Legislature split over how to pay for $154M in Metro funding

Gov. Ralph Northam’s proposed changes to a first-of-its-kind Metro funding bill have delighted many Northern Virginia lawmakers concerned about the legislation’s potential to cripple local road projects — but there’s no guarantee Northam’s amendments will survive.

Northam, a Democrat, is hoping to add a pair of tax increases specific to the Northern Virginia area back into the bill after lawmakers in the General Assembly worked to find new funding streams for the troubled rail service without raising taxes. In all, Metro leaders are hoping for $154 million from the state each year to resolve its persistent problems with malfunctioning trains and broken tracks, and lawmakers in Maryland and Washington have recently passed similar funding bills to form a historic new revenue stream for Metro.

But the version of the bill to emerge from Richmond alarmed many Northern Virginia officials, particularly those in Prince William County, over fears it would threaten major road improvements in the county like the widening of U.S. 1 and the construction of a bypass for drivers stuck in traffic on Va. 28 outside Manassas. Specifically, the legislation could’ve diverted as much as $80 million annually away from the Northern Virginia Transportation Authority, which administers major transportation projects throughout the region.

Northam’s amendments would bump up taxes on real estate transactions and hotel stays in certain Northern Virginia localities to lessen that blow, targeting only counties and cities with Metro service for the tax increases and broadly meeting the demands of Prince William officials.

“Funding and fixing Route 28 does not have to be mutually exclusive with taking care of the Metro system,” said Del. Danica Roem, D-13th District, who made traffic congestion on the highway the centerpiece of her campaign last fall. “The governor’s amendments are phenomenal for my constituents.”

The challenge for supporters like Roem is that Republicans in the House of Delegates have staunchly opposed any tax increase associated with the bill. Now, Northam’s amendments will need to pass both chambers of the legislature — otherwise, the original bill will go back to the governor for him to sign or veto.

“When we started this process, we said we would adequately fund Metro, reform Metro and do it without tax increases,” said Del. Tim Hugo, R-40th District and the lead backer of the House bill to fund Metro. “I’m incredibly disappointed that after we accomplished the things we wanted to do that the governor would come back and add taxes to it.”

Hugo, the House’s majority caucus chairman, says he will “work very forcefully” to ensure there are no tax increases in the bill. He has the advantage of working with narrow Republican majorities in both chambers to accomplish that goal, though it’s no guarantee that the votes will break down along party lines.

Indeed, a Senate version of the legislation with tax increases included already passed with bipartisan support. Many Republican lawmakers, including Senate Majority Leader Tommy Norment, reasoned that since the tax increases only impact Northern Virginia, there’s no reason for representatives elsewhere to block the tax hikes.

Similarly, Prince William County Supervisor Marty Nohe, R-Coles and the chairman of the NVTA, expects that simple self-interest by lawmakers in the rest of Virginia will prove to be a powerful motivating factor.

“If this funding is not restored, these important highway projects will either have to be delayed or cancelled, or we will find money from other sources,” Nohe said. “That means we’ll need to go to other statewide funding sources to do that...Every dollar we get from those doesn’t go to Richmond or Hampton Roads or anywhere else.”

But Hugo questions the very premise of Nohe’s argument, suggesting “Marty is just spreading foolishness.”

Hugo believes the threats to NVTA’s financial future without the money his legislation earmarks for Metro have been greatly exaggerated. For instance, he points out that the NVTA currently sends millions to Metro and stands to get some of that money back — with the new funding streams seemingly headed Metro’s way, its leaders wrote an April 9 letter to the NVTA saying they wouldn’t need nearly $100 million in funding from the authority for two planned projects.

Additionally, Hugo is skeptical that the NVTA’s credit worthiness would be impacted by losing these funds, another concern frequently advanced by Nohe. Hugo notes that S&P Global Ratings, one of three national bond-rating agencies, recently released a statement saying it does not expect the revenue change to have “any negative impact on the authority's credit quality in the near term.”

Yet Nohe cautioned that he is also trying to think about the NVTA’s future credit needs, particularly with so many transportation projects stretching over the course of decades.

“They say they’re not going to downgrade our existing bonds, but it would likely have a big impact on bonds in the future,” Nohe said.

Ultimately, Roem expects that Nohe won’t have to worry about facing those consequences down the line, as she fully expects to find some lawmakers from across the aisle to support Northam’s amendments.

After all, she points out that Hugo is one of just two remaining Republicans from the Northern Virginia localities affected by the tax hikes left in the House — Del. Dave LaRock, R-33rd District, represents parts of Loudoun County. Roem expects her caucus to remain united behind the amendments, meaning Democrats will need to convince just two other Republicans to join them in supporting Northam’s changes.

“I think the votes will be there,” Roem said. “This not a tax increase on their constituents...but they get all the economic benefits that come with everything Metro brings to the state.”

Lawmakers will meet to consider Northam’s proposed amendment on April 18. The General Assembly also began debating the stalemate over the state’s budget on April 11, but legislators expect they’ll need several weeks yet to hash out those differences.