- The Washington Times - Saturday, February 21, 2004

RICHMOND — Virginia Lt. Gov. Timothy M. Kaine said he was surprised by a recent proposal from House Republicans to eliminate $520 million in business tax exemptions, adding that the bill could scare away businesses.

“In a time when the health of the economy is everybody’s major concern, taxes that really go after major employers in Virginia — I think most of us were just stunned that they would go that direction,” Mr. Kaine told The Washington Times.

The Democratic lieutenant governor said he was glad that Republican lawmakers have recognized the need for additional revenue to preserve the state’s fiscal integrity, but said they are going about it in a way that is harmful to business.

“There are a lot of jobs at stake,” he said in an exclusive interview. “They are proposing a way of raising revenue that I think will have a maximum effect in hurting jobs, and that’s the last thing we ought to be doing right now.”

Mr. Kaine said he supports a tax increase that falls somewhere between Gov. Mark Warner’s $1 billion plan, which has died in the House, and Fredericksburg Republican state Sen. John H. Chichester’s $2.5 billion plan, which the Senate approved in a 27-12 vote Friday.

Mr. Kaine, who turns 46 on Thursday, is expected to be challenged by Republican Attorney General Jerry W. Kilgore in the 2005 election.

As of Dec. 31, Mr. Kaine had a little more than $1 million in campaign funds and Mr. Kilgore had about $1.5 million, according to financial reports filed with the state Board of Elections.

In addition, the Virginians for Jerry Kilgore political action committee had collected about $2.5 million through the end of last year. The Kaine for Governor and TimPAC political action committees had collected about $2.2 million by Dec. 31.

“I think that clearly a factor for me is going to be how successful Mark is, and that makes me feel good because nobody has ever made money betting against Mark Warner,” Mr. Kaine said.

Mr. Kaine noted that he and Mr. Warner went to law school together, and he calls the governor a “longtime friend.”

On the budget, he praised Mr. Warner’s and Mr. Chichester’s proposals, particularly the Chichester plan, which devotes money to transportation.

Mr. Chichester’s plan would raise the state sales tax from 4.5 percent to 5.5 percent, increase the state gas tax from 17.5 cents per gallon to 20.5 cents per gallon and would reorder income tax brackets, raising rates for those who earn more than $100,000.

The House on Tuesday indicated that some type of tax increase is likely this year in passing a bill that would raise $520 million in revenue from businesses by eliminating a variety of exemptions. The bill emerged last week as the House’s answer to Mr. Chichester’s proposal.

Citing his experience as a Richmond official when the city’s bond rating was downgraded, Mr. Kaine said he feels a particular need to get the state’s finances in order to preserve its AAA bond rating.

Richmond’s bond rating was downgraded just as Mr. Kaine was elected to the City Council in 1994, and though he and other leaders tried to undo the damage, it took the city eight years to get the rating upgraded again.

“It was eight years of trying to prove again that we knew what fiscal responsibility was [in order] to get an upgrade,” said Mr. Kaine, who later became Richmond’s mayor. “If we lose the AAA rating, we will pay increased interest costs for many years, and we won’t have that cachet in terms of attracting business, and it’s going to be awhile before we get it back. And I ultimately think that threat will be powerful enough to bring about a deal at the conference table.”

A key item in his legislative agenda this session is a bill that would allow the creation of a four-year university in Southside Virginia.

Mr. Kaine also supports a bill that would allow Richmond residents to elect their mayor, which is likely to pass both chambers, and one that would allow judges to commit children for juvenile gun offenses more easily.

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