- The Washington Times - Monday, February 5, 2001

RICHMOND Virginia Senate Finance Committee members yesterday made it clear they have no intention of going along with Gov. James S. Gilmore III's proposed budget cuts and car-tax rebate this year, setting up a conflict with the House Appropriations Committee, which adopted much of the governor's plan.

But both houses showed their displeasure with the governor's proposed budget by eliminating many new initiatives this year, including his electronic-government plan and his algebra readiness program, and both houses restored millions of dollars the governor wanted to cut from health care and education.

The committees adopted their proposals yesterday, and the respective budgets now go to the full Senate and House, where they must be approved later this week. The bills are in the form of amendments to last year's two-year, $48 billion budget.

But the gap between the committees' plans may be the largest ever, and both sides seemed aware that the battle remains a public relations game.

The Finance Committee proposed going to a 50 percent rebate of the car tax from the current 47.5 percent, and it didn't include the governor's use of tobacco money in its budget. The Appropriations Committee proposed going all the way to the scheduled 70 percent rebate, and did use a lump payment from the state's settlement with tobacco companies in its budget.

Finance Committee Chairman John H. Chichester, Stafford Republican, signaled the Senate's opposition to the governor's plan when he laid out the case for freezing the car tax and not taking the tobacco payments because of the lost costs from interest.

"Should we ask our children and grandchildren to pay an extra $210 million by 2020 so that we can enjoy an average tax cut of $55 per car this year? Should we borrow to pay for a tax cut? My answer, speaking only for myself, is 'No,' " Mr. Chichester said. "I think the committee's answer and each member will speak for him or herself will be 'No.' I think the Senate's answer will be 'No.' And, I am optimistic that the General Assembly's answer will ultimately be 'No.' "

Appropriations Committee members saw it differently, voting to hold the line with the governor, though not very enthusiastically.

"We found that by thoroughly examining the budget and setting priorities we could preserve the car-tax [rebate] while addressing the shortfalls in the introduced budget," said Appropriations Chairman Vincent F. Callahan Jr., Fairfax Republican.

Mr. Gilmore, speaking with reporters after the committee's action, praised the House version of the budget, saying it showed it is possible to produce a responsible budget while still giving a 70 percent car-tax rebate.

He also said that since the car-tax rebate in law was 70 percent as of Jan. 1, the Senate version amounts to a tax increase.

"In order to do what they have done, you're going to have to impose $264 million in taxes on the people of Virginia," he said. He said that could work out to $400 to $500 for a Northern Virginia family with two cars.

The senators who presented their budget were often critical of the governor's proposals, and even took shots at him in their remarks. But Mr. Gilmore showed a more conciliatory attitude than in recent weeks. Rather than blast senators for not acceding to his plan, he said, "I think Senator Chichester and some of the other members of the Senate just feel this is the direction they want to go."

Having the House produce a version of the budget that kept the full rebate was critical to the governor's hopes. He can now argue that those outside the administration also have found a way to continue his tax cut.

The governor had signaled to lawmakers that the car tax was a top priority, and both houses seemed to take that to heart. They both eliminated several of the key new initiatives Mr. Gilmore announced in the months and weeks leading up to his December presentation of his budget.

Gone is the governor's Power-up initiative, which was to help students learn on line. Gone also is his electronic-government program, which would have pushed for procurement and other government activities on line. He also lost some of his education initiatives.

Both committees also restored funding to many of the programs the governor proposed to cut, and they rejected his plan for unspecified cuts in some agencies, though they accepted them in others.

The committees also rejected the governor's argument that paying for teacher salaries is a local affair, and included raises for them. The House proposed a 3.5 percent raise this year, and the Senate proposed a 6 percent raise.

The Senate, apparently twisting the knife still further, even included budget language that would prohibit one-time revenue to be counted in the revenue stream for purposes of meeting the car-tax triggers in the future, exactly the technique the governor used this year.

There is still another potential pitfall: Both budgets were drawn assuming revenue growth of 3.8 percent this year, but many lawmakers question whether the state can reach even that.

From here, each house must act on its own budget by the end of business Thursday. A week later conferees are appointed from each house to hash out the differences, and a final single package is brought back to be voted on by both chambers.

After the session ends Feb. 24, the governor may suggest amendments to the budget, but lawmakers will reconvene April 4 to accept or refuse his amendments. After that, the governor either has to accept their final offer or veto the entire budget, a move that would give him his 70 percent car-tax rebate, but akin in its effects, some lawmakers said, to "nuking" the budget.

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