Dissing
the Voters
The
state constitution requires voter approval of
state-backed bonds. Yet every year legislators come
back with some new scheme to bypass the public.
A
plan to use tax-supported bonds to finance the
proposed Hampton Roads sports facility was almost
enacted by the General Assembly this year.
Legislation that would have authorized state debt
for this purpose (S.B. 1070) was approved
unanimously by the State Senate, and was reported to
the full House of Delegates with only one dissenting
vote in the House Finance Committee. It was
ultimately defeated last Wednesday on a 54-37 vote
of the House.
The voters of
Hampton Roads and Northern Virginia rejected similar
tax-supported bond schemes last November.
Those ballot measures would have increased regional sales
taxes to pay for transportation projects and
authorized the issuance of bonds supported by the
new taxes.
Neither proposal
made provisions for referendum approval by the voters
across Virginia before the tax-supported bonds could
be issued. Obviously, the local governmental
officials, investment bankers, bond lawyers and
business elites who believe the Virginia
Constitution doesn’t mean what it says haven’t
stopped trying to use this debt-financing scheme.
To circumvent the
debt restrictions in the Constitution, the
proponents of this scheme resort to complicated
rationales and convoluted statutory language.
Whenever a term such as “pass-through entity tax
revenues” appears in a legislative proposal, as it
did in S.B. 1070, bells and sirens should sound to
put taxpayers and legislators on alert.
This kind of
mischief needs to end. The voters have
repeatedly demonstrated that they aren’t willing
to surrender their constitutional power to approve
or disapprove tax-supported debt. The
Constitution gives voters the opportunity to control
such debt financing schemes directly through
referendum votes.
The General
Assembly cannot lawfully circumvent the obvious
intent of the Constitution by authorizing the
issuance of tax-supported state debt without a
referendum. Yet, legislation to allow state
and regional bodies to incur tax-supported debt
without voter approval is introduced at virtually
every session of the General Assembly.
There is at least
one effective way to stop this assault on the
Constitution. Voters should insist that
candidates running for the House and Senate in 2003
pledge not to support any scheme that would allow a
state or regional body to issue tax-supported debt
without voter approval. The Constitution is
already clear enough on the subject. No
further amendment is required. In fact, voters
have reason to believe that those who continually
advocate these schemes will disregard whatever
language is added to the Constitution just as they
have ignored its clear intent for decades.
Apart from the
constitutional defect in S.B. 1070, there are
obvious policy concerns about diverting personal and
corporate income tax revenues to fund sports and
entertainment facilities. That is particularly
so when state and local spending is being sharply
cut in the face of declining tax revenues.
Proponents argue
that only those taxes generated or made possible by
a new facility would be used to fund it. If
these facilities are justified at all, they should
be undertaken by the private sponsors who stand to
derive such considerable profits.
Why should the risk
of failure of stadium financing be borne by the
taxpayers rather than private investors? A
default on bonds issued under statutes like S.B.
1070 could adversely affect the credit standing of
the Commonwealth.
The disturbing
campaign to allow unelected regional entities to
issue tax-supported debt raises vital questions
about our constitutional system. Does the
Constitution matter? Can the will of the
voters be ignored without consequence?
-- February 17, 2003
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