- The Washington Times - Sunday, January 23, 2005

RICHMOND — Proposals by several Virginia lawmakers to use a projected $919 million budget surplus to fully phase out the unpopular car tax or reduce other levies most likely will fail this year.

Many lawmakers who last year helped pass a sweeping $1.38 billion tax package and an indefinite $950 million cap on the car-tax relief program warn that the surplus is not available for tax relief because of the state’s responsibility to fund commitments such as education and health care.

“We have to be judicious and careful with the spending decisions,” said Senate Majority Leader Walter A. Stosch, Henrico County Republican. “If we have good times, we know we will have bad times to follow.”

Anti-tax lawmakers who opposed last year’s tax increases said they feel vindicated by the state’s recent revenue growth and projected budget surplus. Virginia state tax collections showed an 18.7 percent increase in last month’s revenue, compared with that of December 2003.

Delegate Ryan Todd McDougle called for tax relief.

“I was one of the individuals who felt we should not have a tax increase last year. It was unnecessary because of extraordinary growth,” the Mechanicsville Republican said on the House floorlast week. “I would hope we would consider returning some of those record surpluses back to the people of the Commonwealth.”

Several lawmakers have submitted bills that would provide some relief for Virginia’s taxpayers.

Delegate Ben L. Cline has proposed a bill that would return surplus dollars to taxpayers. The Rockbridge Republican’s bill would require lawmakers to refund to taxpayers any surplus money after depositing the required amounts into the state’s Rainy Day Fund and the Water Quality Improvement Fund. The House Appropriations Committee is expected to consider the bill in the coming weeks.

Delegate John M. O’Bannon III has proposed a bill that would create a “Virginia Taxpayer Surplus Relief Fund” that would return surplus dollars to taxpayers. The House General Laws Committee is reviewing the Richmond Republican’s bill.

Gov. Mark Warner, a Democrat, has proposed using the surplus for one-time initiatives that would help the state’s transportation needs and speed up a planned reduction of the food tax.

Lawmakers are likely to endorse the governor’s proposal to reduce the sales tax on food from 4 percent to 2.5 percent, a move that would cost the state about $180 million. The House Finance Committee is expected take up that proposal today.

Lawmakers also will try to end the accelerated sales-tax collection procedure, in which large businesses pay sales taxes based on the prior year’s sales. The collection procedure is a quick-fix system that began in 2002 to balance the state budget.

“These items will consume all of the so-called revenue surplus,” Mr. Stosch said.

Some lawmakers also have proposed legislation that would lift the cap on the amount that the state pays to localities for money lost under the car-tax relief program. The cap ensures that drivers will pay higher car-tax bills next year as they buy more expensive cars and localities continue to get the same amount of money from the state.

Delegate Jeffrey M. Frederick has proposed a bill titled “Keep Our Promise Act of 2005” that would lift the cap so lawmakers could continue car-tax relief and eventually fully phase out the tax. The bill is pending review in a House Appropriations subcommittee.

The Woodbridge Republican said lawmakers have been pledging to eliminate the car tax since the late 1990s. Car owners in Virginia now pay 30 percent of the tax on each vehicle they own.

“This was a promise, and we need to put car-tax relief into the posture it was in before 2004,” he said.

Mr. Frederick’s measure might get support from House Appropriations Committee Chairman Vincent F. Callahan Jr., Fairfax County Republican who opposed the cap last year.

Mr. Stosch said Senate leaders consider Mr. Frederick’s proposal a “bad bill.”

• This article is based in part on wire service reports.

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