Both the Maryland and Virginia legislatures reconvene this week, setting the stage for some brutal political warfare over tax and spending priorities. In Virginia, the 2004 session, which begins tomorrow, is certain to be dominated by Gov. Mark Warner’s tax increase proposal, which is expected to bring in $1.1 billion worth of new revenue during the next two years.
We urge the state legislatures to stand firm against yet more tax increases and bend their shoulders into finding cuts in the states’ still profligate spending habits.
In putting forward his proposal, Mr. Warner, whose Democratic Party holds just 53 seats in the 140-member General Assembly, has skillfully worked to exploit divisions between pro- and anti-tax increase forces in the Republican Party. Yesterday, Sen. John Chichester, the Republican chairman of the Senate Finance Committee, was expected to propose a tax-increase package that goes beyond that introduced by the governor. Mr. Chichester’s tax increase plan, like Mr. Warner’s, stands a decent chance of passage in the 40-member Virginia Senate, where it is likely to win the support of most of the 16 Democrats there, as well as a substantial number of Republicans. (The Senate’s 24 Republicans are split between anti-tax conservatives and moderates who are amenable to higher taxes.)
For Mr. Warner, the major problem will be in the House of Delegates, where Republicans will command a 61-37 majority with two independents who usually vote with the GOP. Most of these Republicans are conservatives with an abiding skepticism toward higher taxes, and their leader, House Speaker Bill Howell, has been highlighting the negative effects that Mr. Warner’s tax proposal would have on Virginians. Mr. Warner wants to increase the sales tax from 4.5 percent to 5.5 percent, to increase the state cigarette tax from 2.5 cents per pack to 25 cents and to impose a local tax on tobacco of up to 50 cents. In addition, Mr. Warner wants to increase income taxes. Currently, all taxpayers pay an income tax of 5.75 percent. The governor wants to create a new 6.25 percent bracket for Virginians with taxable incomes of more than $100,000. Mr. Howell and conservatives, backed by the state chapter of the National Federation of Independent Business, will counter the Warner proposal by putting forward an alternative plan to cut spending — something Mr. Warner largely ignored in his 2-year, $59 billion budget proposal.
Over the next six weeks, the debate over taxes, pitting Messrs. Warner and Chichester against conservative Republicans in the House of Delegates, will dominate political debate in Richmond. Mr. Warner and his allies are expected to use the threat of a downgrade in the state’s AAA bond rating in an effort to press the legislature to approve tax increases.
In Maryland, the General Assembly session that begins tomorrow and runs until April. Republican Gov. Robert Ehrlich faces a legislature in which Democrats hold a 98-43 majority in the House and a 33-14 majority in the Senate. As he did last year, Mr. Ehrlich will try to persuade lawmakers to enact slots to pay for education and close a budget deficit of more than $700 million.
By next Wednesday, Mr. Ehrlich is required to submit a balanced budget; he will do so by proposing cuts in a wide array of state services. After he does so, the governor is likely to come under heavy fire from House Speaker Michael Busch, who last year was successful in killing Mr. Ehrlich’s slots proposal. Mr. Busch has been outspoken in calling for tax increases; His Senate counterpart, President Mike Miller, is a supporter of slots, but his political effectiveness has been hampered by FBI investigation into donations received by a national political organization he heads. Like Mr. Busch, Mr. Miller has also tried unsuccessfully to push Mr. Ehrlich to agree to tax increases. Look for the General Assembly to send the governor a budget package earmarking higher taxes for public schools and higher education, and daring Mr. Ehrlich to veto it.
We expect that Mr. Ehrlich will do so, at which point the legislature will try to override the governor’s veto (something that hasn’t happened in 15 years). After Mr. Ehrlich’s veto is sustained, the liberal ideologues who dominate the General Assembly will seek to depict him as an ogre for his refusal to accept job-destroying tax increases.
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