The rejection of a sales tax measure to fund transportation projects eventually will quiet the hum of economic growth in Northern Virginia, some businesspeople predicted yesterday.
Businesses leaders had been the strongest supporters of the failed measure, providing millions of dollars in campaign funds and arguing that the tax was crucial to fund road and mass transit projects necessary for the region's continued economic health and expansion.
On Tuesday, when only 45 percent of Northern Virginia voters embraced the measure -- which would have raised the region's sales tax from 4.5 percent to 5 percent -- local business groups and their interests took a hit.
"It's a major, devastating economic blow," said Andrew J. Georgelakos, a McLean-based principal of the real estate service firm NAI KLNB Inc.
"If the region has a V-8 economic engine, four of the cylinders are in Northern Virginia," said Robert A. Peck, president of the Greater Washington Board of Trade, the region's largest business group. "We can't afford not to have all the cylinders pumping."
In Maryland, which in recent years has had a reputation for being less friendly to business than Virginia, executives said they were smiling over Tuesday's election of Rep. Robert L. Ehrlich Jr. (R) as governor and of new members of the Montgomery County Council, who appear more open to expanding the suburban road network.
"At long last, the intercounty connector gets off the ground and makes some progress," said Jack Alexander, president of the Bethesda-Chevy Chase Chamber of Commerce.
Some Northern Virginia business leaders said yesterday that they worry that the failure of the sales tax will cause companies to locate or expand in less traffic-clogged areas of the country.
"We already have a wonderful reputation around the world as a place for people to come do business and invest," Peck said. "But we're getting a reputation as a place with a huge traffic problem. Losing the referendum may undermine confidence in our ability to solve our problems and undermine confidence that this is a great place to do business."
Opponents of the measure, who included anti-tax conservatives and environmental activists, argued that it was too expensive and would only cause more sprawl. They argue that the rejection of the tax could benefit the region by encouraging more sustainable patterns of growth.
"I think we avoided a disaster here in that we avoided the mistakes of cities like Atlanta, that tried to build their way out of the problems we're facing and only made things worse," said Stewart Schwartz, executive director of the Coalition for Smarter Growth.
But to many in business circles, the sound defeat of the tax measure was more bad news at a time when the Northern Virginia economy is already faltering. The technology business that drove much of the growth in Northern Virginia during the 1990s has collapsed in the past two years. Northern Virginia had added an average of 32,000 jobs a year since 1980, according to Labor Department data, but the region lost 27,900 jobs in the 12 months that ended last December.
Businesspeople who rely on the delivery of goods and services said they would be especially hard hit by the measure's defeat.
Jerry Bailey, president of Old Dominion Brewing Co. in Loudoun County, said his operating costs will increase.
"The cost of business is going to go up for us simply because we'll spend more time delivering the same amount of beer and soft drinks as traffic gets worse," meaning, he said, that the very people who didn't want to raise their taxes will pay more for beverages.
Other employers worry how workers will get to the office.
"We recognize that many of our employees commute sometimes a long distance," said Nicholas Graham, spokesman for America Online in Dulles. "Clearly we know employees do care about transportation, and we'll continue to pursue solutions to those challenges."
Bob Buchanan, principal of Buchanan Partners, which builds office and industrial buildings in Loudoun, said several of his employees have quit recently because their commutes were too long -- something he had hoped the referendum might ultimately ease by widening roads.
Some involved with the business campaign promoting the tax measure said they will regroup and try to work with their former opponents to find a more politically palatable approach to solving traffic problems.
"I think we should talk to the people who organized the opposition and see what ideas they have and listen to them," Peck said. "And I would hope they would recognize a lot of the ideas in the referendum are also ideas worth working on."
Staff writers Dana Hedgpeth and Amy Joyce contributed to this report.