Virginia Supreme Court Considers Taxpayer Protections in NVTA Tax Case

February 13, 2008

Download Special Report No. 159

Special Report No. 159

Update: The Virginia Supreme Court agreed with the Tax Foundation’s arguments and has ruled that the taxes and “fees” imposed by the NVTA are unconstitutional. See our update here.

Introduction
On January 1, 2008, residents of Northern Virginia began paying seven new taxes that will raise $326 million a year. The taxes are imposed by the Northern Virginia Transportation Authority (NVTA), a governmental entity created in 2002 but not given the power to tax and issue bonds until 2007.

The taxes may not last long. The Virginia Supreme Court is considering a lawsuit challenging the NVTA as unconstitutional, primarily because an unelected board cannot impose taxes without voter approval under the Virginia Constitution. Indeed, in this case, voters have on several occasions explicitly rejected NVTA-type taxes.

Oral arguments were heard by the state supreme court on January 8, 2008, after a lower court judge (Judge Benjamin Kendrick) had ruled the NVTA to be constitutional.

Many states have taxpayer protections built into their state constitution, and Virginia is no exception. Some of these Virginia taxpayer protections include:

  • Legislative power is vested with the legislature and cannot be delegated without constraints. This limits the legislature if it seeks to avoid responsibility by turning over the decision-making power to other entities.
  • The power to tax, once described by Chief Justice John Marshall as the “power to destroy,” cannot be delegated to an unelected body. This gives taxpayers recourse against those who impose destructive taxes.
  • Measures to raise taxes or borrow money must be approved publicly by elected officials, with votes recorded. This helps ensure that taxes and borrowing are scrutinized publicly and enjoy a broad range of support beyond that of a narrow special interest.
  • Debt to be repaid with tax revenues must be approved by a referendum. Politicians are thus limited in their ability to spend future tax revenues today.
  • Laws cannot embrace more than one object. “Single-object” or “single-subject” rules are in virtually every state constitution, and they arose in “the 1830s to eliminate the evils of ‘logrolling’ and ‘omnibus bills,’ and to ensure separate consideration by the legislature for distinct proposals.”

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