A history of roads in Virginia: Meeting the challenge

The Commission on Transportation in the 21st Century (COT 21) identified more than $20 billion
worth of highway construction needs.

Until 1984, the eight transportation districts had remained as originally established in 1922—Bristol, Culpeper, Fredericksburg, Lynchburg, Richmond, Salem, Staunton, and Suffolk. The 1984 General Assembly authorized the creation of the Northern Virginia district to respond more effectively to the area’s transportation problems. The newly formed transportation district was carved from the existing Culpeper district to include the counties of Arlington, Fairfax, Loudoun, and Prince William.

In the General Assembly, the growing influence of urban areas also led to greater pressures to modify again the formulas that allocated road-building monies around the state.

In July 1985, the department began using a new allocation formula, enacted by the General Assembly, to distribute funds for highway construction and other programs.

It was the first major change in highway fund distribution since 1977, and it increased funding to urban areas.

Under the new formula, 5.67 percent of the money came off the top for hardsurfacing dirt roads. Of the remainder, 40 percent was allocated for improving the primary system. The remaining 60 percent was split equally between the secondary and urban systems.

In 1986, newly inaugurated Gov. Gerald L. Baliles presented a series of initiatives to improve transportation and prepare for the 21st century. His initiatives and subsequent legislative action marked a period of sweeping changes that eliminated the dependence on user fees only and “pay-as-you-go” financing for transportation needs. On Jan. 13, 1986, in his State of the Commonwealth Address, Gov. Baliles called for a vastly different approach to paying for transportation:

“Periodic tax increases have helped only by providing new revenues, but they only postpone the problems — they don’t solve them,” the governor said. “Even worse, the adjustments to our highway funding formula have divided us, competing with one another for the inadequate funds… the heart of the problem now is that we can’t begin to plan for future needs, if we can’t complete meeting today’s needs.”

Gov. Baliles called for a blue-ribbon, non-partisan commission of leaders from government, business, finance, and transportation. Its challenge was to study how to plan and finance the comprehensive transportation system Virginia would need to take it into the next century.

The Commission on Transportation in the 21st Century (COT 21) identified more than $20 billion worth of needs in highway construction, rail, public transit, ports, and airports by the turn of the century. To meet those needs, the commission recommended major changes in the way Virginia paid for transportation projects.

Traditionally, users had paid for transportation in Virginia. Improvements and maintenance were paid through such sources as taxes on motor fuels and license plates. Roads were paid for out of current funds—no general fund financing, no debt financing or bond issues, except those for which there was a specific revenue source, such as a toll road.

The commission recommended that the user fees be increased slightly, and also recommended that the state’s general sales tax be raised and the increase dedicated strictly to transportation uses. Specific percentages would be allocated to specific modes of travel—ports, airports, public transportation, and roads. The commission also recommended the use of bonds to finance major, long-term projects.

While the commission was doing its research, the 1986 General Assembly appropriated $150 million in “seed money” to complete designs and purchase right of way for critical highway projects so they would be ready to be built when the additional monies were made available.

In September 1986, the legislature met in a special session and agreed with the governor and the commission that “business as usual” was not enough to address Virginia’s transportation needs. A new and vastly different approach was needed to build the road to the future.

To help stabilize the funds, the assembly added a half-cent to the state’s general sales tax, raising it to 4.5 cents on the dollar. It also added 2.5 cents to the fuel tax, making it 17.5 cents per gallon. Further it increased the vehicle titling tax from 2 to 3 percent of the purchase price and added $3 to the annual license plate fee.

With part of the general sales tax earmarked for transportation, the state was assured that funds would keep pace with inflation and would not be influenced as much by fluctuating oil prices and vehicles that use less fuel.

The new revenues generated more than $420 million a year, with 8.4 percent designated by law for public transportation systems, 4.2 percent for port improvements, and 2.4 percent for airport improvements. The remaining 85 percent was dedicated for highways.

During that session, the General Assembly also changed the name of the agency to the Virginia Department of Transportation (VDOT) to reflect the increased emphasis on diverse modes of transportation. The legislature also renamed the State Highway and Transportation Board as the Commonwealth Transportation Board (CTB) and expanded the board from 12 to 15 members, with five serving at large and the commissioner serving as chairman.

In addition to increasing its commitment to transportation in general, the General Assembly increased its commitment to separate transportation programs specifically for economic development. This money was used to construct “access” roads or rail spurs to factories and other industrial sites where companies were locating or expanding.

By 1990, $6 million a year was available in road and rail industrial access funds, up from $3 million in 1986. Similar programs provided new or improved roads to recreational areas and airports.
Economic development also was the reason the 1989 legislature took the major step of providing special financing to widen and straighten the longest road in the state. That road, Route 58, stretches more than 500 miles from the Atlantic Ocean to the Kentucky border at the western tip of Virginia.

To pay for the project, the legislature authorized $600 million in bonds to be sold over several years and paid off with $40 million a year from the state’s “recordation tax,” the state fee imposed at the county courthouse or city hall when real estate transfers are recorded.

The legislature also took several other actions in the last half of the decade to increase funds for transportation projects. It gave localities the right to create special tax districts and impose local income taxes. In the special tax districts, land owners and developers paid a special tax, up to 20 cents per $100 assessed, to be used to build or improve roads sooner than would have been possible without the special tax. A local income tax of up to 1 percent could be levied in certain localities if the local voters authorized it.

The General Assembly also gave localities $40 million a year for five years from the recordation tax to spend on education or transportation, beginning in 1990. This was separate from the $40 million a year designated for upgrading Route 58.

Produced by the
Virginia Department of Transportation
Office of Public Affairs
1401 E. Broad Street
Richmond, VA 23219
VirginiaDOT.org