Bacon's Rebellion

Democracy Thrives in Sunlight

Pat McSweeney: Bane of the Political Class

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by

James A. Bacon
in

Patrick McSweeney is one of the few public figures in Virginia today who hews to the spirit of the founding fathers who protested taxation without representation. First he challenged the constitutionality of giving unelected regional transportation authorities the power to levy taxes. The state Supreme Court backed him up. Now he’s going after the planned transfer of the Dulles Toll Road to the Metropolitan Washington Airports Authority.

As reported by the Washington Times, the Supreme Court heard oral arguments in the case yesterday. McSweeney, a Richmond attorney, originally filed the suit in Richmond Circuit Court, where it was dismissed. He appealed, and now the Supreme Court is hearing it. The lawsuit argues that the transfer should be invalidated because the General Assembly never approved it. “The governor and executive agencies exercise no power not granted by the General Assembly,” McSweeney told the court. “They acted beyond their authorization.”

The Kaine administration wants to continue charging tolls on the road, which is scheduled to pay off the last construction bonds by 2016. Now the Axis of Taxes sees the tolls as a multibillion-dollar revenue stream that can help pay for construction of the Rail-to-Dulles heavy rail project. Insofar as the tolls would be applied to a purpose totally divorced from their original function — paying for construction of, or improvements, to the toll road — they constitute a tax.

Making matters worse, the Kaine administration proposes to transfer the road to the MWAA, to which it has given oversight of the Rail-to-Dulles project. As was the case with the regional transportation authorities that the Supreme Court struck down, the MWAA governing body is not elected. Indeed, its board contains representatives not only from Virginia but Maryland and Washington, D.C.!

The unelected nature of the MWAA is not the legal issue in this lawsuit — the authority of the Kaine administration to transfer the toll road is the issue — but from a political perspective, this case is all about taxation without representation. This is all about the forces of Business As Usual getting something they want (Rail-to-Dulles) and have someone other than themselves (Dulles toll road commuters) to pay for it — without the consent of those paying the money.

I’m crossing my fingers and hoping McSweeney hits this one out of the park, too. Two legal grand slams in one season, that would be something else!

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  1. Larry Gross Avatar
    Larry Gross

    there are really two distinct issues.

    1. – who can operate a toll road

    2. – what can the toll revenues be used for

    the first is whether or not a government agency can own/operate a toll road as a cash/revenue generator for a transportation mission (as opposed to a non-transportation mission).

    Could VDOT build and operate and/or lease to private companies toll roads whose revenues would be used to fund other road projects not associated at all with the Toll Road itself?

    Some states are looking to set up DOT-operated toll authorities that commingle the revenues which will then be allocated to other non-toll road projects.

    Could the Virginia Dept of Rail and Transit build and operate toll roads to fund transit and rail projects?

    So.. could any transportation agency build/operate/lease toll roads to fund other transportation projects?

    How different is the Dulles situation different from HOT lanes revenues being used for Metro and VRE?

    Could HOT lane revenues, for instance, be used to fund the new US 460 road or the Coalfields Expressway or I-73 in Roanoke?

    The court challenge.. is pretty narrow … compared to the wider potentials… in my view.

    Even if the Court rules on the narrow issue …the impact of that ruling would depend on what basis the court makes it ruling.

    Depending on how it rules – it could affect the planned use of HOT lane monies.. also…

    and perhaps even keep VDOT from using toll revenues to expend on other non-toll roads…

    Given our GA’s track record on abuser fees and Transportation Authorities, don’t count on them doing anything particularly helpful.. I’d almost fear that they might actually screw things up worse.

  2. Anonymous Avatar
    Anonymous

    “Some states are looking to set up DOT-operated toll authorities that commingle the revenues which will then be allocated to other non-toll road projects.”

    You can do that, but then you have to abandond the mantra that users should pay.

    RH

  3. Anonymous Avatar
    Anonymous

    In Massachusetts they have the Woods Holw, martha’s vineyard, and Nantucket Steamship Authority. (It’s all diesel now, does that mean they have exceeded their charter?)

    Anyway, it operates like a toll road authority, but all the money from passengers and Freight goes to the Authority, not general funds. As long as the authority makes money and pays its bonds,all is well. But if it loses money, the townships it supports have to make up the loss.

