Virginia sales tax vote-part 1

"Highway to Hell," the hit song by heavy metal group AC/DC, has now become the anthem for the business/political/media elite's longtime obsession with enacting a special transportation tax at the regional ends of the I-95/I-64 corridor.

Last Tuesday, the ordinary people in Northern Virginia and Hampton Roads rejected the multimillion dollar VOTE YES campaigns of the local Power Establishments by overwhelmingly voting NO WAY to a regional sales tax.

The usual pundits and soothsayers are saying this is just your garden variety "Virginia Isn't For Lovers of Higher Taxes" election event.

The old adage says hindsight is always 20-20. But this truism is now in jeopardy, as Virginia's "experts" are proving blind to the larger political meaning of this dual rejection. They have just witnessed one of those "critical mass" events in Virginia politics, not some generic, run-of-the-mill anti-tax votes occurring as a matter of course all across the United States on more occasions than not.

Yet all they can see is an election about the governor and taxes, leading them to a journalistic tug-of-war between a political variant of Freud's Ego and ID. It is the new WoodStein media ethic, where the reporter/pundit and the public official are now in competition with each other.

The day of the reporter as observer, as factual analyst, is no longer.

So be it. But I am of the old school in terms of election analysis. The biggest mistake reporters make is to assume endorsements from major political figures or business leaders and newspapers have a great deal of sway on populist issues such as the Tidewater and NoVa tax issues. These are seldom won on top-down issues; rather, they are bottoms-up campaigns because there would be no need for such unprecedented measures if the politicians had been doing their job.

So let's endeavor to think outside-the-conventional wisdom box and try to put the "local tax option" solution rejected by the voters on Tuesday in its historic context. It was an idea developed in good measure to get around the short-changing of the Northern Virginia region by the rural/Western/Good Old Boy legislators long in control of the General Assembly. They wrote the state formula's allocating how the tax dollars sent to Richmond are returned to the regions to provide education and transportation services, among other things.

Thus, to put the vote last week into proper, analytical perspective -- to understand why this was a "critical mass" event -- we need to take Jules Verne's Time Machine back to late 1988. Back then, Gov. Jerry Baliles was on vacation somewhere South of Florida, focusing on the Transportation Issue as he often did. During the 1980s, the political and financial powers of the Northern Virginia business/media establishment had grown dramatically, overwhelming the Richmond Main Street boys who had been the financial angels for the Byrd Coalition ascendancy in Virginia politics.

Northern Virginia had long been the political whipping boy of the old-line establishment. Indeed, Gov. Mills Godwin in the mid-1970s even suggested the commonwealth would be better off if someone took an axe and chopped off the state around the Marine Corps in Quantico, leaving the rest of NoVa for Maryland, the District of Columbia or some other jurisdiction.

Clearly, and with good reason, the power-brokering establishment in Northern Virginia was increasingly unhappy with their domination by this legislative outlook.

Gov. Baliles shared their frustration and so he came up with the idea of giving localities in the fast-growing region the right to enact their own transportation levy. From the standpoint of pure, governmental theory, the original formulation of his idea, the one that germinated in the tropical sunshine, is perfectly in keeping with Jeffersonian conservatism.

But Baliles' reasoning for the tax measure encompassed more than a Jeffersonian view of trusting local residents to know best how to govern themselves. There was also a far more practical point.

Baliles agreed with the NoVa power establishment that the region needed more transportation money.

Accordingly -- and here is the key for our 2002 analysis -- the governor knew the region had only two basic ways for the state to help them get this money given the Dillon rule.

One way was to get the General Assembly to recalculate the allocation formulas. They were skewed unfairly against Northern Virginia, as they were crafted to redistribute funds from the wealthier NoVa region to the poorer areas of the state.

Baliles himself had supported these formulas, for he was born in rural Patrick County and had long planned to run statewide. Moreover, the basic concept of trying to make sure the poorer children of the state and their hard-working families can make a better life for themselves is a traditional American one. Thus, the state formula moves extra tax money from wealthier areas to less wealthy areas by broad consensus of all the Republicans and Democrats in charge of state government over the years.

Thus, there was always a tacit understanding in the General Assembly to keep any public discussion of these formula to an absolute minimum, as they are filled with political land mines. It is often very difficult for any incumbent to defend his or her position even to voters who actually get back far more tax dollars than they send in.

The business and political elite in NoVa, and increasingly Tidewater, understood this reality in 1989. Thus, while knowing their regions were being shortchanged in areas such as transportation by existing state allocation formulas, it was not possible to harp on this situation without antagonizing their powerful friends in the General Assembly and high places.

The power elite saw the regional tax as the idea solution: Get new tax funds to NoVa and Tidewater without upsetting the state's traditional allocation formula. Other, more powerful forces, however were coming into play to which they were oblivious

Accordingly -- and again, this is key -- the Baliles idea for a local regional transportation tax was in some measure conceived as a way to get around the rural/Western/Good Ole Boy control of the General Assembly. Since the formulas couldn't be changed to more accurately reflect NoVa's and Tidewater's growing size, then the only option available to the business and political establishment was a local tax where they would get to spend all the money in their own region.

It was, as they say in game theory, the least, worst option.

From the perspective of the power elite, it was an ideal solution. They are convinced the state needs far more road money than it currently generates with the existing tax structure. Accordingly, from their perspective, some new revenue measure is inevitable. Thus, if they can get one which lets NoVa keep all the new tax money generated in the region, it is the best of all possible taxing worlds, not to mention they will run it independently of VDOT.

But during this 1989 through 2002 period when the elite were selling their practical idea, something else was happening in Northern Virginia. The resentment of the ordinary citizen over the anti-NoVa bias they saw at the General Assembly in Richmond was building.