Bob Hull's Richmond Report

All Plans Raise Taxes

As I am sure you are all aware, the Virginia General Assembly is now embroiled in a big budget and tax battle.

This is a three-sided affair and all three parties have a common element: their budget plans raises taxes.

First, we have Governor Warner’s plan to restructure taxes. It results in an increase in sales and income taxes.

His plan produces $1.3 billion more over the next two years in order to more fully fund our education, transportation, and social service needs.

Next is the Senate plan, known as the Virginia Investment Act, which increases taxes by over $3 billion.

While this plan does provide tax restructuring, the goal seems to be to produce much new revenue in order to rebuild our infrastructure.

Finally, there is the House budget. It, too, relies on a tax increase to balance the budget. But, House leaders do not call it that.

They do not even call it revenue enhancement. In fact, they do not talk much about it at all. That is because they are scared of it.

Say It Ain’t So!

The House leadership, composed of anti-tax Republicans, started out berating the Governor’s plan.

They argued that no tax increases were needed at all. All it will take to balance our next two-year budget, they said, is economic growth.

Then, they learned that this would not work after we were told by an economic consultant that we could not “grow our way out” of our fiscal trouble.

The problem is that we made too many long-term promises over the last eight years (under two GOP Governors).

The biggest commitment of state funding now is the Car Tax Cut, not fully implemented, but already twice what was originally estimated.

This, combined with increases in mandatory spending, has made for a harsh reality. We just seem to have too many burdens.

We have more pupils coming into our public schools, an increase in college students, more prisoners in our prisons, and higher Medicaid costs.

When times were booming and our treasury was overflowing, we also enacted some tax breaks that have come back to haunt us.

The bottom line is that, after making $6 billion in budget cuts since he got into office, Governor Warner will have to cut even more if we do not get more revenue.

No Truth in Legislating?

The House tax increase comes about by removing existing businesses tax exemptions on utility companies, airlines, and others.

They estimated it would bring in $520 million over two years. But, the Department of Taxation estimated it would bring in only about half of that.

Regardless of that, I bet you that those tax increases would by passed along to all of us in some manner.

The bottom line is that the annual ritual of having the House and Senate battle over the budget has been taken to the higher level of political theater.

That is what happened on Monday when former Governors Allen and Wilder called for a referendum on this whole thing.

Gee, if we went to a statewide ballot for all tough decisions, then why would we be needed?

Of course, former Governor Linwood Holton and Former U.S. Senator Harry Byrd, Jr. have both endorsed the Governor’s plan.

So, between dueling celebrities, one question comes up: will the General Assembly adjourn on time with an approved budget?

Legislators, reporters, and lobbyists alike all think that we will have to extend the session or have the Governor call for a special session to get it done.

But, not I. Always the optimist, I believe that we tradition-bound Virginia legislators would not fail to do in a regular session what we were sent here to do.

I think that here in the Capitol building, designed by Thomas Jefferson, tradition still means something.

But, maybe I am wrong. Maybe this year, it will not be the law of Jefferson, but Murphy’s Law that will prevail.