    This is pretty esy to do because the geography is well defined. But, i wonder how many places would sign up for tollroads if the locations served had to make up any eventual losses?

    RH

  4. Anonymous Avatar
    Anonymous

    Here is a blog comment from a NYC MTA rider, following the failure of NYC to impose congestion pricing. Had pricing been imposed:

    ““Subway service would have been expanded on the 1, C, E, and F lines.”

    How does one EXPAND subway service … especially on those lines? You can’t add any tracks, so what are you going to do? Flood another million people into the subway system and then … add more trains? Maybe stack them end to end so we can just walk from one stop to the other. Or perhaps they could build some system that travels in another dimension? That, after all, is just as realistic as expecting any results from the MTA.”

    I guess after you have congestion pricing on the streets, you put it on the subway. When you eventually make it expensive enough to go there, people wil go to some other place.

    RH

  5. Anonymous Avatar
    Anonymous

    Jim,
    Forgive me for not understanding.
    If a government agency turns over a road to a quasi-public body for tolling, then you paint McSweeney as a rum-tee-tum Revolutionary War hero standing next to George Washingtoin crossing the Delaware and fighting off those evil, taxation without representation Redcoats.
    But it is perfectly OK for private roads to hike fees.
    Let me see if I get it: public bad/private good? (We’ve had this discussion before.)

    Peter Galuszka

  6. E M Risse Avatar
    E M Risse

    Now if we could just get Patrick to understand the need for a governace structure that reflected the organic sturcture of 21st century civilization:

    If such a structure were to evolve there would be equitable taxation based on decisions of the impacted citizens.

    We would then have a real winner.

    EMR

  7. Anonymous Avatar
    Anonymous

    Peter – I have quite a few liberal friends who are quite upset at the transfer of the Toll Road to MWAA. It has nothing to do with political or economic theory, but everything to do with the skulduggery of it.

    In the first place, some are offended because a good Democratic state senator, Omer Hirst, made a promise that, once the DTR’s bonds were paid off, the road would become toll free. Some people, both Democrats and Republicans, believe that promises made should be kept.

    Also, many are offended because the transfer of the DTR to MWAA was designed to enrich Bechtel and the Tysons Corner landowners on the backs of commuters. Not every Democrat I know worships at the Temple of the Well Connected, as do Warner, Kaine and a number of other Democrats and Republicans. The transfer was designed to facilitate the no-bid contract for Dulles Rail and to permit the super-sizing of Tysons Corner.

    This is just one more rip-off of the ordinary citizens of Fairfax County and NoVA. Good guys and gals can be found on both sides of the aisle.

    TMT

  8. Jim Bacon Avatar
    Jim Bacon

    Peter, I’m not as concerned by who owns/operates the toll roads as what they do with the toll proceeds.

    I don’t believe “private/good and public bad” at all. There are public toll road authorities (like the Richmond Metropolitan Authority) that do a fine job. And there are undoubtedly private toll road operators that abuse their power to raise tolls when they can get away with it.

    There is a role for private tolling authorities because they can sometimes raise capital when the public sector cannot (I-95 and I-496 HOT lanes, for instance), and private owner/operators have greater incentives to control costs in the construction phase. But reasonable arguments can be made in favor of public tolling authorities. They don’t require profit margins that the private entities do, nor do they have incentives to jack up tolls as high as they can get away with.

    The critical distinction is what the tolls are used for. If the tolls are used to pay off the bonds used to finance construction of the toll road, that is a legitimate use. The toll is, in effect, a user fee. It doesn’t matter if the toll operator is public or private (although the private operator inevitably gets a percentage of the take for his trouble). Similarly, if the tolls revenues are used to maintain, or make improvements to, the toll road, as the RMA proposes here in Richmond, that also is a user fee.

    The Dulles Toll Road is very different. The construction bonds have been paid off, and the tolls imposed are far in excess of what is needed to maintain and improve the road. The vast majority of the toll revenues are proposed to be used to finance construction of the Rail-to-Dulles heavy rail project. The commuters along the Dulles Toll Road are not the direct beneficiaries of those expenditures. The biggest beneficiaries of the Dulles Toll Road revenues would be the contractors building the rail project and the property owners around the Metro stations. Accordingly, such a diversion of revenue constitutes a transfer of wealth from one group of people (Dulles Toll Road commuters) to a different set of people (the special interests that lobbied for Rail-to-Dulles). As a transfer of wealth, it is appropriate to refer to such tolls as a tax.

