- The Washington Times - Tuesday, August 22, 2000

RICHMOND Gov. James S. Gilmore III's promise to do away with car taxes in Virginia may have sounded like political rhetoric once, but it's fiscal reality now.
The governor told the legislative money committees yesterday state revenue growth beat projections to guarantee the last two years of phasing out the state's personal property tax on cars, which will conclude in 2002. The car-tax cut was a campaign promise Mr. Gilmore rode to victory in 1997.
The news comes as most Northern Virginia residents are receiving their car-tax bills technically, personal property tax bills from local governments, with the state picking up 47.5 percent of the bill and residents paying the rest.
"I'm pleased to announce today that we will be able to implement the final two phases of car-tax relief a 70 percent reduction beginning in January 2001 and a full implementation beginning in January 2002. 'No car tax' was a promise made and now is a promise kept," Mr. Gilmore, a Republican, told the House Finance and Appropriations committees and the Senate Finance Committee yesterday.
Two earlier phases of the car tax already have been implemented and have saved Virginians "almost $500 million of their own money," Mr. Gilmore said.
Mr. Gilmore's announcement wasn't a surprise the governor and lawmakers expected enough money and budgeted for it this past legislative session but it does make it official. Nothing can derail the cut anymore.
The car-tax announcement was tempered, however, by lower-than-expected economic growth.
The economy only outgrew projections for the fiscal year that ended June 30 by one-tenth of 1 percent. Lawmakers had set a goal of exceeding projections by 1 percent for automatically beginning the next phase of the gradual partial elimination of the state's sales tax on food.
That means the tax cut won't automatically kick in, but Mr. Gilmore promised yesterday to find the $70 million needed for the next phase in the off-year budget during the upcoming legislative session. Both Democrats and Republicans in the General Assembly seemed eager to do the same.
Overall, state revenue grew 10.5 percent and that money is providing for more funding for state colleges and primary and secondary schools, raises for state employees and teachers and the governor's transportation program from this year's assembly session.
Some lawmakers were worried about the news for the future, after Secretary of Finance Ronald L. Tillett said growth trends point to a slowing economy.
"I would characterize that briefing as storm clouds on the horizon," said Delegate Robert Hull, Fairfax Democrat.
Sen. John H. Chichester, Stafford Republican and chairman of the Senate Finance Committee, said other unfunded expenditures, such as state employee salary raises, still needed money in the upcoming off-year budget bill.
But Mr. Tillett and Mr. Gilmore also touted low unemployment figures and the state's "rainy day" fund, a cushion for bad economic times, which stands at $900 million more than any other state in the country.
Mr. Gilmore has made tax cuts the centerpiece of his administration, and the car-tax cut, when fully implemented, will return more than $1 billion a year to taxpayers.
Strategic moves Mr. Gilmore and Republicans made early are now paying off. They wrote the food-tax cut bill so each phase only happens once there's already enough money for the next phase of the car-tax cut.
This year, since there is enough to cover the car-tax cut but not enough to cover the food-tax cut, lawmakers will have to appropriate more in the coming session. Since both parties have championed the food-tax cut, it's much easier for the governor to deliver on that promise next year than it would have been to find extra money for his car-tax cut.
Both parties seemed ready to find the extra money yesterday.
"This is more equitable state-wide than the car-tax cut," Mr. Hull said.
The only question is whether both parties will support emergency legislation to keep the food-tax cut on schedule for April 1. Emergency legislation requires 80 votes in the House and 32 in the Senate.

LOAD COMMENTS ()

 

Click to Read More

Click to Hide