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Disney to make up the cost of debt service should tax revenues from the ill-fated theme park fall shy of projected levels. Such an arrangement was in fact a commitment by the Commonwealth to maintain Disney as a tax source for so long as the debt remained unsatisfied, a possible violation of Article IV, Section 15, of the Virginia Constitution which requires that any general law shall be subject to amendment or repeal. In other words, this guarantee impaired the legislature’s right to amend or repeal laws.
In order to justify its departures from the constitution, proponents of the Disney bond issue used the excuse that the debt was not backed by the full faith and credit of the Commonwealth! Now if the bonds were not obligations of the Commonwealth they would not be eligible for federal tax exempt status under Section 103 (a) of the Internal Revenue Code. Failure to achieve tax exempt status would have made the bonds more difficult to market and increased their debt service cost. The bonds themselves were to be named “Commonwealth Transportation Board, Commonwealth of Virginia, Revenue Bonds,” which sounds like these bonds were backed by the Commonwealth regardless of aay disclaimers. Such language is misleading, and the marketing of securities by obfuscation or omission is illegal.
It is incumbent on concerned citizens throughout Virginia to demand an accounting of these matters. Was the state legislature simply careless and hasty, or was there a concerted effort to circumvent constitutional restraints? These are questions for the courts to ponder. The voters have a much larger issue to consider, and that is whether or not they are prepared to have a government that ignores constitutional restraints and our traditional procedures for incurring public debt. In as much as Virginia is the cradle of Jeffersonian democracy, I sincerely hope that the people will not tolerate an administration that meets in smoke filled rooms, behind closed doors, to conspire to circumvent the constitution.
RICHARD W. KATOS
Washington
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