But the way the amendments read, Gov. McDonnell may have just made things worse.
Of particular focus is the Governor’s amendment to the regional taxes AG Cuccinelli brought into question:
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.
“Utilize these tools” simply means that other regions of Virginia will be granted the power to hike taxes to pay for transportation if they become large enough and gain similar infrastructure to the two regions that will begin taxing now. I imagine the language is written in a way to attempt to limit future tax increases, but unless Governor McDonnell has a crystal ball on economic development that I’m not aware of, he can’t guarantee this won’t lead to further statewide tax increases down the road.
Others see no “may have set” about it: future tax increases are automatic
DJ McGuire at Virginia Virtucon finds future tax hikes are directly died to Census data:
There’s only one problem: there is no choice involved at all. From the verbiage of the amendment itself (LIS VA, underline 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.
Norm Leahy saw the same problem in a post at Bearing Drift:
The one thing about shifting to these numerical criteria, though, is that they are open-ended, and could, through population growth and other factors, see higher taxes imposed automatically elsewhere in Virginia.
In short, the Governor, following the Attorney General’s road map, has put a ticking time bomb in the tax code.
But for Norm, the issues don’t just stop there:
The General Assembly can tax whatever it wants. The upshot of Attorney General Ken Cuccinelli’s advisory opinion, as employed by Gov. McDonnell, is that the General Assembly can tax just about anything under the sun and not run afoul of the constitution if the legislation is properly camouflaged.
What we are left with, then, is a bill that is closer to constitutional, though not entirely so…contains the nasty surprise of future tax increases for the rest of Virginia…and seems to give the General Assembly the ability to tax you, me, the guy behind the tree and the tree, too.
The bill now goes back to the General Assembly who must consider the Governor’s amendments and, should it pass, expect legal challenges on multiple aspects of the law.