McDonnell’s amendments to transportation tax: a few rate tweaks, and a mechanism for AUTOMATIC future tax increases

Most of Governor McDonnell’s changes to HB2313 were minor – small reductions in the tax and fee rates – except for one big change that made this fiasco of a bill even worse: a mechanism to impose automatic future tax increases on Virginians.

One of the controversies surrounding what I call Plan ’13 From Outer Space was the state-imposed taxes on Northern Virginia and Hampton Roads (regional taxes being unconstitutional and all). So, in reaction to Attorney General Ken Cuccinelli’s reminder of that fact (VV), the Governor came up with this (also VV):

Addressing potential legal questions regarding regional taxation authority for Northern Virginia and Hampton Roads. Amendments are made to the sections imposing the regional taxes for transportation by the state to improve the legal posture of the law by changing the applicability of the taxes to any Planning District Commission meeting certain empirical thresholds including population, registered vehicles and transit ridership.  Hampton Roads and Northern Virginia are the only jurisdictions currently meeting these criteria, but in the future other parts of the Commonwealth could utilize these tools if their transportation challenges continue to grow.

Now, it sounds like the affected future regions could choose to impose new taxes, doesn’t it? There’s only one problem: there is no choice involved at all. From the verbiage of the amendment itself (LIS VA, italics in original, bold added):

In addition to the sales tax imposed pursuant to § 58.1-603, there is hereby levied and imposed in each county and city located in a Planning District established pursuant to Chapter 42 (§ 15.2-4200 et seq.) of Title 15.2 that (i) as of January 1, 2013, has a population of 1.5 million or more as shown by the most recent United States Census, has not less than 1.2 million motor vehicles registered therein, and has a total transit ridership of not less than 15 million riders per year across all transit systems within the Planning District or (ii) as shown by the most recent United States Census meets the population criteria set forth in clause (i) and also meets the vehicle registration and ridership criteria set forth in clause (i), a retail sales tax at the rate of 0.70 percent. In any case in which the tax is imposed pursuant to clause (ii) such tax shall be effective beginning on the July 1 immediately following the calendar year in which all of the criteria have been met.

No “could utilize” about it. The tax increase is automatic. The determination is made not by local or state elected officials, but by the U.S. Census. Thus, future taxes can be imposed on an entire region without anyone taking responsibility.

By the way, here are the list of Planning Districts in Virginia. Please note that, in effect, a subdivision built multiple counties away from you can trigger a tax increase that no one can stop under the Governor’s amendments.

If anything, this just makes Plan ’13 From Outer Space worse. It certainly is no way to govern…

…and it leaves Virginia’s transportation system just as overcentralized, disconnected from land use, and held hostage to upstream unfunded mandates as it was before this entire sorry episode began.

With any luck, the legislature will reject this; the entire, listing enterprise will sink beneath the waves; and Virginia can try again with a fresh perspective in 2014.

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