- The Washington Times - Wednesday, August 8, 2001

Virginia Gov. James S. Gilmore III yesterday said the state narrowly missed its revenue target for the fiscal year that ended in June, but the figures are close enough to fully implement the car-tax cut next year.

State revenues fell short by $52.4 million, or less than one-half of 1 percent, leaving the state just under a half-percent shy of its projected 3.8 percent revenue growth. State law would freeze the car-tax repeal, which is now at 70 percent, if the state misses its target by one-half percent.

Revenue was estimated at $11,487.9 million; the goal was $11,540.3 million.

"We anticipated this downturn coming last fall and prudently lowered our revenue estimates then," Mr. Gilmore said yesterday at a news conference in Richmond. "We've done what any hardworking family knows it has to do when faced with a reduction in income, and we've reduced our spending."

Despite the shortfall, Mr. Gilmore said there is enough money to continue several critical college capital spending projects that were frozen earlier this spring.

Mr. Gilmore, a Republican, also said the state ended the year with $3.5 billion in cash, including $1.2 billion in general fund monies. The governor also set aside $103 million into the state's "rainy day fund."

The governor's announcement comes nearly five months after the General Assembly deadlocked over the appropriate level of car-tax relief and adjourned without passing a budget.

The shortfall prompted some lawmakers to predict that the year-end numbers could lead them to hold the line on a complete car-tax phaseout, which is scheduled to take place next year.

"We want to retain the commitment but at the same time follow a schedule that has some relationship to the reality of fiscal responsibility," said Delegate Marian Van Landingham, Alexandria Democrat. "We've got to take the wait-and-see approach."

Others disagree. "It's not bad news," said Delegate Jay O'Brien, Fairfax Republican. "These numbers should be seen as so close to the mark that there's no reason to waiver on the car tax."

John Bennett, director of the Senate Finance Committee staff, said revenue actually needed to grow by 5.5 percent to advance the car-tax cut. Mr. Bennett referred to a provision in the state code that says the next phase of the tax cut can be implemented only if revenues come within one-half percent of the projected growth rate in the appropriations act in effect at the time.

The growth projection was revised to 3.8 percent in December, and that is the rate the governor considers relevant.

Mr. Gilmore's announcement also provoked a spirited exchange with Mark R. Warner, the Democrat running for governor against formerRepubican Attorney General Mark. L. Earley.

Mr. Warner, who is vacationing with his family, sent out a statement saying the cost of Mr. Gilmore's "fiscal missteps," including his budget projections, have cost the state hundreds of millions of dollars.

"The constantly shifting bottom line could not be a stronger indication that we need new leadership and a new way of doing business in state government," he said.

In a terse reply, Mr. Gilmore said Mr. Warner's remarks show that he does not understand how fiscal forecasts are made: "Mark Warner's statement issued today shows more than ever his ignorance of government and calls into serious question his ability to be governor."

• Stephen Dinan contributed to this article, which is based in part on wire service reports.

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