- The Washington Times - Monday, December 17, 2001

RICHMOND (AP) Gov. James S. Gilmore III will urge the legislature and his successor to jump-start the stalled car-tax cut from 70 percent to 100 percent, beginning July 1, 2003, sources said.
Mr. Gilmore will include money in the final year of his two-year budget proposal, which he will present this week, to eliminate the local tax on the first $20,000 of assessed value of a personal-use vehicle, the sources said.
The Republican governor, who leaves office Jan. 12, will disclose his revised car-tax schedule today in Richmond, according to a report in the Richmond Times-Dispatch.
"Despite the recession which postponed the car-tax rollback, the governor's not leaving office without putting it in the second year of the new state budget," a source said.
On another budget matter, the administration confirmed yesterday that the governor's final spending plan will recommend at least 2 percent raises for the state work force, effective Dec. 1, 2002.
However, Mr. Gilmore lacked the money to award retroactive pay raises to classified state employees, public school teachers and college faculty. They lost the promised 3 percent raises this year because of the budgetary impasse over the size of car-tax relief.
The full car-tax phaseout and modest employee raises are among the few bright spots of Mr. Gilmore's final budget.
It will feature deep agency cuts and other economies to balance the package. Legislative analysts said the state must slash and scramble to find more than $1.3 billion a year to replace declining revenue and to pay for mandatory programs such as Medicaid, education and public safety.
"There's almost nothing in the budget for anybody," Mr. Gilmore said in a telephone interview yesterday. "It will not please a lot of people.
"There will be some substantial reductions in state agencies' budgets," he said. "It's going to be very difficult."
Many agencies will be given spending-reduction targets in order to balance the current budget, which ends June 30, as well as for the new two-year plan.
"I'm not going to dictate or direct how they cut," he said. "They can choose how to do it themselves."
Most agencies have operated under a hiring freeze and cutbacks since last spring. Mr. Gilmore did not rule out the prospect of layoffs.
To help balance the books this fiscal year, he is likely to dip into the state's rainy-day fund and withdraw up to half of its estimated total of $940 million.
He will formally disclose his proposed two-year, $51 billion budget on Wednesday during a briefing of the money committees of the General Assembly. The new budget, most likely to be amended before being adopted by the Assembly and signed by incoming Gov. Mark R. Warner, goes into effect on July 1.
Although Mr. Gilmore's signature achievement has been car-tax relief, he also has courted the state work force. His GOP predecessor, now-U.S. Sen. George F. Allen, had a rocky relationship with the workers, who complained that he cared little about their welfare.
"It's been a priority of mine," Mr. Gilmore said. "We've clawed and scratched to find a way to get them a well-deserved raise. I'm also giving state employees the first claim on additional revenues once the economy turns around."
The 2 percent raises could be boosted if revenue collections exceed the administration's forecast of 4.1 percent growth next fiscal year.
However, he has not included any raises in the budget's second year, when tax collections are forecast to rise by 5.5 percent.
Mr. Warner would not endorse the pay raises yesterday, saying he still needed "to see the whole picture of this difficult budget."
"I have consistently supported fairly compensating state workers, teachers and faculty," he said in a statement. "But until we see the cuts elsewhere in Governor Gilmore's budget, we won't know who's paying the bill."
The soured economy had forced Mr. Gilmore to stall the car-tax phaseout at 70 percent indefinitely.
He will disclose his revised plans for its elimination tomorrow when he receives the report of the Governor's Commission on Finance Reform for the 21st Century.
Mr. Gilmore leaves office just days after the Jan. 9 opening of the General Assembly, and it is unlikely that the orphaned proposals will win much support without a strong push by the new governor.
The Assembly has its own tax-reform panel at work, and it isn't scheduled to complete its study for at least another year.
Additionally, Mr. Warner may take a wait-and-see approach toward the car-tax phaseout plan. He has promised only to eliminate the levy before leaving office in early 2006.
The annual cost of 100 percent relief is more than $1.2 billion.
With the state strapped for cash, Mr. Gilmore has proposed a nearly $1 billion borrowing plan to pay for sorely needed construction and renovations on state college campuses. About two-thirds of the proposed borrowing would have to be approved in a referendum in November.
Mr. Warner generally favors using tax revenue for colleges' capital projects, though he suggested the state may have to start by borrowing because of the bleak economy.

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