RICHMOND — Gov. Mark Warner yesterday urged lawmakers to support his proposed tax increases that would generate about $1 billion in new revenue, as the state continues to face projected shortfalls through the rest of the decade.
During the annual State of the Commonwealth address last night, the Democratic governor said the state no longer can rely on spending cuts and one-time fixes to make ends meet. He called for bipartisan compromise to restore the state’s fiscal integrity and to protect its AAA bond rating that the state is “in serious jeopardy” of losing.
“When we work together, we can achieve important goals for the people of Virginia,” Mr. Warner said in his 35-minute-long speech. “I am willing to work with everyone in this General Assembly, no matter which House you serve in, no matter which community you come from, no matter which political party you belong to.”
In the Republicans’ official response, Delegate David B. Albo, of Fairfax, said the House Appropriations Committee will rewrite the budget, relying only on an existing tax structure that will generate an additional $1.8 billion because of economic growth.
“I want to see what a budget built on existing tax revenues looks like before I consider any new or higher taxes,” he said.
Sen. Ken Cuccinelli, Fairfax Republican, called Mr. Warner’s plan “terribly unrealistic.” “I heard nothing new in his speech,” he said. “I’m hopeful Fairfax County is not the only place that feels hammered by this plan.”
However, Sen. Benjamin J. Lambert III, Richmond Democrat, praised the governor. “This puts Virginia way ahead,” he said. “It’s good for the commonwealth.”
Mr. Warner has proposed a plan that would increase the sales tax from 4.5 percent to 5.5 percent and the cigarette tax from 2.5 cents per pack to 25 cents. It also would raise the income tax on households that earn more than $100,000 a year and reduce the 4 percent grocery-sales tax to 2.5 percent.
Under his plan, Mr. Warner has said 65 percent of Virginians will pay less in taxes, and the car tax will be fully phased out by 2006.
“It just doesn’t make sense that someone earning only $17,000 a year in Virginia should pay the same tax rate as someone earning $500,000 a year,” said Mr. Warner, a multimillionaire who earned his fortune in telecommunications before being elected governor in 2001.
The plan is coupled with a two-year, $59 billion budget that calls for $2.3 billion in new spending, mostly for education and health and human services.
Mr. Warner also disputed critics who say an economic recovery will enable Virginia to grow its way out of the problem without tax changes.
“It would take revenue growth rivaling that of the technology and dot-com boom to make that happen,” he said. “And, to bet our financial future that those days will return again is a fool’s wager.”
At stake, Mr. Warner said, is Virginia’s prized AAA bond rating, which allows the state to borrow money at the lowest interest rates. “The AAA bond rating is a recognized seal of approval that indicates to the world that Virginia is a good place to do business — and that means jobs for Virginians,” he said.
Mr. Warner’s address capped the first day of business for the 2004 General Assembly, which opened at noon without the Salute to the Flag of Virginia. The salute, written by a member of the United Daughters of the Confederacy, had been added to the daily recitation of the Pledge of Allegiance in the House after September 11.
Some delegates found the salute divisive and offensive and tried unsuccessfully to remove it. But Republican leaders decided this year to quietly end the tradition after meeting with members of the Legislative Black Caucus.
Sixteen new legislators were sworn in, and Republican William J. Howell, of Fredericksburg, was re-elected to a two-year term as House Speaker. Mr. Howell, who has been deemed “Speaker Newhart” for his sense of humor, took over the position last year after former speaker S. Vance Wilkins Jr. resigned amid accusations of sexual misconduct.
In his remarks, Mr. Howell, 60, alluded to the impending showdown over Mr. Warner’s budget and proposed tax increases by the governor and Senate Finance Committee Chairman John H. Chichester. Mr. Howell opposes the governor’s plan.
“There have been dark clouds of economic distress that have dimmed the enthusiasm and diminished the opportunities of the people of Virginia,” Mr. Howell told lawmakers. “Now that the sun is finally beginning to shine again, we should think very carefully before we begin to darken the landscape anew with clouds of our own making.”
Mr. Chichester, Stafford Republican, who was re-elected president pro tempore of the Senate, has proposed a plan that would boost the sales taxes by 1 cent on the dollar, raise the gasoline tax by 2.5 cents a gallon, and reorder income tax deductions and brackets. His plan eliminates the car tax by 2008.
The 100-member House welcomed 12 new members, nine Democrats and three Republicans. Republicans hold a 61-37 majority in chamber, where there are two independents. The 40-member Senate welcomed four new members — three Republicans and one Democrat. Republicans hold a 24-16 majority in the Senate.
The 60-day session ends March 13.
• This article is based in part on wire service reports.
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