- The Washington Times - Wednesday, November 29, 2000

Virginia Gov. James S. Gilmore III said yesterday he may dip into the state's $900 million contingency fund to keep his 1997 campaign promise to repeal the car tax by 2002.
"I suppose the legislature and I could decide that we wanted to go ahead and use that to smooth it out this year," Mr. Gilmore said during an appearance on WTOP-AM's (Radio 1500) "Ask the Governor" show. "It's an option."
His statement contradicts the testimony of his secretary of finance Ronald L. Tillett two weeks ago before the Republican-controlled state Senate Finance Committee.
Mr. Tillett told the panel the state's estimated 3.2 percent economic growth for this year less than the original projection of 5.5 percent would not necessitate using the contingency fund to pay for programs, including the next phase of the car-tax repeal.
The Virginia Constitution was amended to mandate that the state keep a contingency fund, officially know as a revenue stabilization fund, after a series of recessions in the early 1990s.
Currently, the state pays 47.5 percent of the car tax on the first $20,000 of a vehicle's value. The state is supposed of pay 70 percent next year and 100 percent by 2002.
"I can't just stir up a pot of money in the back room," Mr. Gilmore said, blaming the Clinton administration's effort to keep inflation in check by raising interest rates as one reason for the state's economic woes.
Mr. Gilmore reiterated that a downturn in Virginia's economy has him looking at delaying by one year full implementation of the repeal.
On Monday, Mr. Tillett told The Washington Times the governor also was looking at scaling back government programs to offset the costs of the full phase-in of the car-tax repeal over four years.
"The people in the state can be reassured that the governor intends to fulfill their promise, but I have to deal with the cards dealt," Mr. Gilmore told The Times yesterday.
Political pressure could force Mr. Gilmore to shelve the idea of skipping a year.
State Delegate Robert F. McDonnell, Virginia Beach Republican and a leader in the House of Delegates GOP caucus, said there will be voter backlash if Mr. Gilmore does not deliver on the promise that got him elected.
"There will be significant disappointment from the taxpayers if he doesn't find the money to do this," Mr. McDonnell said. "All they heard was, 'Cut the car tax.' "
Failure to repeal the tax on the original timetable, he said, also could hamstring Republicans running for statewide offices next year.
Mr. McDonnell said that if the Republicans do not deliver, the Democrats will crow that Republicans won't keep promises.
Mr. McDonnell said he thinks the House will support an effort to dip into the contingency fund.
James Parmelee, chairman of the Northern Virginia Republican PAC, said he thinks Mr. Gilmore was lofting a trial balloon to gauge reaction from the state's GOP.
"He may be alerting Republican activists to get out there and drum up support to get the General Assembly to do this," Mr. Parmelee said.
Former House Speaker and Delegate Thomas W. Moss Jr., Norfolk Democrat, said using the contingency fund would be a big mistake. "The 'rainy day' fund … was never intended to be meant for tax relief," Mr. Moss said.
Mr. Moss said Mr. Gilmore "never knew what it was going to cost when he made that pledge" and now has to suffer the consequences of counting too much on the promise of a robust economy.
Barbara Reese, a legislative fiscal analyst with the state Senate Finance Committee, said the rainy day fund can be used for anything the governor and legislature deem appropriate.
"It's supposed to be used to fill the gap. It's to fill revenue shortfalls," she said.
Ms. Reese added that the fund could be tapped now since the current revenue collection is 2 percent less than last year's revenue collection.
The governor cited the economic slowdown as a reason for using the contingency fund or slowing the car-tax repeal.
Revenue shortfalls also threaten full implementation of the rollback in the state's sales tax on foods. The 4.5 percent tax already has been cut to 4 percent, but the reduction to 3.5 percent originally set for April may have to be postponed, Mr. Tillett said.
Mr. Gilmore will sit down today with his budget, which is to be submitted to the legislature Dec. 20, to figure out which course to take.
"We are watching our revenues. Over the Christmas holidays, we'll look at the revenues by the middle of December," he said.
Joshua Kurlantzick contributed to this article, which is based in part on wire service reports.

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