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The
Phony Car Tax "Cap"
Moody's
may have been impressed when lawmakers capped car tax
reimbursements at $950 million forever, but there's
nothing to stop a future legislature from changing
its mind.
Virginia’s
best-in-the-nation credit rating is secure for now.
The one rating agency that had expressed concern
about the Commonwealth’s financial condition,
Moody’s Investors Service, has been placated by
the recent actions of the General Assembly.
A
major factor in Moody’s decision to take Virginia
off its watch list was the statute capping future
appropriations for car tax relief at $950 million a
year. As noted in a column last month, this practice
of attempting to bind or appearing to bind future
legislative sessions is a dangerous one.
Because
the General Assembly cannot bind itself to act in a
particular way in the future, this type of statute
is deceptive. What the legislature did in writing
into law language that, by its terms, mandates a
permanent limitation on what future legislatures can
appropriate is nothing more than eyewash.
The
statutory car tax relief cap has been sold as
something substantive. It is intended to have a
concrete effect on future budgets, even though
future legislatures can ignore it.
The
original car tax relief legislation has the same
flaw. In unequivocal language, it mandates future
appropriations for car tax reimbursements to
localities. The Virginia Constitution doesn’t
permit this kind of legislation.
The
problem is that words don’t mean what they say
when the legislature enacts such language. If
that’s the case, then why are such laws enacted?
One
reason is that politicians want to appear to be
solving a problem even if they really aren’t. The
citizens of Virginia should insist on a better
practice.
Political
accountability depends on clarity and transparency.
Doubletalk and confusion make it more difficult to
hold elected officials accountable.
Moody’s
was influenced by the car tax relief cap because it
believed that it would have an effect on the General
Assembly when it convenes in January 2006 to enact
another two-year budget. The appropriations act
passed in 2006 can include whatever reimbursement to
localities for car tax relief the General Assembly
chooses.
There
is not even a requirement that a future session of
the General Assembly formally amend or repeal the
$950 million a year car tax relief cap. This
conflicting language of the appropriations act will
automatically amend the cap as a matter of law.
Yet,
the statutory language permanently restricting what
may be appropriated for car tax relief will remain
in the Code. This is misleading and destructive of
public confidence.
When
elections are held next year, the voters have every
right to insist that candidates tell them how state
revenues will be spent and whether additional taxes
are needed. The next General Assembly will write a
budget without having its hands tied.
How
should the car tax burden be dealt with? What the
General Assembly did in 1999 when it first provided
for reimbursements to localities for car tax relief
and what it did this year to limit those
appropriations did not solve the problem.
Contrary
to what state Sen. John Chichester has said, the cap
enacted this year accomplished nothing for the
future except to provide empty statutory words.
We’re still looking for a solution.
The
reimbursement method should be scrapped. The
principal reason is that it is constitutionally
impossible to lock in a permanent reimbursement
schedule. A more straightforward approach is needed.
If
the General Assembly wants to cap spending, it
should not limit itself to car tax relief. It should
deal with the problem comprehensively.
--
June 21, 2004
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