Commentary

Balkanizing Virginia Government

The debate on the Northern Virginia sales tax referendum has focused on congestion and taxes. But another dimension that voters should consider is the transparency and accountability of government in Virginia.

The sales tax increase would fund the Northern Virginia Transportation Authority as a complex new layer of government that would collect taxes, issue billions of dollars of debt, acquire land, and dole out money to contractors. Yet Virginia transportation funding is already too complex with the overlapping functions of the federal government, the state Department of Transportation, the Commonwealth Transportation Board, local governments, and highway-specific taxing districts. VDOT’s annual report has five pages of flowcharts illustrating the state’s transportation funding, which comes from the federal gas tax, the state gas tax, a car sales tax, a portion of the general sales tax, and numerous fees and debt proceeds. The NVTA makes that Byzantine structure even more complex.

Complexity and diffuse authority breeds irresponsibility. Who will citizens blame if the NVTA funds white elephant projects or descends into scandal? The governor and legislature will surely duck the blame saying that the NVTA mistakes are not their doing. What about corruption? The relationship between the NVTA and developers is already tight. Won’t contractor kickbacks be a seductive possibility for a powerful but obscure independent authority?

The NVTA debt issuance also raises accountability problems. Governments are always tempted to evade short-term budget choices and thrust costs onto future taxpayers through debt. If referendum projects run over-budget and run out of cash, you can be sure that the NVTA and the developer lobby will agitate for new bond issues - without the transparency and oversight available for debt issued directly by Richmond.

Politicians are using taxing and debt-issuing authorities like Enron used “special purpose entities” to evade responsible budget choices. Choices such as enacting former Governor Douglas Wilder’s recent budget cut proposals, carving out a share of general fund tax growth for transportation, or pursuing private funding options akin to the Dulles Greenway project.

Passage of the November referendum would allow politicians to avoid budget trade-offs by handing over taxing and debt-issuing powers to an unelected mini-government. What’s next — new mini-governments for universities or parks in regions that are unhappy with Richmond’s budget allocations? Rather than balkanizing state spending, let’s keep government in Virginia as simple and transparent as possible and reject the sales tax referendum.

Chris Edwards is director of fiscal policy at the Cato Institute, and a resident of Falls Church.