    In the Bacon world view, there is one other set of circumstances: congestion tolls. The primary purpose of congestion tolls is (1) to allocate scarce highway capacity (2) optimize the efficiency of existing highway capacity, and (3) generate revenues. I have argued that congestion tolls are a good idea —but only if the revenues are reinvested in building the transportation of the corridor or district from which they came. If congestion toll revenues were diverted to other public programs, as they are in London, then they constitute a tax. If they are reinvested in increasing transportation capacity and relieving congestion for the benefit of those paying the toll, then they more resemble a user fee.

    In the Bacon scheme of things, “user fees” for transportation are OK. Somebody is getting a benefit from the money he pays. “Taxes” for transportation are bad because they represent a transfer of wealth from one party to another — inevitably from the politically powerless to the politically powerful.

  9. Anonymous Avatar
    Anonymous

    “they can sometimes raise capital when the public sector cannot “

    Sure, as long as the public sector guarantees the loans.

    RH

  10. Anonymous Avatar
    Anonymous

    “they can sometimes raise capital when the public sector cannot “

    How about, “It’s a tax whose primary purpose is the transfer of wealth.”

    RH

  11. Larry Gross Avatar
    Larry Gross

    remember the Feds are financing not only the HOT lanes, but the Inter County Connector – AND – New Metro trains.. AND the Pocahontas Parkway

    http://tifia.fhwa.dot.gov/

    these subsidies are coming from fed gas tax payers across the county… and not just the folks in Wash Metro/NoVa.

    and that does not count the 900 million they hope to also get from the Feds for the Metro extension.

    So the Wash Metro Area is a net beneficiary of more than 5 billion in funding for their transportation projects which is not at all “user pays” unless we count those folks in Kansas and North Dakota who pay Federal Gas Taxes and don’t get anything for it.. at least not on the scale of what Wash Metro is getting.

    Maryland says that tolls alone cannot even pay for the subsidized loans for the ICC so they are going to divert tolls from other toll roads to pay for the ICC.

    So in the ICC’s case not only is it not “user pays”… it is subsidized by other toll payers…

    North Carolina is in the process of setting up a Statewide Toll Authority where they intend to commingle tolls from all toll roads and reallocate them for other roads – some not even toll roads…

    New York shut down congestion tolls for NYC. The Texas legislators have enacted a moratorium on toll roads (at least for the time being).

    What will Virginia do if the court rules the airport authority arrangement kaput?

    will they start looking at the HOT lanes as a potential source of money?

  12. Groveton Avatar
    Groveton

    Once again our fearless elected officials in “Richmond” have probably taken an illegal action. They are pushing the needle on the incomp-O-meter.

    Oh, and Larry….

    “the U.S. Department of Transportation (DOT) may provide three forms of credit assistance – secured (direct) loans, loan guarantees, and standby lines of credit.”.

    So your outrageous “subsidies” are actually loan guarantees? That’s the scandal? And FIFA has been making these loan guarantees since 1999 – so some areas got in early but others are still getting in? As a matter of fact:

    http://tifia.fhwa.dot.gov/

    There’s another $30B in applications to guarantee loans. Maybe Kansas and North Dakota just haven’t had time to file their applications yet. South Carolina and Ancorage have apps on file (along with a lot of other places).

    You are halucinating and the halucinations are taking the form of “subsidies”.

    Ray –

    What’s so hard about expanding NYC subway service? Run longer trains, run more frequent trains, run trains starting earlier and ending later.

    Also –

    “”Some states are looking to set up DOT-operated toll authorities that commingle the revenues which will then be allocated to other non-toll road projects.”

    You can do that, but then you have to abandond the mantra that users should pay.”.

    That mantra exists only in the fertile imagination of Jim Bacon. Elsewhere, there is not intent to make the tolls user pays. They will be taxes levied in NoVA and maybe HR for the raising of revenue to be spent throughout the state.

    How much evidence is needed?

    The Dulles Toll Rd.
    The tolls that were supposed to bay for transit buses but are being diverted to VRE.

    The Taliban (GA) cannot be trusted. YOu can tell when they are lying – their lips are moving.

