RICHMOND Gov. James S. Gilmore III will disclose today how he intends to keep his promise to wipe out the local car levy. His chief allies in the Virginia House and Senate say he will succeed despite gloomy state revenue forecasts.
The math the governor has used to pay for the tax cut described to The Washington Times as incredibly complicated, if not spellbinding has been kept secret from all but those who put together the formula.
Today, Mr. Gilmore plans to ask the upcoming General Assembly to carry out the promise that propelled him into office in 1997: phasing out the entire tax on the first $20,000 of a car’s value.
Mr. Gilmore has prepared a state budget that in its most rudimentary form relies on both cost cuts and a new kind of indebtedness to defray the $1 billion cost of knocking off 70 percent of the first $20,000 of a car’s taxable value, as scheduled.
Some senior members of the Republican-led legislature are skeptical about Mr. Gilmore’s spending plan, but they say even without his closely guarded budget plan, Mr. Gilmore has public opinion on his side.
“It boils down to this: Do you want to use the money to cut taxes or increase government spending?” one longtime Gilmore aide asked. “We say: Cut taxes.”
Gilmore aides declined to comment on precisely how the administration will fund the next phase, which increases the state’s absorption of the locally administered car tax from 47.5 percent to 70 percent of taxable value.
The plan that the General Assembly adopted in 1998 called for phasing out the tax completely by 2002, but only if the state economy remained strong enough to fund it.
State economists predicted a budget shortfall of about $400 million in October; a new estimate is expected this week.
“[The car tax] will be in the governor’s budget, and there will be significant support for it,” said Delegate John H. “Jack” Rust Jr., Fairfax Republican and a key Gilmore ally on the House Finance Committee. “The politics of it are such that there is tremendous, tremendous support for it from the general population,” he told The Washington Post.
Because Virginia budgets are on a two-year cycle, the $1 billion annual cost of the next phase of car-tax repeal is essentially paid for, requiring Mr. Gilmore to squeeze $100 million to $200 million out of a $48 billion spending plan to reach his goal, senior aides said.
Mr. Gilmore contends that new economies in agency spending such as the $150 million savings in transportation announced last week coupled with long-term bond financing instead of paying cash for programs will help defray the cost of the next phase.
“My guess is that he’s going to point to that … and say, ‘Here’s a good reason for us to take an equivalent amount of money out of the transportation budget and use it for … the car tax,”’ said Delegate John A. “Jack” Rollison III, Prince William Republican and co-chairman of the House Transportation Committee and a member of the Appropriations Committee. “I just see the invisible hand at work.”
Mr. Rust, Mr. Rollison and Sen. Janet D. Howell, Fairfax Democrat who is a member of the Senate Finance Committee, said proceeding with car-tax repeal could crimp some vital services.
“The House will be going along with phasing it out,” she said. “But when it comes to the Senate, there’s limited belief in the governor’s numbers.”