YOU to pay for their development.

    Private profits, public debts. When does it stop?

    Let’s hope both these plans fail.

  • 2018-04-10 at 5:11 pm

    Whoever thought disproportionately raising taxes on Northern Virginians would be the BETTER result?
    It’s unfortunate our representatives in Richmond don’t care about local concerns. To have rubber stamped the horrible legislation that took our special tax dollars for one purpose and use it for another shows that they simply don’t care about their own constituents. The only reason we have to have NVTA money is because the State failed in its responsibility to build roads. If we have to pay for metro regionally without the help of the state then we’ll gladly keep all the economic benefit from metro.
    Thank goodness the new Governor cares more about Northern Virginia than those we elected to care about us.

  • 2018-04-11 at 4:41 am

    Nick Freitas was a fool to vote for Metro funding over roads and bridges!

  • 2018-04-11 at 10:21 am

    Democrats raising taxes to cover up for our own local democrats who screwed over Loudoun home owners by stealing our road money to feed to their fat cat cronies at Metro?

    Impossible! Say it isn’t so. Who could of have seen this coming?

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