VA Supreme Court: Tunnel tolls are user fees, not taxes

By Robbie Webber

In a ruling denounced by the Portsmouth business community and commuters, but applauded by VDOT, the Virginia Supreme Court unanimously overturned a ruling by a lower court that held the tolls imposed to pay for tunnel expansions and maintenance in Portsmouth are unconstitutionally-imposed taxes. The Supreme Court instead ruled that the tolls are indeed user fees for the benefit of those that use the tunnels, not the general public. The tolls are being used solely to pay for the project, not to raise general revenue; and drivers are not compelled to use the tunnels, so can avoid the tolls. VDOT worried that if the lower court ruling stood it could hamper private-public partnerships in other parts of the state and call into question the entire Public Private Transportation Act of 1995.

The tolls were scheduled to begin in February of 2014, but Portsmouth residents and long-time users of the tunnels filed a lawsuit in July 2012. Only the General Assembly can levy taxes, and Circuit Judge James A. Cales Jr. ruled in May that lawmakers improperly ceded that authority to the Virginia Department of Transportation on the $2 billion project with Elizabeth River Crossings. ERC is the private entity that is expanding the Midtown Tunnel between Portsmouth and Norfolk and rehabbing the Midtown and Downtown Tunnels.

The plaintiffs in the case claimed that the two projects were being bundled solely as a way to produce revenue, and motorists would be paying tolls in one tunnel to pay for work on the other but not reaping any benefits. However, VDOT argued that all drivers would benefit with less congestion and a faster commute.

ERC  already had started construction despite the uncertain outcome of the lawsuit. The public-private partnership relied on the tolls to cover 43 percent of the project cost. The remaining financing will come from federal TIFIA loans and VDOT. The company will maintain and operate the tunnels, as well as a local freeway extension, until 2070.

Robbie Webber is a Senior Associate at SSTI.