Dedicated Funding Plan for Metro Receives Final Approval in Virginia

Virginia will provide $154 million a year to support the Metro transit system. On April 18th, the Virginia General Assembly approved funding for Metro through a combination of existing sources, without an increase in the grantors’ tax (“congestion relief fee”). Throughout the process of approving Metro funding, members of the Dulles Area Association of REALTORS® (DAAR), Northern Virginia Association of REALTORS® (NVAR), and the REALTOR® Association of Prince William (PWAR) worked very hard to minimize the impact on the real estate industry.

The Final Bill
Metro funding includes approximately $30 million in state funds, $102 million in funds that would have been used by the Northern Virginia Transportation Authority (NVTA), and $22 million in funds generated by setting a floor on the regional gas tax. Highlights include:

  • $20 million from existing state recordation tax.
  • $10 million from existing motor vehicle rental tax.
  • $45 million from existing “Grantor’s” tax.
  • $27 million from existing NVTA revenues.
  • $30 million from existing regional Transient Occupancy Tax.
  • $22 million gas floor tax.
  • No new taxes on real estate transactions or hotel stays.

The new law also includes reforms to Metro and a requirement that Maryland and the District of Columbia each contribute their proportional share of total Metro funding. Recently Maryland approved its share of $167 million per year and the District of Columbia approved its share of $178 million.

Background
McAuliffe’s Plan
REALTORS® first learned of a proposal to fund Metro through an increase in the grantor’s tax when then-Governor Terry McAuliffe submitted his proposed 2019 budget. Included in his Metro funding proposal was an increase of $0.10 to the current Northern Virginia regional grantors’ tax. DAAR joined with NVAR, and PWAR to voice concerns about the McAuliffe plan, specifically about the continued reliance on real estate to fund government services.

Virginia General Assembly’s Plan
REALTORS® traveled to Richmond and met with members of the General Assembly and Virginia officials to help search for ways to provide dedicated funding for Metro. General Assembly members initially adopted two different approaches: the Senate version closely mirrored the McAuliffe plan and included a 10-cent increase in the grantors’ tax; the House version provided Metro funding without any new tax increases. DAAR leadership continued to be actively engaged in Metro funding discussions and encouraged equitable funding solutions rather than a disproportionate reliance on homeowners. The final plan sent to Governor Northam provided $154 million per year to Metro and mirrored the House approach by excluding additional taxes on Northern Virginians.

Governor Northam’s Plan
Soon after the General Assembly plan was passed, Governor Northam suggested that he might restore the two tax increases (grantors’ tax and hotel tax) to help fund Metro. Also occurring during that time was increased pressure from Northern Virginia localities to restore regional money for local transportation projects. As a compromise, Northam amended the General Assembly bill and increased the real estate tax by $0.05.

The Future
Finding sources of money to fund transit and transportation projects will continue to be a topic of discussion in the future. Although DAAR recognizes that a safe and reliable Metro system is a vital component to the economic success of the region, the continued reliance on real estate to fund government services is a concern. DAAR will continue to ensure that the real estate industry has a voice in any future funding decisions.