GOP lawmaker: Va. gov tax boosts going nowhere

AP News
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Posted: Dec 08, 2009 3:51 PM

Even with hard times assured for public schools and other state-supported ventures, Democratic Gov. Tim Kaine's bid to end tax breaks to help balance an underfunded budget will get nowhere in a Republican-run House of Delegates, the top GOP budget writer said Tuesday.

But even as Republicans, fortified by last month's elections, hold the line against new taxes, increases are virtually assured by some cash-starved local governments after support from the state dries up, an advocate for county governments said.

Del. M. Kirkland Cox, the ranking House Appropriations Committee Republican, told journalists that rolling back tax breaks is tantamount to a tax increase, something Republican Gov.-elect Bob McDonnell has pledged to reject with the support of a Republican-controlled House.

"The biggest thing he (Kaine) could do for us is not put a tax increase in the budget," Cox told about 50 reporters and editors attending the eighth annual Associated Press Day at the Capitol.

"The reason for that is elections have consequences, and in this election, Bob McDonnell ran on a platform of not raising taxes," said Cox, from Colonial Heights.

Later, McDonnell told the same AP journalists' gathering that if Kaine proposes to repeal the car tax cut, it would be a tax increase.

But Sen. Janet D. Howell, D-Fairfax County, said Kaine should include in the budget he submits Dec. 18 whatever best ensures critical state services and protects Virginia's perfect, never-blemished bond rating. If additional revenues are required, she said, so be it.

"I think we're going to really be in a situation where things are so dire we're going to have to cooperate. We're going to have a choice: Are we going to cooperate or are we going to fight?" said Howell, a senior member of the Finance Committee in the Democratic-controlled Senate.

Their comments set the stage for the central conflict of the 2010 General Assembly: differences between McDonnell and House Republican allies and Senate Democrats over a new biennial budget for 2010 through 2012 that is already at least $3.5 billion short of its revenue needs.

Kaine, who has already reconciled nearly $7 billion in budget shortfalls since the worst recession in 60 years took hold in 2007, last week said he will propose eliminating the "dealer discount," a tax break merchants got for collecting and remitting the state retail sales tax. He has also said he is considering reversing the cuts made 12 years ago to the car tax.

Howell had noted earlier Tuesday that numerous tax exemptions had been in Virginia law for decades.

"Something I find troubling is that we put tax credits on the books and then we never analyze whether they're working or not," she said.

McDonnell acknowledged that an outdated and archaic tax break that no longer serves its intent should be reconsidered, but carefully avoided advocating repeal. Should the anti-tax House approve such a measure, he said, he would consider it.

The state spends $950 million annually reimbursing city and county governments for the tax revenue lost in 1988 when Republican Gov. Jim Gilmore forced a Democratic legislature to accept his campaign proposal to phase out the despised property tax that Virginians paid annually on personal cars and pickup trucks.

As the cost of the state's reimbursements to local governments soared, lawmakers in 2004 agreed to cap them just under $1 billion. Any attempt to undo Gilmore's signature policy achievement is dead on arrival, Cox said.

"I think you'd do tremendous harm to citizens who are struggling the most," Cox said.

But as state support is inevitably cut as lawmakers struggle with their worst fiscal dilemma in modern history, county governments will be forced to make up the difference, almost exclusively through increases in real estate taxes, said Virginia Association of Counties chief lobbyist Mike Edwards.

"In addition to absorbing a state cut, we have to absorb an equal if not greater local cut," Edwards said. And the bulk of cuts localities make, he said, will be to public education.

"To date, the governor and the General Assembly and local governments ... have tried to protect public education. That can no longer be the case with the drop of $3.5 billion," he said.

Cox, a teacher, said that while the cuts were inevitable, there is room for savings without imperiling classroom instruction. Support personnel levels have increased by 43 percent while faculty have increased by 23 percent the past eight years, Cox said.

"I think that's something we have to do," Cox said. "Come on, you got front office personnel, curriculum specialists _ I'm still trying to figure out what they do, and I've been there 27 years."