Virginia would tax services and digital purchases and fund transportation

Virginia would apply retail sales tax to listed services and digital products, using a 4% state rate under this section. Covered purchases include personal and household services, digital subscriptions, and digital products with lasting access. Businesses' purchases of listed digital services also qualify. The 4% rate is one state component, not the total sales tax. Professional services, internet access, and services from providers earning no more than $2,500 a year from services would be exempt. The personal-care and pet-care categories exclude surgery and veterinary procedures, along with separately billed care that requires the specified licensed professionals. Covered home repairs must require no state or local permit. Residential cleaning, repairs, and landscaping bought by homeowners' associations or landlords for tenants would be exempt. For package deals with one combined price, sellers must identify tax-free portions in regular business records to avoid tax on those portions. The highest applicable rate could apply to the whole package unless records identify lower-rate portions.

Virginia would collect regional sales taxes, a retail delivery fee, and an annual vehicle fee. Sales tax rates would be 0.385% in Northern Virginia Transportation Commission localities, 0.615% in other Northern Virginia Transportation Authority localities, and 0.2% in Potomac and Rappahannock Transportation Commission localities. The vehicle provision covers specified Virginia-registered alternative-fuel, electric, or fuel-efficient vehicles. Regional sales taxes and the delivery fee would exclude food for human consumption and essential personal hygiene products. The vehicle fee would equal 29.34% of the vehicle's state highway use fee. Owners could choose mileage-based payment instead. After administration costs, vehicle-fee money would go to transportation funds based on where the vehicle is mainly kept. The delivery fee would apply in Northern Virginia Transportation Commission localities. On and after July 1, 2027, it would be adjusted annually for inflation, without decreasing when the inflation measure falls.

Regional transportation funds would make yearly payments to Metro and commuter rail. The Northern Virginia regional fund would provide $136 million for Washington Metropolitan Area Transit Authority, known as Metro, capital projects and $9.1 million for commuter rail. The Potomac and Rappahannock regional fund would provide $18.2 million for commuter rail operations and capital projects. Metro's $136 million payment would require Washington, D.C., to contribute at least $173 million and Maryland at least $152 million in 2027. Those required contributions would rise 3% annually. The Northern Virginia fund would set aside 2% for transit planning and project support. Remaining money after the specified payments would support local public transportation. Metro's capital payments from its capital fund would be capped at $154.5 million in fiscal year 2027 and $290.5 million in fiscal year 2028. Only the $136 million portion would grow 3% annually thereafter. The specified regional payments would begin in fiscal year 2028 and rise 3% each fiscal year afterward.

Virginia would divide transportation money among road, transit, rail, and other transportation programs using specified shares. Within the mass transit allocation, Metro would receive 55.5%, other transit operations 23%, capital projects 12.5%, ridership incentives 3%, and special programs 2%. Up to 4% could support jointly operated commuter rail. Specified Commonwealth Transportation Fund revenue would be divided 47% for highway maintenance and operations and 53% for the Transportation Trust Fund. Within the Transportation Trust Fund distribution, construction would receive 51.2%, mass transit 26%, rail 8%, ports 2.5%, aviation 1.5%, space flight 0.8%, priority transportation projects 9%, and motor vehicle administration 1%. After the required earlier road allocations, remaining construction money would be divided 27.5% for keeping roads in good repair, 18% for high-priority projects, 18% for district grants, 26.5% for interstate improvements, and 10% for highway safety. District transit grants could use up to 15% of available district money where the listed fee revenues are available. Agencies directly funded by the Hampton Roads or Central Virginia transportation authorities, or a transportation district, would be excluded. The transportation money would be allocated each year.

Metro would publish spending and performance reports to qualify for state support, and commuter rail districts could issue bonds. The cost rules cover Metrorail and Metrobus operating costs measured against vehicle service hours. The commuter rail transportation districts could issue bonds or other debt in amounts they consider appropriate under the referenced borrowing rules. Virginia would withhold 35% of the specified Metro operating and capital assistance if Metro lacked the required cost-measurement policy in fiscal year 2028 or later. Starting in fiscal year 2029, Virginia would withhold 35% of that assistance if Metro's rail or bus cost per unit of service grew more than 3% from the previous year. State support would depend on Metro publishing the required budgets, audits, and performance reports. The Northern Virginia Transportation Commission would verify publication. The longer-term plan and major-project reporting requirements would depend on Washington, D.C., and Maryland passing similar requirements. Metro must publish yearly cost calculations no later than its proposed fiscal year 2028 budget. Conditional long-term reporting requirements have a June 30, 2027, deadline.