1/31/03: Odds on a D.C. Commuter Tax

The decision to keep the Department of Homeland Security in the District of Columbia could undercut the arguments of D.C. politicians who have for years demanded a tax on commuters who don’t live in the city. The salary-based tax could amount to hundreds, if not thousands of dollars per commuter each year.

Thousands of federal and non-federal workers commute to the District daily, mostly from Maryland, and Virginia, but also from West Virginia, Pennsylvania and Delaware.

The idea behind the commuter tax, which many cities have, is that the jurisdiction must provide services, from roads to safety, to people who live and pay taxes in other jurisdictions. The argument is that they come to town, use the streets, park , then go home where they pay their local taxes. The argument goes: commuters should chip in for the problems, congestion and wear and tear they cause. But that argument can and will be flip-flopped when D.C. politicians make their annual run for a commuter tax. For example:

Opponents of a commuter tax argue that the D.C. officials want it both ways: They act as if they don’t want the commuters. On the other hand, they cry foul when the federal government says it’s considering moving out of the District into Virginia or Maryland. Suddenly the non-taxpaying leeches are desirable.

Rep. Tom Davis (R-Va.) has long been an opponent of the commuter tax. In that respect he’s like other Republican and Democratic members of Congress from the Washington suburbs. Davis now chairs the committee that oversees federal employee matters AND the District of Columbia. He has told friends and reporters that advocates of the commuter tax can’t have it both ways, complaining about the federal presence, then complaining when it may be removed.

Davis has said that if the District needs additional money it should come from the federal government in the form of an appropriation, not from a commuter tax. His argument is that this is a federal city and a national tourist center that belongs to all Americans. It shouldn’t, he and other suburban politicians believe, be financed by people whose offices, both federal and private, happen to be in the District. Many warn that if such a commuter tax becomes law, outlying areas would impose one on D.C. residents who work out of town.

It doesn’t help that many people feel the city “profiles” when it gives out parking tickets and boots cars with Maryland and Virginia tags attracted by the ticket-writers.

Given the situation, and the new arguments, the odds of a commuter tax being enacted this year, on a scale of 1 to 10 (with 10 being the least likely), most practical people would give it an 11.

TROUBLE IN TSP LAND

Roger W. Mehle, former executive director of the Federal Retirement Thrift Investment Board, has filed suit against four of the five part-time directors of the federal 401k plan. Mehle, a Reagan administration appointee who resigned from the Board last November alleges a “breach of fiduciary duty” on the part of directors of the Thrift Savings Plan.

The TSP has three million active and retired federal and military participants and a value of about $100 billion. Mehle’s suit was filed in U.S. District Court for the District of Columbia. Among other things the lawsuit asks that the successor he recommended, James B. Petrick, be reinstated as executive director. The Board agreed last November. But when new members were confirmed by the Senate, the next day Petrick resigned from that post. He’s serving as acting executive director. The lawsuit said that Petrick was unaware of the lawsuit.

The Board has delayed implementation of a daily valuation system record-keeping system several times. The systemIt would express investor accounts in “shares” and make it possible to make much quicker trades, as well as process loans. During Mehle’s tenure, the Board fired the contractor who was working on the new record-keeping system and sued for damages. Petrick was the project manager, according to Board records.

A Board spokesman declined to comment on the allegations except to say “counsel finds the suit (Mehle’s lawsuit) frivolous and has referred it to the Department of Justice.” Earlier this week the Board announced it has hired a head hunting firm to help in the search for a new executive director.

For background on the record-keeping delay and other TSP matters click here and go to the “Current Information” section.

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