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State Stuck on Budget, Again

In a replay of 2004, General Assembly hits impasse over budget and tax increases.

Once again, the Virginia General Assembly has deadlocked over a budget and proposed tax increases. The players are essentially the same as those in the budget impasse in 2004 — the Governor, Senate and Democrats in the House of Delegates favor one approach, while House Republicans favor another.

This time around, the issue is funding for transportation. The Senate plan, generally backed by Gov. Tim Kaine (D) proposes a series of tax and fee increases which would generate about $1 billion per year over the next four years.

The House Republicans' proposal relies on using part of the budget surplus and selling bonds to leverage more funds, but would generate about half as much money.

Another difference is duration. The House plan generates a short-term cash infusion, while the Senate uses the tax hikes for a continuing revenue stream.

"We're going to work it out eventually," said Del. Vince Callahan (R-34). He chairs the House Appropriations Committee and is one of the group of delegates and senators which will work to negotiate a compromise.

The assembly ended its session on Saturday, and will come back on March 27 to start a special session dedicated to passing a budget.

Kaine expects that the negotiators will continue to meet over the next two weeks, said spokesman Kevin Hall. Kaine has encouraged assembly members to go out and talk to their constituents. Kaine himself will likely travel throughout the state to try and generate support for his plans. "You can expect to see him out there banging that drum," Hall said.

AS IN 2004, a major sticking point seems to be proposed tax hikes. "They're [the Senate] going to have to come off of their gas tax," Callahan said, referring to the plan for a 5 percent increase at the pump. The proposed gas tax is projected to generate about 25 percent of the total Senate plan's funding, he said

The Senate plan includes a provision that would allow motorists to save their gas receipts and submit them twice a year for a refund of the new tax.

"The house calls it a gimmick, but I think they did because they didn't think of it first," said Sen. Jeannemarie Devolites Davis (R-34).

The House plan, Devolites Davis said, relies too much on debt. "They're relying too heavily on bond sales and they're not doing anything long-term," she said.

"The Senate wants a stable, reliable, dedicated, adequate, statewide funding stream," said Sen. Janet Howell (D-32). "The Senate Democrats and Republicans are totally bonded. We have the same vision for Virginia and it's going to be tough to crack that."

House Democrats are generally supportive of the Senate plan, said Del. Brian Moran (D-46), chairman of the House Democratic caucus. "The house has to move toward the Senate and the Governor," he said. "Transportation is a long-term problem. It needs to be addressed year after year."

THERE MAY BE some room for compromise. The governor is leaving all options on the table, Hall said. During the campaign and weeks after it, Kaine had staked much of the success of his first year on developing a transportation plan, and passing legislation to more closely tie land-use to transportation.

While Kaine put forward a plan of his own, he may be willing to accept less. "We're not going to define success by a dollar figure," Hall said.

Callahan said that house members might be open to some "revenue enhancements and fee increases."

Howell and Devolites Davis said they might be open to going into some debt. However, Devolites Davis said that first the budget should determine how much funding it will generate for transportation, and then decide what portion of that funding should be used for debt. Otherwise, paying back bonds could overwhelm other needs, she said.

Another potential compromise might be in allowing different regions of the state to tax themselves in order to increase local funding.

"I think ultimately, we're going to come up with a regional plan," Callahan said.

Devolites Davis said she has been lobbying the Senate leadership to include a provision in the plan. Then if it is adopted, rural legislators who don't support tax increases can go back to their districts and say they let Northern Virginia tax itself.

In 2004, a group of house Republican legislators broke ranks with their party and supported tax increases that went to fund public safety, health and education. "You're starting to see elements of that coalition step forward," Hall said.

But all of the same delegates might not be receptive this time around. Rural areas of the state do not benefit as much from this plan as they did when the issue was for more school funding. "We're probably going to need to reach across and get some different delegates than two years ago," Howell said.

Moran notes that Northern Virginia contributes the lion's share of tax revenue to the state coffers. That money is then sent around to other parts of the state to fund their services.

If traffic chokes Northern Virginia's economy, then rural areas will suffer, Moran said. "We're paying for their schools," he said. "If they don't address our problems, they do so at their peril."