On February 24, 2007, the Virginia General Assembly passed, and the governor subsequently signed into law, a comprehensive legislative package to provide for significant increased funding for transportation. February 29, 2008, exactly one year and five days later, the Virginia Supreme Court has ruled unconstitutional a major portion of that legislation: the generation by regional transportation authorities of revenues for transportation in Virginia.
House Bill 3202 passed the General Assembly and was subsequently enacted as Chapter 896 of the 2007 Acts of Assembly (“HB 3202”). HB 3202 provided a number of statewide, local, and regional measures to address transportation funding. One of the most significant of those measures was empowering the existing Northern Virginia Transportation Authority (“NVTA”), and creating a new Hampton Roads Transportation Authority (“HRTA”), to issue bonds for transportation projects, and to impose taxes and fees to finance those bonds.
Delegate Robert Marshall, former Delegate Richard Black, and several other citizens of Northern Virginia, as well as the Board of Supervisors of Loudoun County in a separate suit, challenged the constitutionality of HB 3202 with regard to NVTA (Marshall v. Northern Virginia Transportation Authority, et al.). The court was asked two questions:
- Whether the provisions of HB 3202 violated the Constitutional requirement of Article IV, § 12 that no law embrace more than one object (“the single-object rule”)
- Whether the General Assembly may delegate its power of taxation to a political subdivision that is not a county, city, town, or regional government, and is not an elected body
Virginia’s Constitution requires, in Article IV, § 12, that “[n]o law shall embrace more than one object, which shall be expressed in its title” (the title of a bill is the introductory statement expressing the subject matter of the bill). Plaintiffs alleged that the title of HB 3202 did not contain all of the subjects embraced in the legislation, and that various elements of the legislation constituted more than one object and did not have a “natural and necessary connection to each other.” The court, using its standard of review that acts of the General Assembly enjoy a presumption as to constitutionality, held that the title of HB 3202 adequately described the subject matter of the bill, and that the subjects included within HB 3202 “are congruous and have a natural connection with the subject of transportation expressed in the title.” Therefore, HB 3202 does not violate the single-object rule.
On the second question presented, the court ruled that the General Assembly’s delegation of taxing authority to NVTA was unconstitutional. Article IV, § 14 of the Constitution of Virginia prohibits the General Assembly from enacting “any local, special, or private law…[f]or the collection of taxes.” The General Assembly may, however, under Article VIII, § 2, delegate by special act the power of taxation to any “county, city, town, or regional government.” Article IV, § 11 provides that no law creating, imposing or reviving a tax shall be passed except by a majority vote of members elected to each house of the General Assembly.
NVTA is not a county, city, town, or regional government; it is a political subdivision created to address regional transportation issues. The Board of NVTA consists of the chief elected officers of the Counties of Arlington, Fairfax, Loudoun, and Prince William, and the Cities of Alexandria, Fairfax, Falls Church, Manassas, and Manassas Park, as well as two members of the House of Delegates, two members of the Senate, and two citizens appointed by the governor. HB 3202 empowered NVTA to impose seven regional taxes and fees, and the revenue generated from such taxes and fees could be used for the sole purpose of financing bonds and providing revenue for transportation projects and purposes in the jurisdictions encompassed in NVTA.
The court held that the General Assembly’s authorization of NVTA to impose taxes and fees was a constitutionally prohibited delegation of the taxing power of the General Assembly to a political subdivision whose governing board is not elected by the citizens to serve in that capacity. NVTA argued that the delegation was not a true delegation, in that the General Assembly retained control over the subject of the taxes and fees, dictated the amount or rate of such taxes and fees, and mandated the manner in which revenues were spent. The court disagreed, holding that the General Assembly has delegated its authority when it enacts a law authorizing another entity to determine whether to impose that law. Despite the strong presumption of constitutionality given to acts of the General Assembly, the court held that the Constitution placed greater restrictions on taxing power than on most other types of legislative power, indicating that the people of Virginia cannot be taxed without their consent or that of their elected representatives.
The court also held that the General Assembly may not do indirectly that which it may not do directly: impose taxes on Virginia’s citizens without an affirmative, recorded vote of a majority of all members elected to each body of the General Assembly. The court was not asked to address the constitutionality of the provisions of HB 3202 that implemented HRTA, but because HRTA was given taxing and bonding power similar to that of NVTA, this ruling removes that authority from HRTA as well. Because statutory construction in Virginia, as well as the text of HB 3202, provides for severability of provisions if one or more provisions is held invalid, the remaining provisions of HB 3202 are left intact. However, the revenues expected to be generated from NVTA and HRTA are by far the lion’s share of revenues anticipated from HB 3202.
The court’s issuance of the opinion, with eight days left in the regularly scheduled General Assembly session, means that the General Assembly is on notice that it cannot rely on revenues expected from both NVTA and HRTA to create the 2008–2010 Biennial Budget. The General Assembly has now lost its expectation of revenues from NVTA of at least $300 million per year, revenues from HRTA of around $200 million per year, and $102 million of bonds authorized, but not yet issued, by NVTA. In a year of lower-than-expected revenue growth statewide, the General Assembly now has to adjust its priorities for transportation projects and identify new or increased sources of revenue to pay for transportation projects in the Commonwealth. These challenges now present the question of how much time the General Assembly needs to accomplish its task, as well as how much compromise will be both necessary and possible to do so.