- The Washington Times - Tuesday, March 2, 2004

RICHMOND — Virginia House Republicans said yesterday that they will support a voter referendum on tax increases rather than face a budget impasse with the Senate that would force a special session of the General Assembly and potentially shut down the government.

“Make no mistake, we oppose these higher taxes, but we are willing to take our case to the people and abide by their verdict,” House Speaker William J. Howell said yesterday, noting that the compromise is “as far as the House will go.”

“Starting today, the choice in the budget debate becomes very clear: impasse or referendum,” he said. “This appears to be the only way to avoid a catastrophic budget impasse, save our AAA rating, and keep faith with the people of Virginia.”

Mr. Howell’s statement came before the start of budget negotiations by House and Senate conferees and a day after former Govs. L. Douglas Wilder, a Democrat, and George Allen, a Republican serving in the U.S. Senate, called for a referendum.

Gov. Mark Warner, a Democrat, yesterday rejected the call for a referendum and accused Republicans of having “thrown in the towel” even before the negotiations have begun.

“This action is extremely irresponsible and is an abdication of leadership,” a visibly irked Mr. Warner told reporters after the announcement.

“For the House leadership to suggest that we are hopelessly deadlocked before the House and Senate conferees have even begun to negotiate is not the way the people of Virginia expect their leaders to behave,” the governor said. “I call upon the House to stop playing games.”

Earlier yesterday, the House and Senate rejected each other’s budgets, a traditional move that forces a few hand-picked lawmakers into a conference committee tasked with reaching a compromise during a series of closed-door meetings.

The key players are Senate Finance Committee Chairman John H. Chichester and House Appropriations Committee Chairman Vincent F. Callahan Jr., who are on opposite sides when it comes to raising taxes to fund the state’s core services. Both men are Republicans.

If they don’t find common ground, many fear that the government will be forced to shut down, leaving its bills unpaid and closing the courts and the Department of Motor Vehicles. A shutdown also would mean that state troopers and prison guards will not get paid.

As of today, the legislature has 10 days to come up with a balanced budget, and the conference committee must figure out whether to include any tax increases. The General Assembly adjourns March 13.

They must decide between a $58 billion budget that meets the state’s basic needs with no general tax increase; a $61.5 billion budget that provides more funding to all state services by raising the sales, gasoline, cigarette and income taxes; or a combination of the two plans.

The most pressing concern is that a budget impasse will force a downgrade of the state’s AAA bond rating, which allows it to pay a choice interest rate on state-issued bonds. If the state loses the coveted rating, the government will have to pay higher interest rates, much like a person with bad credit would have to pay more to finance a home.

State Attorney General Jerry W. Kilgore, a Republican, had said that if the government were to shut down, it would cripple state services. “Government shutdown is unacceptable,” Mr. Kilgore said Monday.

But others said threats of a government shutdown were a “scare tactic,” and that the state is constitutionally allowed to go an additional six months without a budget before state workers are forced to go unpaid.

Yesterday, House Majority Leader H. Morgan Griffith blasted Mr. Warner for rejecting the referendum suggestion. Mr. Griffith, Roanoke Republican, said the House has tried to come up with creative solutions, but the governor kept saying “no, no, no.”

“If having a referendum [is what it comes to] that would be a distasteful pill to swallow, but having a budget impasse would be even more distasteful,” Mr. Griffith said. “Not attempting to find a resolution to the differences in the bodies on the budget would be the worst pill not only for me to swallow as an elected leader, but a bitter pill to force on the people of Virginia, because they do not want our government to shut down in July.”

Mr. Chichester, of Stafford County, also rejected the idea of a referendum. He said yesterday that going to the voters surely would force Wall Street to downgrade the state’s bond rating.

“There is no impasse. There are budget differences,” Mr. Chichester told reporters. “I don’t know how you can say there’s a stalemate when we’ve not even met.”

Those close to the process said Mr. Chichester is hoping to force a special session in which lawmakers would be called back after the adjournment to hammer out a budget agreement.

Mr. Howell, a Stafford Republican who has not officially named his conferees, said last week that he plans to name Mr. Callahan; Delegates Phillip A. Hamilton and M. Kirk Cox, who are Republicans; the House’s most senior member, Delegate Lacey E. Putney, an independent; and Delegate Johnny S. Joannou, Norfolk Democrat and opponent of general tax increases.

Mr. Cox, of Colonial Heights, was named to replace longtime conferee Delegate James “Jim” Hardy Dillard II, a pro-tax Republican and chairman of the House Education Committee.

Mr. Hamilton, of Newport News, was the author of the House plan that would have raised $520 million in revenue by eliminating tax exemptions for businesses. The Senate, which denounced the plan earlier, left it on the table yesterday, instead of adopting it and using it in a compromise budget.

On the Senate side, Mr. Chichester is expected to name himself, the chamber’s most senior member, Sen. Charles J. Colgan Sr., as well as Sens. Walter A. Stosch, of Henrico County, and William C. Wampler Jr., of Bristol, as conferees. All the senators have served as conferees for several years.

Mr. Colgan, of Prince William County, is the only Democrat in the group. All expected conferees from the Senate are considered “pro-tax” and voted in favor of the tax plan.

The conferees are expected to be named today and perhaps sit down for a first meeting this afternoon.

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