Transit Funding On Hold Until Suit Is Settled

By Anita Kumar
Washington Post Staff Writer
Wednesday, June 4, 2008

RICHMOND, June 3 -- Gov. Timothy M. Kaine's staff has postponed borrowing millions of dollars for statewide road and transportation projects that were part of a once-heralded package now facing multiple legal problems.

Kaine (D) and transportation officials said lawyers appointed by the attorney general's office recommended that they wait to issue $300 million in bonds until a lawsuit filed last summer is resolved.

Virginia's transportation troubles appeared to have been resolved last year when the General Assembly passed a landmark plan to add $1.1 billion annually to transportation. The revenue plan is now estimated to bring in less than $300 million a year, if the bonds are excluded.

"I knew [the package] was bad, but I didn't know how bad," House Minority Leader Ward L. Armstrong (D-Henry) said Tuesday after he was informed about the latest problem.

After a public outcry, legislators repealed steep abusive-driver fees, estimated to bring in $65 million a year. The state Supreme Court ruled that the regional authorities in Northern Virginia and Hampton Roads could not levy taxes and fees because they are not elected bodies.

A lawsuit is now holding up a $3 billion bond package that is to be issued over 10 years.

Del. Phillip A. Hamilton (R-Newport News) said the transportation package is still a success because it includes changes to land use regulations, more accountability for the state Department of Transportation and other statewide taxes and fees.

"There are still a lot of good things in there," he said.

Barbara Reese, deputy transportation secretary, said the state had expected to start issuing the bonds in January. The money was to be used for projects across Virginia, including the widening of Route 29 in Fairfax County, the Route 1 bridge replacement in Prince William County and Route 15 improvements in Loudoun County.

The General Assembly will return to Richmond on June 23 for a special session on transportation.

In recent years, a downturn in the economy and rising prices for asphalt and steel have forced the state to spend money on road and bridge maintenance that was supposed to be spent on new construction.

In May, Kaine proposed raising $1.1 billion a year by increasing taxes statewide on car and home sales, and vehicle registration fees. His plan includes a tax increase of 1 cent in the state's most congested areas, Northern Virginia and Hampton Roads.

Democrats and some Senate Republicans want to increase taxes statewide, but they disagree on whether to increase the gasoline tax, sales tax or other revenue sources.

House Republican leaders, who oppose a statewide tax increase, want to encourage public-private partnerships, in which companies would pay for some projects on roads and bridges in return for the ability to collect tolls.

House Majority Leader H. Morgan Griffith (R-Salem) said he was "disappointed" and "surprised" to learn the bonds were not being issued and accused Kaine of trying to make a case for his tax increase. "It's politically motivated," Griffith said. "He's playing games."

More than a dozen taxpayers from across the state, including wealthy conservative activist Paul Jost, filed a lawsuit in August in Richmond Circuit Court that argues the bonds should not be issued without a referendum by the voters, said Patrick McSweeney, the attorney who filed the lawsuit.

Democrats said it is not unusual to postpone issuing bonds while a lawsuit is pending and that more can be issued to make up for the delay later after the lawsuit is resolved. They dispute that the decision was politically motivated.

"That's absurd," said Senate Majority Leader Richard L. Saslaw (D-Fairfax). "That's simply not so. It's almost silly."

Republicans, including Attorney General Robert F. McDonnell, frequently mention the bill's benefits, including the bonds. Most did not know until recently that the bonds were not issued.

McDonnell, who was out of town Tuesday, declined through a spokesman to comment.

David Clementson, a spokesman for McDonnell, said numerous cases have previously determined bonds can be issued without a voter referendum.

"Despite the delay, outside bond counsel and this office are working with VDOT to ensure a favorable resolution so the bonds are issued as soon as possible to address the transportation needs as directed by the General Assembly," he said.