me Ishmael. I'd say that Gov. Mark R. Warner is
sailing into dangerous waters.
by aides and editorial writers demanding a
big spending program as a "legacy," the
governor is setting himself up for Republicans
to characterize him as the Captain Ahab of
Virginia politics, obsessed with the Great White
Whale, Moby Tax.
say: Let this fish get away. Warner doesn't need
a billion-dollar general tax increase to have a
legacy. He needs to stop listening to Richmond insiders
and especially the editorial boards, a prime
example being yesterday's Roanoke Times.
The scribblers from Big Lick have preached for
years that it is anti-rural and fiscally
irresponsible to do 100% percent car tax
phase-out in our current financial shape, since
it will cost another $600 million to $800
million the state doesn't have.
suddenly, they have reversed course, now opining that
if Warner doesn't do the full car tax Monte by
2008, the GOP will do it by 2006.
is not only wrong, but an indication that they
are now more obsessed with Moby Tax than anyone
could have thought possible. Why? The truth
is, the budget cap I discuss below legally
prevents the GOP from a 100 percent
phase-out of the car tax in 2006, something the
editorial boards might know if they bothered to
read the law. Incredibly, Warner is proposing to
eliminate this very cap, demanded in 1998 by
Democrats to prevent Republicans from raiding
education funds to gain political points by
exploding the cost of the car tax program.
knows he can not bust the budget with his
own 2008 phase-out plan unless he scraps the
cap. That's right: Warner, his eyes on the U.S.
Senate like former Gov. Jim Gilmore, is
proposing something he knows is fiscally
reckless, something he and the Roanoke Times
have long said would be wrong for Gilmore to do.
True, it is politically popular. But Warner won
an election attacking this kind of politics,
saying it was killing the state's finances.
of it: Suddenly, the Roanoke Times
editorial writers wants to do precisely what
they begged Democrats not to let Gilmore do,
what they would be forcefully opposing if a
Republican Governor were proposing it. They know
Warner's proposal all but guarantees a future
raid on education funds to pay for the car
tax program next time there's a dip in revenue!
so desperate are they to pass a General Tax
increase, they are willing to throw their fiscal
principles overboard, even knowing it will make
things fiscally worse in a few years.
Having changed their minds, are they preparing
their public apology to "Deficit" Jim
addition, the editorial boards also back
Warner's reversal on the estate tax, saying his
"compromise" is smart because
otherwise the GOP will eliminate the Estate tax
really? The GOP plan, vetoed by Warner just last
year as "fiscally irresponsible,"
eliminated the estate tax for the 1786 families
-- less than 2 percent of all Virginia families
-- who paid it, according to the latest
state data. What Warner calls his
"equitable compromise" eliminates the
estate tax for 1,773 of these families, or more
than 99 percent! He leaves only 13 families
paying the estate tax; but to keep them from
feeling inequitably treated, gives each upwards
of a $1 million windfall reduction in this levy.
this is an "equitable compromise"
please show me an "inequitable" one!
tell it like it is: This is rank capitulation,
done under the guise of making the tax code
"fairer" when it does no such thing.
is, if Warner and all the Democrats hold their
ground as baconsrebellion.com helped force them
to do last year, they can sustain a veto of
any GOP plan to eliminate Republican Teddy
Roosevelt's estate tax, thereby stopping the GOP
from creating yet another $300 million dollar
future budget hole. Warner's aides are saying
that his estate tax plan will cost the state far
less than $300 million in the future. But they
should know this is almost surely not true.
Because in 2011, only a few years away, federal
estate tax law is scheduled to change for
the benefit of states like Virginia. If Virginia
estate tax law stays as it is -- and again, it
only affects less than 2 percent of the
wealthiest families in the state -- the
Commonwealth figures to get $300 million a
budget cycle at least. Since Warner eliminates
the levy for almost all families, then clearly
his plan will create yet another future budget
hold, something he and the Roanoke Times
ask you: What has happened to the Virginia
Democratic Party's principles and willingness to
fight for them?
is what Governor Warner said in vetoing the same
basic irresponsible political promise last year:
is particularly unfair about this tax cut is
that it is being proposed at the same time that
college students are paying higher tuition at
our state universities, the poor and mentally
ill are facing curtailed social services, and
programs that benefit all Virginians - ranging
from parks to environmental protection -- are
it's tough standing up to powerful political
forces. It's far easier to declare that you would
have fought for your principles but you knew you
couldn't win. The beauty of this argument: Who
could prove otherwise?
it is time to fish or cut bait: In chasing the
Great White Whale, Warner risks harpooning not
only Virginia but his own party and, tragically,
the gubernatorial prospects of every Democrat
who doesn't have a $200 million personal fortune
to outspend Republicans three to one.
