Virginians are as smart and cunning a people as you'll find anywhere. But over the years, I have observed that when they get together to act collectively, through their elected government, they are prone to boneheaded decisions that make simple things complicated and complicated things nearly impossible.

The endless dispute over repeal of the car tax is the classic case.

More recently, we have the example of how the state and two of its wealthiest jurisdictions, Fairfax and Loudoun counties, are going about financing the extension of Metrorail to Tysons Corner, Dulles Airport and beyond.

Let's start out with the fact that this $4 billion project represents about the best investment of public dollars that you could imagine, even putting aside the clear benefits of public convenience and environmental protection.

For every dollar of public investment, for example, figure that there will be at least $2 in private investment as developers rush in to propose high-density, mixed-use projects at every stop along the rail corridor. That would work out to at least $8 billion in added property value, generating roughly $80 million in additional property tax revenue for Fairfax and Loudoun counties every year. And because most of that value would come in the form of offices, stores, and apartment buildings and condos geared for households without children, this would be the kind of growth that generates relatively modest demands for extra spending by local government.

Now add to that the fact that every existing home within a reasonable walk or drive from any of the new Metro stations can be expected to increase in value by at least 20 percent.

Finally, consider that the federal government will probably pay for half of the $4 billion in estimated construction costs.

Add it up, and what you have is a veritable bonanza for public finance -- an investment with huge payoffs not only for the county, but also for the state, once incremental sales and income tax revenue are considered. And because of the First Law of Virginia Politics, which holds that public money flows from north to south, a disproportionate share of that extra revenue will flow out of Northern Virginia.

Given the potential returns, you'd expect Virginians to use their stellar credit rating to finance this high-payoff project in a straightforward manner. But instead, state and local officials have come up with a backdoor financing scheme meant to fool taxpayers into thinking they can get all the benefits of the project without assuming any of the risks -- a fiscal fantasy that renders the project politically vulnerable when the costs escalate, as they inevitably will.

In Fairfax and Loudoun, county officials have cleverly persuaded the owners of commercial property along the extension route to pay a 22 percent property tax surcharge that was supposed to cover the counties' entire 25 percent share of the project cost. Now that the cost for Phase I of the project has increased by 20 percent, or $300 million, officials are already planning to ask the commercial property owners for an increase in the surtax rather than suggest that general taxpayers invest even a dime of their expected windfall.

The state of Virginia, meanwhile, plans to cover its share of the project costs by raising tolls on the Dulles Toll Road 25 cents now and another 25 cents later. Not only does that mean that the flinty taxpayers from Roanoke and Virginia Beach have once again picked the pocket of Northern Virginians, but there is also the delicious irony that the people least likely to use the new Metro are being forced to pay for the people who will.

But wait -- it gets worse. A consortium of construction and engineering firms has come along with a proposal to hand the state a check for at least $1 billion -- the state share of the Metro project -- in return for a contract that would allow it to operate the Dulles Toll Road for the next 50 years and keep all the tolls. The group even promises to pay for improvements to access ramps and to add auxiliary lanes. Presented with what looks like a free lunch, some state officials are eager to chow down.

Outside of Virginia, people are generally clever enough to be suspicious of free lunches. After all, whatever the private group proposes to do -- borrow money, construct roads, collect tolls -- any self-respecting state should be able to do just as well for even less, given the state's lower cost of capital. If operating a toll road is a good deal for private investors, it ought to be an even better deal for the public.

Except, that is, in Virginia, where "public investment" is rapidly becoming an oxymoron. Rather than tax themselves or borrow money for worthy public projects, Virginians and their politicians would rather indulge themselves in the illusion that private investment should always do the job for them.

Next: What price too high?

Steven Pearlstein can be reached at

With the advantage of public investment, Virginia should reject the $1 billion Dulles Toll Road offer.