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Chamber Says No — Debate Goes On

Sales Tax Referendum: Good or Bad?

A sales-tax referendum debate drew an overflow crowd to the First Tuesday Business Lunch of the Mount Vernon-Lee Chamber of Commerce, even though members had already passed a resolution to oppose its approval by the electorate.

Squaring off at the Paradiso Restaurant on Franconia Road were Virginia Del. Jack Rollison (R-52nd) and Peter Ferrara, president, Virginia Club for Growth. Rollison was arguing for approval, while Ferrara was opposed to the tax.

In justifying their opposition to the Nov. 5 ballot question, the Chamber stated its opposition in a release at the luncheon, noting, "The first Chamber in the region to signal its opposition to the referendum, the Mount Vernon-Lee Chamber Board did so after carefully considering the issues involved."

The question not answered by the announcement was, why then schedule the debate? Or, conversely, why adopt the resolution before the debate, which would provide an opportunity for the membership to hear both points of view?

The Chamber's action was taken, as specified in the release, "due to concerns about the existing funding of the state transportation system and the impact of raising taxes during a downturn in the economy."

Dan Rinzel, chair of the Chamber's Legislative Committee, noted in the release, "We're all concerned about the state of transportation in Northern Virginia. But, this year's state budget took $317 million raised by the current state sales tax out of the state's Transportation Trust Fund. It makes little sense to effectively shift transportation sales taxes to our region to make up for the failure of the state to keep its trust-fund promises."

THIS RATIONALE played to the main thrust of Ferrara's arguments that the proposed one-half-cent tax increase actually "amounts to an 11-percent increase in the sales tax." He also noted, "It doesn't terminate in 20 years. There's no end in sight."

His recommendation was for state government to initiate "a moderate slowdown in all state spending by one-half of one percent. This would produce the same amount of money as the proposed tax increase."

He went on to say, "The budget increase of $1.6 billion for this year is the highest in Virginia history. And, the bi-annum budget of over $50 billion is also the highest in the state's history."

Ferrara warned the audience, "You are being snookered by this proposal." And, "the governor is doing a good job of scaring people about the shortfall."

In response, Rollison cited the losses to businesses caused by traffic congestion and that many potential employee are not coming to the area because they do not want to deal with the ever-increasing commute time. "We need to build a road network that will serve all the community," he insisted.

Rollison also emphasized the need for a strong commitment to a mass-transit component in the proposal. He called for HOV lanes on the Capital Beltway and mass transit for the Woodrow Wilson Bridge. "We have the third-worst traffic in the nation," he emphasized.

During the question period, Chamber president Rick Neel asked, "Do we have an airtight guarantee this money will go to transportation?" In response, Ferrara offered, "We tried this before. It was pledged to transportation then. There is no guarantee."

Rollison acknowledged, "Twice funds have been diverted from the trust fund. But, it has been replenished with interest." As an author of the legislation establishing the referendum, he also noted that the money raised in Northern Virginia would remain here.

"The money for building the roads here is guaranteed. I wrote the legislation, and it's a part of the ballot question," Rollison insisted.

ANOTHER CHAMBER member stated to Rollison, "Your opening statement is the same as what I've heard for the past 40 years — better roads, better education, and the like. Why can't the legislature do what it was elected to do? Taxes are to be voted by the legislature, not the people."

Rollison's answer was "I'm sorry we have lost your confidence. But, I'm not a full-time legislator. I have a business in Woodbridge, and I have the same problems as other business people."

When asked to specify what projects would specifically benefit the Mount Vernon area, Rollison cited the Route 1 corridor and I-95. "There will be a dramatic increase in spending on the Route 1 corridor. This is our only chance for that," he warned.

"This referendum is a once-in-a-lifetime opportunity to make a decision," Rollison cautioned. "The proposed sales tax increase will cost the average family about 25 cents per day."

Ferrara countered with, "We already pay more than enough taxes to fund transportation. These big-spending politicians are going to turn Virginia into New York. We have traditionally been fiscally conservative." Rollison had previously admitted that the state has $1 billion in the bank "for a rainy day."

Ferrara asked the audience to look at the various transportation projects. "We don't have full control over the projects. The ultimate control remains in Richmond. The sales tax was raised one-half of one percent in 1986 for transportation. Where is that money?" he inquired.

"Projects always end up costing twice as much, and it will be eight to 10 years before they get started. What happens to the money in the meantime? You are being sold a pig in a poke," Ferrara chided.

The Chamber resolution in opposition to the referendum urged the General Assembly to take the following actions:

1. Restore to the Virginia Transportation Trust Fund those moneys transferred during the last session ($317 million for the 2002-04 budget), so they can be used to reduce congestion and improve transportation.

2. Revise the formula for transportation funding at the state level to give greater weight to volume of traffic and higher funding to those regions with high traffic volume, as recommended by the transportation funding study of the legislature's Joint Legislative Audit and Review Commission.

3. Remove the limits on funding transportation projects by allowing such projects to be funded from the general revenues, rather than primarily from the Transportation Trust Fund.