The Virginia Supreme Court has ruled that the General Assembly overstepped its constitutional authority when it gave the Northern Virginia Transportation Authority (NVTA) the power to raise taxes to fund transportation projects.
NVTA was given the power to levy fees and taxes as part of 2007’s landmark transportation legislation, HB 3202. One of the other major elements of the bill, raising hundreds of millions of dollars through abusive driving fees, will be overturned this year by the General Assembly itself after significant public outcry. That puts the ball back in the court of state and local governments as they continue to search for ways to raise additional funding for road and transit projects. Last week, VDOT’s CFO announced that road construction funds will be down as much as 44% over the next six years.
Under the enabling legislation, NVTA gained the power to impose seven regional taxes and fees, including additional licensing fees and a local sales tax, effective the first of this year. Based on that, the Authority passed a resolution authorizing the sale of $130 million in bonds which would be paid down through the tax revenue.
The court case originated when the Authority sought confirmation from the Circuit Court of Arlington County that bonds it planned to issue would be valid. The Loudon County Board of Supervisors as well as Delegate Bob Marshall filed to oppose the certification, but the Circuit Court ruled last summer in favor of the Authority. Marshall appealed on the basis that NVTA is a political subdivision whose members are not directly elected, and thus the General Assembly unconstitutionally delegated its power to raise taxes. NVTA’s lawyers argued that the General Assembly retained the power to set the rates and could amend them at any time.
“We consistently have held that when the primary purpose of an enactment is to raise revenue, the enactment will be considered a tax,” wrote Justice S. Bernard Goodwyn in the ruling. Goodwyn concluded that because NVTA had the final decision on whether or not to impose the taxes and fees, the General Assembly had in fact delegated its power to tax. The ruling then points to several reasons how the power to tax is specifically reserved to the General Assembly, including Article I, Section 6 of the Virginia Constitution which reads in part:
“that all men . . . cannot be taxed . . . without their own consent, or that of their representatives duly elected . . . “
The ruling also cites Article VII, Section 7, which reads in part:
“No ordinance . . . imposing taxes . . . shall be passed except by a recorded affirmative vote of a majority of all members elected to the governing body.”
The General Assembly can grant cities and counties the power to levy taxes, but the ruling states NVTA is not itself a political jurisdiction. “NVTA is a political subdivision narrowly charged by the General Assembly with the responsibility of addressing certain regional transportation issues in the Northern Virginia localities it encompasses,” wrote Justice Goodwyn.
Any taxes already raised by NVTA are null and void.
In February, the Charlottesville City Council and the Albemarle County Board of Supervisors directed the
Thomas Jefferson Planning District Council to continue with efforts to seek enabling authority from the General Assembly to create a similar transportation funding mechanism for both localities.
Supervisor Dennis Rooker (Jack Jouett) said he would be watching to see how the General Assembly fixes the legislation. “It’s a decision more of form than substance,” he said in a phone interview with Charlottesville Tomorrow. He said the proposed regional transportation plan for this area might include language that assigns the power to raise additional taxes to the City Council and County Supervisors, rather than to the proposed transit or transportation authority.
“I’ve read the opinion a couple of times, and I don’t think this prevents a regional transportation authority, “ Rooker said. “We’ll just have to do it in a way that complies with the ruling.”
Senator Creigh Deeds (D-25) issued a statement about the ruling that indicated he may seek an increase in the gas tax.
"The decision handed down by the Supreme Court of Virginia today invalidating the Northern Virginia Transportation Authority's taxing ability granted by the General Assembly sends a clear and unmistakable message to legislators in Richmond. We will not solve the transportation challenges facing us if we continue to pass the buck and shirk our responsibilities to lead.”