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The Good Times Are About to Roll
By Stephen J. Rossie

Square2017 imageRICHMOND, VA – The U.S. Supreme Court gave state legislators a Christmas-in-June present last week. For Virginia politicians, it was a pricey one — as much as $300 million a year.

In a 5-4 decision, justices overturned a 20- year-old precedent it established in a previous ruling and decided that Internet retailers are indeed subject to state sales taxes. Yes, Virginia General Assembly, there is a Santa Claus and he’s going to bring you pallets full of cash to spend on your favorite projects and programs. It’s unclear whether legislative leaders praised the decision for its federalism or for the newfound wealth.

First things, first, as in passing a law establishing a tax on such purchases. In Virginia, though, it’s a bit more complicated because of the 2013 transportation package that raised the wholesale gas tax from 3.5 to 5.1 percent, but included a provision that would lower it and, instead, use the new sales tax revenue for transportation if Congress passed a law establishing sales tax equity between online and bricks-and-mortar retailers.

The High Court ruling hasn’t changed that, but it may provide an impetus for Congress to act. Or, the General Assembly may go its own way and repeal that provision. Senator Emmet Hanger (R-Augusta County), who co-chairs the Senate Finance Committee, favors protecting any new revenue for the general fund, and leaving dedicated transportation funds in place. House Appropriations Committee Chairman Delegate Chris Jones (RSuffolk) promised "a hard look” at how to spend the new revenue.

But his co-chair, Majority Leader Tommy Norment (R-Williamsburg) told the Richmond Times- Dispatch that, "Prayerfully, the Senate will demonstrate some fiscal discipline and channel the unanticipated revenue into our cash reserves and resist the temptation to spend it all in an effort to try and cultivate constituents’ favor in 2019.”

That will require countless Rosaries. But speaking of praying, the SCOTUS has shown that the holy golden line of precedent is, and always has been, nothing more than alchemy. If it can reverse itself on the grounds that technology has changed the economic landscape, then perhaps it can reverse itself on other scenes technology has altered, such as protecting the unborn.

This latest ruling, that upheld a South Dakota law, isn’t the only cash cow SCOTUS has presented to states. It recently allowed sports betting under state authority. It took only days for New Jersey and Delaware to dive in. As with the lottery decades ago, its spread to all 50 states is inevitable, as are the bills that will be filed to bring it to the Old Dominion in 2019.

That’s not all. This past session saw the creation of, for all practical purposes, slot machines under the guise of "historical horse racing.” Additionally, the new owner of Colonial Downs vows not only to bring back the thoroughbreds but also revive the state’s 10 off track betting parlors (perhaps eventually combined with sports betting), and the Pamunkey Indian tribe has plans to establish Virginia’s first casino (an estimated $700 million development) on 600 acres it purchased in New Kent County.

The Internet sales tax was a gift the General Assembly has requested from Santa for years and, despite not acting nice all that time, finally got it. Now it may get still more golden cash cows under its tree. Let the good times roll. Wait . . . that’s an expression for another season — Mardi Gras.

Stephen J. (Steve) Rossie is a Richmond-based public and government relations consultant. He has been a General Assembly lobbyist since 2006 and has written about Virginia government since 2007.

 





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