WASHINGTON - Virginia officials and lawmakers are scrambling to find a way to provide funds to the state's transportation system in the aftermath of a state Supreme Court ruling last week that found it would be unconstitutional for the Northern Virginia Transportation Authority to issue $130 million of bonds.
Gov. Tim Kaine met with House and Senate lawmakers over the weekend to consider options for obtaining such funds, after the high court ruled that regional bodies cannot be delegated the ability to levy taxes and fees, which would have been used to back bonds issued by the authority.
"NVTA is not a county, city, town, or regional government, and thus it is not a political subdivision to which the General Assembly may constitutionally delegate its legislative taxing authority," the court said in its unanimous ruling.
The ruling also has put the kibosh on similar transportation authorities that were being established in Richmond and the Hampton Roads region of the commonwealth.
Kaine hopes to reach an agreement with lawmakers before the General Assembly's regular session wraps up on March 8, according to a spokesman for the governor. However, if a plan cannot be forged by the end of this week, Kaine will consider calling for a special legislative session to address the transportation issue.
Jody M. Wagner, Virginia's finance director, said the executive branch "is working with the General Assembly regarding potential solutions. They're still trying to figure out what to do."
Meanwhile, several options are being bandied about. For example, Senate Majority Leader Richard L. Saslaw, D-Fairfax, is pushing a statewide gas tax, which could produce an additional $150 million of tax revenue, annually.
Another option is for the lawmakers to simply levy the taxes and fees that they originally authorized the NVTA to impose. Last July, shortly before filing the bond validation suit against itself to verify the bonds' constitutionality, the authority approved seven new taxes and fees authorized by the General Assembly that would have raised $300 million a year for the region and provided backing for the proposed bonds.
The high court found that these taxes - and as a result, the bonds - were unconstitutional because the NVTA, which is made up of members appointed by the governor, cannot levy taxes, a responsibility that rests only in the hands of elected officials.
However, the court indicated that the General Assembly could approve the taxes and fees. The ruling stated: "If payment of the regional taxes and fees is to be required by a general law, it is the prerogative and the function of the General Assembly."
To quickly reapprove the taxes and fees with the General Assembly as tax collector would be the "path of least resistance," NVTA spokeswoman Kala Quintana said yesterday.
"[Lawmakers] voted for these taxes already, and it would be very simple for them to just vote for them again. In fact, the reality is that some of these guys campaigned on the fact that they voted for this," Quintana said. She added that there is widespread support among the region's citizens for an influx of infrastructure funds, regardless of how they are obtained.
"The General Assembly can't afford to do nothing," she said. "The economic vitality of the region is threatened if we don't do something now."
While awaiting the court's ruling, the NVTA had prepared an initial offering of $102 million from $130 million of bonds that they were authorized to issue, which now must be scrapped.
However, Quintana said if lawmakers adopt the NVTA's taxes and fees, it is unclear who will issue the bonds, the authority or the General Assembly. If lawmakers approve the issuance, it is likely it will be general obligation debt, meaning it must be put before the voters in a November referendum at the earliest. Wagner said it was unclear whether the NVTA would be a factor in issuing the debt, adding that it would "depend on the structure" of the deal.
There are cases where bonds are issued by authorities, many times in situations where the funds are needed before voting day. For example, Kaine's $1.6 billion education bond proposal consists of $1.53 billion of GOs, with the remaining $126.5 million to be issued by the Virginia College Building Authority. In those cases, the bonds are backed by appropriations, which do not require voter approval.
Quintana said the NVTA is adopting a wait-and-see approach with legislators, and will determine who is responsible for issuing bonds once a solution is reached. However, if the authority is approved to issue the new debt, it will have to go through the entire procedure of proposing the bonds again, including filing a new bond validation suit.
In the meantime, Quintana said the NVTA is working to redeem all taxes collected, none of which had been spent prior to the ruling.