Years ago, Oregon voters approved a ballot measure that required a vote of the people before any local increase in taxes or user fees. As the Antiplanner supports user fees as a way of improving government efficiency, I asked one of the measure’s authors why he included user fees in the measure. “You know if they were exempted that local governments would just claim every tax increase was a user fee.”
It seems to me that user fees can clearly be distinguished from taxes: fees go to the use for which they are paid while taxes go for other uses. That question might be settled by a recent lawsuit filed against the Metropolitan Washington Airport Authority, which is Dulles Toll Road in order to raise money to build the Silver Line extension of the Washington Metrorail system.
The toll road was originally built by the state of Virginia to be a self-funding project. But Virginia politicians who wanted the Dulles rail line gave it to the Airport Authority to use as a fundraising tool to pay for the rail project. Now that the authority is effectively flush with funds, it is no surprise that the projected costs of the rail line have doubled.
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Particularly controversial is a plan to spend $340 million extending the rail line right into the Dulles Terminal, instead of 250 feet outside the terminal. Is it really worth more than $1 million a foot to save people a short walk?
The truth is the Dulles rail line isn’t worth it at all–most of the early analyses found that bus-rapid transit would work as well for far less money. But property owners at Tysons Corner lobbied hard for the rail line in the hope that the county would let them build to higher densities–a proposal the county had previously rejected because the roads into the area could not support that density. Ironically, county planners have since concluded that the rail line won’t increase the area’s transportation capacity enough to allow increased densities. But the rail line is being built anyway.
I fully support the goals of the people bringing the lawsuit against the Airport Authority. But I strongly suspect that–as predicted by my Oregon friend–the court won’t be able to tell the difference between a user fee and a tax. Since this leaves open the possibility that fees collected from users of any public infrastructure can be diverted to other uses, this is an argument for privatization rather than public ownership of such infrastructure.
The courts in Florida, and I expect elsewhere, have little trouble differentiating between a tax and a user fee. In Florida counties and cities frequently try to pass a tax off as a user fee because local governments have the authority to impose user fees but can only tax if authorized by state law. So, for example, a city tried to impose a “user fee” on every residential property owner in order to fund a bus system. The court saw through the ruse and held that the “user fee” constituted an impermissible tax because there was not a sufficient nexus between the assessed properties and the need or benefit to the property provided by the bus service.
I suspect that they’ll make an argument to the effect that spending Dulles Toll Road money on the rail line still benefits users of the Toll Road, by diverting traffic from the Toll Road to the rail line.
Ironically, county planners have since concluded that the rail line won’t increase the area’s transportation capacity enough to allow increased densities.
Wait, what?! The post you link to in turn links to this WaPo article from 2009 that says that the planners “reduce[d] by as much as one-third the building recommended by the task force.” Which means that increased density is coming, but not as much density as the task force/the property owners wanted. What you wrote – that increased density won’t be allowed – is just wrong.
The density in Tysons Corner thing is still an ongoing fight, AFAIK.
The specifics are an ongoing battle (which means that nothing has been “concluded,” as Randall erroneously writes), and as a libertarian I personally hope that they allow as much density as the market will bear, but I’ve never seen anyone other than Randall suggest that no extra density will be allowed.
A user fee is paid by the payee in return for a specific service rendered to the payor or a right granted to him. I.e. I pay a toll to use a toll road, or pay a park entrance fee to enter a park, or pay for a hunting license for the right to shoot two deer.
A tax is a general revenue collection going to unspecified uses. I pay gas and liquor excise taxes, the income tax, property tax, and the government uses them for general operational expenses as it sees fit. Dedicated excise taxes are not user fees because they are paid by all consumers of the specific product taxed but provide benefits only to specific users funded by the tax revenue. There is no specific direct connection between my gas tax or airline ticket tax and any service rendered to me in driving or flying, plus I can buy the product taxed and not receive any service at all (i.e., I can buy gas and burn it in my lawnmower or use it to disolve paint, and I can buy non-refundable airline tickets and cancel them at the last minute because my plans change).
