- The Washington Times - Thursday, January 18, 2001

RICHMOND Virginia's financial picture is no worse than expected, Gov. James S. Gilmore III said yesterday, and he urged lawmakers to continue working to implement the next phase of the car-tax cut.

The Republican governor had called a news conference to respond to reports about the state's revenue collections, which are barely above the point where they would be called a recession.

Secretary of Finance Ronald L. Tillett told the General Assembly's money committees yesterday and Tuesday that revenue collection over the first six months of the current fiscal year was up just two-tenths of a percent over last year. That will make it tough for the state to meet the year's total projection of 3.8 percent on which the administration based its budget.

But Mr. Gilmore said his administration expected the poor showing and included it in the revised budget.

"Things are still the same. You still have people in the Senate who don't want the car tax to pass, you still have special-interest groups that want to get their hands on the money, you still have the money for the car tax in the budget, and people should just relax and not all of the sudden get the idea that there's a whole different situation here," Mr. Gilmore said.

Lawmakers from both parties, though, were reluctant to believe the state would meet its revenue target.

"I think the committee is increasingly skeptical of the numbers that are coming forward," said Sen. Janet D. Howell, Fairfax Democrat and a member of the Senate Finance Committee. "We have to get a budget that's honest for the people of Virginia."

She said lawmakers in the House and Senate budget-writing committees, each of which has to have completed spending plans by the second week in February, need to have confidence in the numbers they are using. Given the first six months' collections, she said, lawmakers probably will have to assume revenues will come in less than the 3.8 percent increase that the administration projected.

That doesn't mean the next phase of the car-tax rebate which is scheduled to go from 47.5 percent to 70 percent on the first $20,000 of a vehicle's value is automatically dead. But it would make the case for keeping it in the budget tougher.

The governor submitted a budget that pays for the next phase of the car-tax rebate, cuts some agency budgets and pays for both previously budgeted construction and maintenance on college campuses by taking a lump-sum payment on part of the state's settlement with cigarette makers.

The Senate Finance Committee probably the biggest hurdle the governor has to clear already has voted against taking the lump payment. The governor yesterday said he still thinks that is a good method but is waiting for lawmakers to propose an alternative.

December's revenues were down 11.1 percent from December 1999. But the governor said January numbers are looking much better than last year's numbers, and administration officials said they expect double-digit growth over January 2000's collections.

The state's sluggish receipts actually may boost support for the rebate: Some House Republicans have argued the state needs a stimulus, and the next phase of the car-tax cut would provide one.

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