Last week, Bearing Drift contributor Dr. Ron Utt wrote a piece on Circuit Judge James A. Cales ruling that the financial arrangements embodied in a public private partnership between VDOT and a private firm – the Elizabeth River Crossings – were unconstitutional. . The project – which would provide a third tunnel under the river and rehabilitate the two existing tunnels – was ruled unconstitutional because it reimposed tolls on the two existing tunnels to fund the third, and, in effect, was a tax, not a user fee/toll. Since new taxes can be levied only by the legislature, the judge ruled that this financial arrangement was unconstitutional.
This ruling set off alarm bells for advocates of the P3 funding system. Writing in Public Works Financing, the leading publication covering P3 projects nationwide, William Reinhardt notes:
McSweeney believes the legislature may be forced to revise the PPTA. “There is already enough pressure to look at the PPTA again,” he says. “Part of it is because the [Midtown] negotiations were so badly handled, and that they don’t want to be told, as legislators, that they have to come up with $1 billion to fund a project that has been declared unconstitutional. They hadn’t focused on their exposure. Classic denial.”
The state is appealing the ruling the Virginia Supreme Court. In the meantime, Transportation Secretary Sean Connaughton is slated to testify before the House Appropriations committee on June 17th, where he will be asked how the project can salvaged if the state’s high court declares the agreement unconstitutional.
The Cuccinelli Angle
One item to watch in this story: it was Attorney General Ken Cuccinelli’s office that negotiated the contract for the third crossing and did the legal analysis on the matters before the court. While this case is far from over, the possibility for political fallout is very real if the state Supreme Court invalidates the deal.
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