- The Washington Times - Wednesday, January 24, 2001

RICHMOND If Virginia legislators don't go along with Gov. James S. Gilmore III's call to advance the car-tax rebate to the next phase of 70 percent, it will throw a wrench in the works for localities who have to send out their personal-property-tax bills in the first half of the year.
That's just one of several trump cards in Mr. Gilmore's hand in the game of poker he and the legislature are now playing. The big question is whether he has the stomach to play his hand through.
The next deadline for action is Feb. 4, when both houses of the General Assembly must produce amendments to the $48 billion two-year budget that either fund, partially fund or freeze the next phase of the car-tax cut at 70 percent. Six months ago, no one thought that would be a problem, but a slowing economy has placed it in doubt.
Mr. Gilmore, who campaigned on eliminating the car tax for the first $20,000 of value for a private vehicle, is now under the gun to make good on his promise. And, he said yesterday, he has every intention of doing so.
"I think that car-tax money needs to go back to the public the way we said it was going to. I think it's a matter of good policy, it's good for working men and women, and it's good that people can believe their public officials are going to do what they said they would do," the Republican governor said on WTOP radio's "Ask the Governor."
The House appears ready to accede to the governor's demand, but not the Senate. A Senate panel already rejected one method the governor proposed taking a lump-sum payment for the state's tobacco settlement for paying for the budget.
Yesterday, Sen. John H. Chichester, Stafford Republican and chairman of the Senate Finance Committee, told committee members he spent the weekend trying to identify where to make $500 million in cuts in the budget the governor submitted, and that's without even considering a car-tax-rebate increase.
"When you start looking at $500 million cut out of the budget things that are big-dollar amounts, small-dollar amounts, of necessary services that we are expected to provide for local governments … it's not a very pleasant task in the very least," he said.
For now, all eyes are on the next round of revenue figures. In the first six months of the fiscal year, state revenue grew only 0.2 percent. January's revenue so far is much better, but to reach the 3.8 percent growth in revenue that is drawn into the budget the state must take in about $1 billion in revenue per month. Put another way, it means the state must grow by 6.8 percent during the rest of the year.
The situation is complicated by two factors: The legislature's Republicans are under the gun to prove they can manage the General Assembly; and the governor, the new chairman of the Republican National Committee, is now in the national spotlight. Failure to deliver on a big promise at home could be a blow to his efforts to establish himself.
Democrats are in the new and somewhat enviable position of sitting on the outside watching the governor and prominent Republicans snipe at each other, and giving some a chance to capitalize.
So far, they have been content to try to poke holes in the governor's math.
"The car tax has collapsed the entire ability of the state government to make an analysis of the revenue stream," said House Minority Leader C. Richard Cranwell at a Finance Committee meeting Monday, where he grilled an administration official about the exact costs of the car-tax rebate.
The 70 percent rebate has been law since Jan. 1. As long as the governor included the car tax in his budget and the budget had sufficient revenue, the cut automatically became law.
But localities like Loudoun County and Richmond collect some or all of their year's car-tax revenue in early May, and that means they have to know whether to collect 30 percent, 52.5 percent or some compromise amount.
"If the Senate passes a freeze or some change to the governor's implementation, then we are forced to wait for the veto session to happen," said H. Roger Zurn Jr., Loudoun's treasurer.
That would mean Loudoun would miss its usual March 15 mark for printing the bills while waiting for April 4, the veto session. And that, Mr. Zurn said, could put a real crimp on cash flow, and the county has already made decisions for how to spend and invest based on expected revenue.
Mr. Gilmore yesterday seemed confident he held the aces in his hand.
"It's up to the legislature to see whether or not they can pass a pause of the cut, and then get it by me. That's always the effort they have got to make. If I were a betting man, though, I'll bet you that the people will get what they're entitled to, which is a full phaseout to 70 percent this year," Mr. Gilmore said.
It's a pretty safe bet, because in the end he can veto the budget amendments, which means the two-year budget reverts to what was passed last year, which includes a 70 percent rebate.
Senators said if it comes to a possible veto, they will just have to make their case and hope public opinion holds sway.
"He does have that card there, but if we can make our argument that we just can't proceed with the car tax at this point and show why, and he goes ahead, it shows he's irresponsible," said Sen. Warren E. Barry, Fairfax Republican and member of the Finance Committee. "The governor has literally cut last year's budget all to pieces to make the monies available."
Still, he said, "I'm a betting man, but I wouldn't bet on this."

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