aides say he had no choice but to advocate this
billion dollar general tax increase to pay for
the $2.4 billion in new spending he proposes for
the two-year, 2004-2006 budget.
urge legislators, Democrat and Republican, to
consider this fact: A record general tax
increase is not necessary to fund the
governor's own spending proposals, as shown
contrary to claims by Warner aides, the
governor's plan (1) raises taxes on most
Virginians in 2004, (2) busts the
protective budget cap intended to prevent state
education funds from being raided to pay for the
car-tax program, (3) gives away $100,000
to $1 million estate windfalls to a handful of
families, something the governor previously
labeled unaffordable and unconscionable, and (4)
guarantees more structural deficit erosion
by back loading huge new budget costs that will
raise havoc during the next economic downtown.
Warner plan makes a bargain with the political
devil: It raises $500 million in regressive
sales and cigarette taxes disproportionately
from vulnerable Virginians, mainly poor and
rural, for the purpose of buying off more
politically powerful interests. None of this
money goes to educate children, support
health care, create jobs, fight crime, or repair
devilish deal is why Warner needs to raise the
sales tax by 22 percent, the cigarette tax by
900 percent, hide a 100 percent tax increase on
some struggling senior-age Virginians, and
remove a budget protection for education funds
demanded by both parties in 1998.
leaders say this is the price for a deal.
deal? They have no agreement for anything.
Instead, we have self-interested political
capitulation, not enlightened negotiation. The
governor proposes roughly $2 billion in new
non-transportation expenditures and $400 million
in transportation items, all to be paid from the
his own figures, appearing in the newspapers,
show basically how you can fund what he wants without
a general tax increase.
budget conservatively projects over $1.2 billion
in new revenue growth and about an additional
$300 million in surplus and other carry-over
funds from the previous budget. Historically, a
bipartisan consensus of Republican governors and
Democratic General Assemblies has agreed to pay
for road maintenance with a user fee known as
the gas tax. Several key House Republicans say
they are prepared to return to this bipartisan
approach, but the governor's plan did not
include a gas tax because aides said it polled
Warner had taken the lead, Virginia could have
gotten a four-cent gas tax for maintenance only.
The modest levy would raise $400 million for the
transportation fund, eliminating the need to
transfer $400 million from the General Fund, the
key source for education dollars.
administration figures show that a combination
of other actions could provide an extra $400
million to $500 million to spend. These include:
closing corporate loopholes,
delaying for now an adjustment of the
accelerated sales tax program,
passing a "K-12 first law" that puts
his full car-tax funding on hold until fully
funding education needs,
reversing position on giving fiscally
irresponsible estate-tax giveaways to the
wealthiest families on the order of $100,000
to $1 million.
forging a bipartisan agreement to raise the
tobacco tax to a dime for a special smoker's
reassessing the curious decision to put in the
budget a pay raise two years before it will be
cutting political and other unnecessary budget
spending, such as the $500,000 lulu to the
state's leading political pundit, and the
incredible cost of the Legislative
Department, now more than $800,000 per
list doesn't even include those hidden pots
of "money" that state politicians
always "find" at General Assembly
Session crunch time to fund popular programs.
line: Add this $500 million to the $1.5 billion
and you can do more for education than
the governor's aides said they realistically
expected to get this year. Plus, it should allow
continued, if not faster, reduction of
the food tax (something that's already on the
books, so I don't want to suggest it is a new
tax break). Why more? Because when Warner
asked for $2 billion, that means he was hoping
to get a compromise at $1.8 billion from
the General Assembly.
Virginia Education Association says it has to
back Warner's tax-increase plan to get more
education funding now. But as I showed above,
there is no need to make Faustian bargain that
will curtail future education funding. Warner's
plan will drain an extra $600 million to $800
million and more per downstream budget
cycle from the General Fund to pay for the 100
percent car-tax phase out. In the next economic
slowdown, that money will come right out of the
education budget -- at least, that's what the
VEA has said when Gov. Jim Gilmore proposed it.
VEA lobbyists changed their position now?
as I have shown, by imposing huge transportation
obligations on the General Fund, Warner's plan
further crunches the main source of K-12
raising the gas tax instead, you would get the
$400 million for maintenance -- a good chunk
paid by truckers and out-of-state motorists --
in a stable, traditional, user-fee revenue
stream that doesn't compete with K-12 funding.
(Sorry 'Til Hazel, et. al: No new roads with
this user-fee money. It goes strictly for
maintaining the roads and other transportation
infrastructure we use now.)
Virginians, especially those faithful to
Democratic Party principles, should demand
that their leaders produce a No General Tax
Increase budget alternative for immediate
will be better for it, now and in the future, if
we devise a fiscally responsible alternative.
There is no reason to waste another year of
opportunity chasing the Great White Whale.