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Heads,
Warner Wins
Tails,
GOP Loses
Gov. Warner is in a no-lose position in the
debate over tax reform.
House
Speaker William Howell threw down an election-eve
gauntlet on tax reform last week, in effect telling
the board of directors of the Virginia State Chamber
of Commerce: no net tax increases.
The
speech, previewed in advance of delivery by the Richmond
Times Dispatch on Friday, not unexpectedly, set
into stone the triangle — Gov. Mark R. Warner,
Senate Finance Chair John H. Chichester and Howell
— that will define the debate parameters and
dominate the coming session of the General Assembly.
(Think of the three sides of this triangle as
House and Senate Democrats, centrist House
and Senate Republicans, and Howell and The Anti-Tax
Right.)
The
question is a simple one:
Do we increase revenues?
In broad strokes, the debate will go like
this: Warner
and Chichester, will say,
"Yeah, we will." Howell will counter with, "No, we
won’t."
Politics
and policy always intermingle and the players are
sharp discerners of nuance — which, believe,
they'll need to be. With this issue, coalitions and
alliances will morph and change color daily on the
policy-politics axis.
It will be Warner and
Chichester
on policy; Chichester
and Howell on politics.
Make
no mistake about this:
The Republican majority will, at all costs,
avoid the so-called "train wreck" of a
budget stand-off that characterized their first shot
at majority government during the last two years of
the Gilmore Administration.
Politically,
Warner will win either way.
(For once!) If
he gets what he wants, he has shown "leadership"
and his non-partisan approach to the job is
vindicated. If
he doesn’t, who is to blame?
The
policy side of the equation is a little more
complicated. Get
the chalkboard and I’ll draw you a picture.
-
A
commitment made to Moody’s Investment Services
to double the state’s "rainy day"
fund, spent down, some say recklessly, by
tax-averse legislators over the last couple of
budget cycles.
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The
state’s commitment to reimburse localities for
revenue lost by elimination of the car tax will
escalate dramatically, even if it remains pegged
at 70 percent. This, of course, is driven by
more Virginians buying better, more expensive
vehicles, theoretically using the money they
don’t have to pay in taxes now. Think
about it as ‘mo’better’ cars. But there is
another, very real, conundrum here. State budget
forecasters at the moment are estimating revenue
growth in the 4.6 percent neighborhood. If it
goes to 5.0 percent -- and it well might, there
being signs that the economy is, in fact,
bestirring itself after a long slumber — guess
what? Virginia
law says the car tax reimbursement will go to
100 percent. This is probably the first
time in the history of the state that budget
writers, though they’d never admit it, hope
the revenues go up, but just not too much. If
they do, kick in another couple of hundred
million dollars in car tax "costs."
-
The
governor’s Education for a Lifetime
initiative, a good, well-received, overdue
contemplation of our education system but one
knocked off the front pages in mid-launch by
Isabel, is not a big ticket item, as big ticket
items go. Still, add $50 million.
Add
the numbers and you get a shortfall of at least $1.5
billion, probably higher.
It is a long ways from what it was last time
around, but is still significant.
And all the easy, one-time fixes, the fiscal
sleights of hand tricks, are gone.
Meanwhile,
every special interest group in Virginia with an ox
in the goring pit — and there are lots of them —
are bedecked in their best wooing finery and are
working around the clock, pleading with little knots
of legislators here and there in this post-election
run-up to gavel time in January.
--
November 3, 2003
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