Funding Transit at a Cost: What HB 900 Could Mean for Virginia Taxpayers

Couched behind the promise of better transit infrastructure, Virginia’s latest proposed transportation bill, HB 900, would raise new taxes and fees on everyday activities while having taxpayers and consumers foot the bill—with little guarantee of real benefit for many. State lawmakers seek to shift transportation funding toward public transit, rail, and regional transit authorities. To accomplish this, taxpayers will pay the price.

To pay for this pricey proposal—slated to cost taxpayers nearly $300 million per year—the government would raise sales and use taxes on services and digital personal property. A new regional fee would apply to electric and fuel-efficient vehicles, set at 29.34 percent of the statewide highway use fee. In addition, the sales tax base would expand to include personal services, such as cleaning and landscaping, as well as digital goods and subscriptions. Certain services, including medical and legal services, would remain exempt. In Northern Virginia, a $0.20 regional delivery fee per order would also be imposed—excluding groceries and essential products—increasing the overall cost of online shopping.

Virginia lawmakers wish to update its public transit system due to issues including population growth, aging infrastructure, and changing travel patterns that have strained systems largely built decades ago. State leaders view transit upgrades as necessary because gas-tax revenue is declining due to the rise of electric and fuel-efficient vehicles, leaving traditional transportation funding sources less reliable. In addition, there has been an increase in traffic congestion, rising maintenance costs, and pressure from growing urban regions. This has driven the state to pursue long-term public-transit projects as an alternative to continued highway expansion.

Currently, Virginia’s transportation funding is heavily dependent on highway construction and maintenance, resulting in little funding for mass transit systems including the Washington Metropolitan Area Transit Authority (WMATA), and commuter rails like the Potomac and Rappahannock Transportation Commission (PRTC). Virginia proposes to hike taxes to lock in long-term spending on transit, automatically increasing funding for these commuter-based systems. Starting in 2028, HB 900 would ostensibly raise $290 million a year to flow to WMATA capital and regional transit, with funding set to grow 3 percent annually—and to continue to grow indefinitely. The problem, though, is that tax hikes rarely deliver on promised revenues owing to diminished economic activity and payers finding ways around higher rates. While tighter oversight and cost reporting—including a 3 percent annual cost-growth cap and potential 20–35 percent funding withholding—would be implemented to ensure greater transparency, the result of the legislation would almost certainly be yet another unfunded project “financed” via deficits.

All these new taxes and fees would be permanent and increase automatically over time. Transit funding will grow by 3 percent annually and the regional delivery fee will rise each year with inflation, regardless of actual transit usage. These costs would be spread broadly across all consumers and service users, but the revenue would be restricted to transit systems concentrated to the Northern Virginia and PRTC regions. This would result in Virginians in most regions of the Commonwealth paying more without seeing direct benefits.

HB-900 would raise the cost of everyday living to support long-term transit funding. Costs are spread among many taxpayers who will see little to no direct benefit. Once in place, these fees would grow, locking residents into higher costs without much hope for accountability to ensure results.

Instead of locking state residents into an endless spiral of taxes and spending, Virginia policymakers should focus on reducing taxes and spending to bring jobs and opportunities into the state. By attracting economic activity and giving households a well-deserved break, the state can pave the way for shared prosperity—not just gains for a privileged few.