    TMT says, “This is just one more rip-off of the ordinary citizens of Fairfax County and NoVA.”.

    Bingo Baby!

  13. Larry Gross Avatar
    Larry Gross

    re: subsidized “loans”

    agree..not “grants” but loans

    Why?

    If the law says that private investors can build and operate toll roads (with appropriate oversight) then why are the Feds providing the financing instead of the private equity markets?

    Why NoVa and not North Dakota?

    that’s a good reason for taking Federal Gas Tax from North Dakotians and using it to subsidize construction of the ICC?

    Why not get North Dakotians their gas tax share and let them spend it on what they need – in the first place – and let NoVa folks do ditto?

    re: NoVa Transit vs VRE

    I actually agree.

    Some say that by taking money from NoVA folks and spending it on VRE, that we are encouraging more “sprawl” – paving the Piedmont in your parlance…

    But then others would say that by NoVa taking the jobs and not providing affordable homes.. that they deserve the commute traffic…

    re: user pays and tolling authorities

    I report only what seems to be the direction being taken by several states…

    If the commingled are ONLY used to improve TOLL roads – i.e. allows much more timely upgrading of specific – very expensive infrastructure – on a “round robin” basis.. that would be one thing…

    but some discussion centers on using the monies ALSO to “fix”…. major non-tolled roads that “connect” to the toll roads…i.e. part of the “network”….

    this is why Washington (and other States) are also studying “area-wide” tolling….

    NoVa OUGHT to … LIKE this idea… because every car on NoVa roads will PAY.. and that includes all those folks who live outside of NoVa and commute daily to NoVa as well as other out-of-state, out-of-NoVa origin traffic.

    It would amount to a Cordon Toll.

    NoVa could actually set up some kind of tax relief for NoVa residents to compensate them for the tolls – but, of course, get to keep ALL of the tolls from non-NoVa traffic.

    but I’m hearing from NoVa posters here – a similar refrain heard from HR/TW posters and that is that more money for the current perceived “developer-owned” transportation planning system is abhorred and that it’s better to have the congestion as is that give more money to developers to create worse congestion?

    I hope that the folks at VDOT and the GA and other State level folks understand the level of distrust that exists on this subject.

    ahhh.. the R’s in the GA actually DO understand! right?

    that’s why they say “no mo money”!

    geeze and all along I was thinking they didn’t have a clue…

    and it was me instead…

    🙂

  14. Anonymous Avatar
    Anonymous

    “What’s so hard about expanding NYC subway service? Run longer trains, run more frequent trains, run trains starting earlier and ending later.”

    I think the commenter was making the point that you cannot do those things. The trains are already as long as the station platforms, and they already run so close togeter that they delay each other.

    He figured that if you make them any longer, you would have one continuous jam of trains, and you could just walk from car to car to get to the next station.

    Or, you would have to double track the system.

    Congestion doesn’t only affect roadways, and sometimes you need either more lanes (rails) or less traffic (people).

    Ray

  15. Anonymous Avatar
    Anonymous

    “North Carolina is in the process of setting up a Statewide Toll Authority where they intend to commingle tolls from all toll roads and reallocate them for other roads – some not even toll roads…”

    This would be illegal if they were an investment bank.

    RH

  16. Anonymous Avatar
    Anonymous

    “That mantra exists only in the fertile imagination of Jim Bacon.”

    Let’s just say it is conveniently applied. Apply it against everything you don’t like and then look for incentives for things you do like.

    RH

  17. Anonymous Avatar
    Anonymous

    “Some say that by taking money from NoVA folks and spending it on VRE, that we are encouraging more “sprawl” – paving the Piedmont in your parlance…”

    That is partiall correct. At least with regard to the outlying stations. What metro has done is create new centers which are a locus for attracting automobile traffic. They then transfer those passengers to another “center”.

    You could just put the offic buildings where the outlying metro stations are and shut down that portion of metro. You would save enough money to provide the office buidings rent free.

    Metro has not reduced auto use, but relocated it. In the process they became the areas largest parking provider. If we thought about it, we could relocate the auto usage without paying for Metro.

    RH

  18. Anonymous Avatar
    Anonymous

    TMT and Jim Bacon,

    Thanks for your explanation. It’s not “Pay as You Go.”

    It is “Pay as you Go, GO, GO.”

    Peter Galuszka

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