Reston Spring

Reston Spring
Reston Spring

Thursday, May 23, 2013

Tolls, Taxes, the Portsmouth Judge...and MWAA and the Dulles Toll Road?

Last week, in a surprising decision, Virginia Circuit Judge James A. Cales, Jr., ruled that the planned tolls on the Portsmouth Midtown-Downtown tunnel were unconstitutional under the Virginia Constitution because they constituted taxation without representation.  In a subsequent ruling, the judge refused to stay his decision as requested by the Commonwealth. 

The judge's rationale was that the tolls are taxes, and only the Commonwealth has the authority to levy taxes, since taxation requires representation under the Virginia Constitution.  This is essentially the same argument that has been made in a local case (Corr, Grigsby v. MWAA) against MWAA for raising tolls on the Dulles Toll Road to pay off bonds for construction of the Silver Line.  That case is now before a Virginia Appeals Court after having been rejected by the circuit court, i.e.--the opposite decision on the same basic argument made in the Portsmouth case.

In the Portsmouth case, the tolls are the result of a public-private partnership (PPP) to construct the tunnel.  In northern Virginia, MWAA's authority stems from an agreement with the Commonwealth to take over management of the DTR, including the authority to raise tolls.

Both the Portsmouth tunnel and the DTR cases stem from the utter refusal of state legislators to raise taxes or tolls of any kind anywhere for fear they will lose votes in the next election.  Increasing taxes and tolls is anathema.  So they have tried to ditch this apparently responsibility apparently dictated by the Virginia Constitution.  That way, they can just shrug their shoulders when MWAA or the PPP charges or raises tolls--"It's not my fault they did that."  But of course it is.

The Washington Examiner reacted this way editorially to the judge's decision:
A Portsmouth judge's recent ruling in a case involving Virginia's Public-Private Transportation Act has sent shock waves through the commonwealth and the financial markets, as well it should. Members of the General Assembly have been hiding behind the PPTA by allowing unaccountable bureaucrats and political appointees to do the dirty work of raising taxes to fund major transportation projects. 
The 1995, the PPTA was designed to allow the state to leverage scarce tax dollars by partnering with private companies. Under the Virginia Constitution, only elected members of the General Assembly — who are accountable to the people at the ballot box — have the authority to raise taxes. The PPTA was not supposed to supplant the legislature. But over the years, it has been used to justify what amounts to taxation without representation. . .
The Examiner editorial notes that "Fitch Ratings has already warned investors that Virginia may be on the hook for $1 billion if the Portsmouth decision is upheld."

And, yes, this case (as well as the MWAA case) are far from over.  They will no doubt go to the Virginia Supreme Court where a decision is expected before the Portsmouth tunnel opens in February 2014.

The ramifications for continuing the planned (actually, expected) toll increases on the Dulles Toll Road to cover Metrorail bond payments are not clear--and probably won't be for some time.  If the cases are ultimately rejected, there will be no change in the planned toll increases.  On the other hand, if the Portsmouth judge's ruling is upheld, there appear to be two types of outcomes for the DTR:
  • The General Assembly will approve toll increases very much the same as are already planned for DTR users at the risk of being tossed out of office by their constituents.  
  • The General Assembly will approve a state-wide tax hike to cover the cost the cost of the Metrorail bond payments--at the risk of legislators outside NoVa getting thrown out of office--and tolls will not rise to the astronomic levels projected.  
Either way (or some other way), the bonds will be paid.  

Stay tuned....


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