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ways and Transportation existing maintenance funds would cover repair needs through 1995.
During the afternoon session, committee members and transportation officials discussed:
• Pledge bonds, which Secretary of Finance Stuart Connock called preferrable to general obligation bonds because the Virginia constitution gives greater fexibility in using them.
For instance, the size of the bond can’t be limited in size. The constitution limits the General Assembly to issuing 8.14 million per year in general obligation full-faith credit bonds. In addition, the state must pay debt service on those bonds.
General obligation bonds must be approved by voters. Secretary Connock said voter approval adds an undesireable measure of uncertainty to the revenue-raising procedure. If the funds can’t be guaranteed, then the state can’t advertise construction contracts, the secretary explained.
The use of pledge bonds requires approval by two-thirds of the General Assembly. Also, pledge bonds, unlike general obligation bonds, don’t have to be spent on specific projects.
But some have questioned the constitutionality of pledge bonds. If the General Assembly approves pledge bonds, the state will take a test case to the Virginia Supreme Court to establish their legality.
• Gramm-Rudman tax measure. In answer to a question, Secretary Connack said he has heard that the federal tax-cutting proposal could result in a $200 million revenue loss to Virginia.
But, several legislators said, the restructuring of the federal tax system could mean a substantial though unknown tax windfall for Virginia.
• A state lottery. Del. J.W. “Billy” O’Brien Jr. (D-Virginia Beach) is expected to propose that the General Assembly create a Virginia lottery and allocate a portion of the estimated $150 million annual take for transportation needs.
But some senators seem wary of the idea, saying lottery receipts can fluctuate wildly and thus would be an unreliable source of revenue. To succeed, they must be actively promoted through costly media campaigns, Sen. William A. Truban (RF auquier/Clarke/W arren/Shenandoah) noted in an interview after the hearing.
Of the lottery proposal, Sen. Truban, a long-time Senate Finance Committee member, said: “It’s a ioke."
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