If a court can’t figure that out, they need to be replaced.
As to the Dulles line, Tyson’s Corner property owners should be allowed to build whatever the market will bear. If that makes traffic even more intolerable than it already is, so be it. No one will rent the office space or go shopping there and provide a return for investors if the congestion is that bad, so an equilibrium will establish itself. How in the world do the planners there think that dense cities like Washington ever developed except by ignoring congestion and working around it? I suspect the rail line will garner a very good ridership from Loudon county and Washington and Arlington DC residents working in Tysons, and it will obviously do nothing for the hordes coming over from Montgomery County. Washington Metrorail is very popular judging from the ridership of 930,000 in a metro area of 5.5 million – that’s around 9% for a system that is hardly comprehensive or fast. If Fairfax County and the State of Virginia want to cure highway congestion, they should toll I495, I95, I395, and I66 at around 10 cents per mile (Virgina could then also abolish the hated car tax).
Andrew:
I don’t think your analogy holds. After all, couldn’t you pay a park entrance fee but then turn right back around before entering because your plans change, or pay for a hunting license but never get a chance to use it that year because your plans change?
The “cancel at the last minute because my plans change” argument would seem to apply to most if not all user fees.
“It seems to me that user fees can clearly be distinguished from taxes: fees go to the use for which they are paid while taxes go for other uses.”
So I guess there will be no more need to call the gas tax a user fee then?
We debated the tax versus fee issue in class, and even read some court cases about it. It is a lot harder to find the dividing line than it seems at first.
Sandy,
It ALWAYS comes down to were to draw the line. That’s pretty much the entire debate going on here at the Antiplanner.
I don’t think you are correct about Oregon’s law. Unless limited by their own charters or statutes, local governments in Oregon can charge user fees, and many now do, most notably the “road utility fees” charged by cities such as Tualatin, Lake Oswego, West Linn, Tigard, and others, which are based upon a rough calculation of use of the roads on average for each residential unit and business within a city, and are used to upkeep existing roadways by maintaining and repaving them.
John Thacker:
After all, couldn’t you pay a park entrance fee but then turn right back around before entering because your plans change,
No, because you pay the fee to enter. You can’t pay the fee before you enter because the fee is paid at the gate.
or pay for a hunting license but never get a chance to use it that year because your plans change?
Hunting, trapping and fishing licenses grant a privlege to shoot and catch wildlife which is tacitly held as common property. You gain the privilege as soon as you pay for the license. The use of the privilege is irrelevant to the cost being a fee.
Again, this is very simple – excise taxes are liable on all persons purchasing a certain item, go to unspecified purposes, and do not confer a benefit or privilege. Use fees are liable only on persons acquiring a certain benefit or privilege and are a direct cost of the benefit or privilege.
Very simply put for the case everyone is thinking about, I can use a road without paying the gas tax by using a non-taxed source of fuel (human leg power, electricity, ethanol, animal power, steam, etc.), and I can buy gasoline without using a road (to fuel a quad, a lawnmower, a leafblower, a snowmobile, etc.). I can also buy gasoline and use roads not supported by gas tax revenue (local roads, turnpikes, private roads), but I still pay the tax. Its clearly not a fee for use, and paying the tax does not confer any rights or privileges on me I did not possess before I bought the gas. On the other hand, I cannot use a turnpike without paying the toll – so tolls are clearly a user fee.
“Metrorail is very popular judging from the ridership of 930,000 in a metro area of 5.5 million – that’s around 9% for a system that is hardly comprehensive or fast. ” – Andrew
I’m not sure why you’re taking those 2 and getting excited about 9%. Ridership is not unique people riding, it’s simply number of trips taken. That doesn’t mean 9% of the metro population uses The Metro.
The weekday ridership number’s for Washington’s Metro have only been that high or higher once. And we’re not talking weekday average for a a month or year, just a one-off day. Current ridership for the WMTA rail system is around 725,000 ( http://www.wmata.com/rail/disruption_reports/ ).