WASHINGTON - The Virginia Supreme Court ruled Friday that $130 million of bonds the Northern Virginia Transportation Authority, a regional body created by state lawmakers, planned to issue would be unconstitutional.
In a unanimous ruling, the high court determined that lawmakers are not permitted to extend taxing and bond issuance powers to the authority because its board members are not elected. The court ruled that only elected officials possess the ability to levy taxes, and that therefore the NVTA cannot impose the seven new taxes and fees that were needed to back the bonds, or issue the bonds. The authority, which hoped to collect $300 million from the new taxes, consists of members who were appointed to their positions.
The ruling's importance extends beyond Northern Virginia. It also effectively invalidates bonding and taxing powers given to similar regional authorities that are being formed in Richmond and the Hampton Roads region, which includes Virginia Beach, according to the attorney representing the group that challenged the NVTA.
Patrick McSweeney, a partner at McSweeney, Crump, Childress, and Temple PC, represented the so-called Marshall defendants, a group of 18 citizens led by Republican House Del. Robert Marshall.
McSweeney said that while the case specifically addresses NVTA, the court's ruling also prohibits any future attempts at creating regional authorities that would issue bonds to finance the specific needs of any particular region of the state.
"As a practical matter, both of those regional taxes are gone," he said.
Gov. Tim Kaine, who joined the NVTA in its bond validation suit, which it had filed against itself to resolve the issue of constitutionality, released a statement today addressing the ruling.
"I am disappointed by the Supreme Court's finding that the limited authority to impose taxes granted by the General Assembly in 2007, by an overwhelming vote by both bodies, was unconstitutional," he said. "Over the next few days, my legal staff and I will work closely with the Attorney General's Office and members of the General Assembly to determine what alternatives are available to provide adequate transportation funding."
Like Kaine, Attorney General Robert McDonnell and House Speaker William Howell joined the NVTA as parties supporting the bonds.
The high court ruled that because the board members of the NVTA were appointed, not elected by voters, that they could not impose taxes. "We hold that because the regional taxes and fees specified in Chapter 896 may be imposed in the sole discretion of NVTA, the General Assembly has delegated its taxing authority to NVTA," the ruling said.
The Virginia Constitution "clearly contemplates that taxes must be imposed only by a majority of the elected representatives of a legislative body," the ruling said. "The General Assembly may not delegate its taxing power to a non-elected body, such as NVTA."
"We hold that the provisions of Chapter 896 permitting NVTA to impose the regional taxes and fees are invalid because they violate the constitution."
In court, the Marshall defendants argued that permitting the NVTA and similar transportation authorities to levy taxes and issue bonds would open the door to "thousands" of similar entities, created by lawmakers to collect revenue for specific needs.
McSweeney said yesterday that the ruling will finally force state politicians to come up with creative financing solutions, rather than passing the burden on to different areas of the state.
"[The ruling] already has prompted the politicians to go into their corners and decide what they're going to do next," he said. "[The disallowed method] allowed the General Assembly to solve the problem without raising taxes, but it pushed the burden down to the people in the regional entity."
He added that he was surprised by the ruling, mainly due to its unanimity.
"Seldom do we get state legislation overruled by a unanimous decision. It took some gumption," he said. "This is one branch [of Virginia's government] saying unanimously, 'You got it wrong.'"
Christopher Zimmerman, chairman of the NVTA, said the ruling was a "significant setback for Northern Virginia."
He said several transportation plans had been put in place, and the authority was in the process of preparing an initial bond offering before the court's decision. Now, he said, Virginia lawmakers must reach a constitutional solution that ensures the region gets the funds it needs to relieve its saturated transportation system.
"The General Assembly and the governor need to act, and they need to act immediately," he said. "This is a problem that they can fix, but without their help, NVTA will essentially be out of business."
Gerald Connolly, chairman of the Fairfax County Board of Supervisors and an NVTA board member, said that the high court's ruling didn't completely abolish taxes and bonds for Northern Virginia Transportation, but ruled against who could issue them.
"In many ways, the Supreme Court ruling was a technical ruling. Its logic was impeccably correct," he said, saying that NVTA's attempt to raise revenue was not at fault, but rather "the illegal act was the illegal delegation of this authority by the General Assembly."
He maintained that the General Assembly must find a way to finance infrastructure improvements in Northern Virginia.
"It must not leave town without acting. It cannot leave NVTA in the lurch," he said.
The NVTA bond validation suit reached the commonwealth's high court after an Arlington Circuit Court affirmed the authority's ability to levy the taxes and issue bonds in August. Arguments were heard in the Supreme Court on Jan. 9.