- The Washington Times - Monday, March 5, 2001

RICHMOND The governor didn't blink.
In the high-stakes showdown between Gov. James S. Gilmore III and those in the Virginia Senate who opposed the scope of his car-tax rebate were many lawmakers who thought they could wear down the governor.
Instead, senators and delegates left town a week ago without passing a revised budget for the first time in state history leaving the budget-making to the governor and the car-tax rebate on schedule.
Far from a surprise, though, it's a political checkmate that has been in the works for months.
The governor wanted the personal property tax rebate to stay on schedule at 70 percent up from 47.5 percent last year. Senate leaders said there wasn't enough money in the budget. The question mark was the House.
Early on, the governor's supporters realized that if he could hold enough House members to prevent an override to a potential veto, he was going to get his way.
"The biggest mistake in the whole process was the failure of the Senate Committee on Finance to accept the inevitability that there would be a 70 percent car-tax reduction rate this year," said Sen. Bill Bolling, Hanover Republican and one of the six senators who voted against the Senate budget.
House leaders worked with that in mind the whole time.
"You don't stand up to the governor when he's facing you with a two-barrel shotgun," said Delegate Vincent F. Callahan Jr., Fairfax Republican and the House's chief budget negotiator.
But throughout the process some senators said they didn't believe Mr. Gilmore would use his veto, and others said they should not be swayed by it anyway.
"He vetoes it, and we just have to address it then. For us to just bow down, I don't think we can operate that way," said Sen. Charles J. Colgan, Prince William Democrat and one of the four eventual budget negotiators from the Senate.

It wasn't a bluff

The car-tax cut is Mr. Gilmore's political legacy. In the 1997 gubernatorial race, he was trailing Lt. Gov. Donald S. Beyer Jr. by 10 points in polls until Mr. Beyer ran head-on into the "No Car Tax" campaign. Within weeks, the race reversed and Mr. Gilmore cruised to victory.
All 100 members of the House were up for election in 1997, and they saw the power of the car-tax issue firsthand.
But not the Senate. In Virginia's staggered elections, the Senate is up for election two years after the governor. Senators never have run on the car tax. Most of the senators eventually voted for it in 1998 but never were wedded to the idea.
Several delegates said that may be one reason why they and the senators had such divergent expectations of the governor and the politics of the car tax.
That difference was evident as far back as Dec. 2, when Republicans held a joint caucus meeting in Richmond. They held a majority in both houses, and this should have been a chance for them to get together on the session's priorities.
Instead, Senate Finance Committee Chairman John H. Chichester, Stafford Republican, was warning of a slowing economy. With a looming budget deficit, either the car-tax rebate or government spending would have to be trimmed. He said the tax cut should be halted.
Most of the senators present had left by lunch time, though, which is when Republican pollster John McLaughlin presented polls showing broad support for keeping on schedule. About one-quarter of respondents wanted the car tax frozen, but slightly more than one-third said spending should be reduced to keep the tax cut on schedule. Between one-quarter and one-third said they would even want to dip into the "rainy day" fund to keep the tax on schedule.
"As McLaughlin gave out poll numbers, you could see the shift in people's positions towards the car tax," said one of those who attended the meeting.

The chasm widens

The governor also had seen those numbers, and two weeks later he submitted a budget with the car-tax cut on track.
He turned to "securitization" an upfront lump payment from the state's settlement with tobacco companies to find new revenue to automatically keep the rebate on schedule.
The move was both brilliant and a big mistake, assembly members said.
It boxed in the assembly because now it would take an act of the assembly to delay the 70 percent rebate and that action could be vetoed by the governor.
But both houses had rejected a securitization plan for tobacco money last year, and both Democrats and Republicans saw the governor's effort to retool and reoffer it as a poke in the eye.
Even worse, key legislators weren't told about the plan until the same time the governor was making his presentation to reporters.
Anger at the policy and the procedure boiled over when the session began Jan. 10. During a closed-door House Republican caucus meeting, delegates lit into Finance Secretary Ronald L. Tillett. But they were told of the governor's intent to veto anything under 70 percent and, realizing the situation, they emerged unified behind the governor.
From then on, Republican rank-and-file members said, more than 33 House Republicans were ready to support a veto.
During the next few weeks, House Speaker S. Vance Wilkins Jr., Amherst Republican and the silent force pushing for the 70 percent rebate, went to work on key House members. Winning the assurance of Mr. Callahan was critical because, as chairman of the House Appropriations Committee, once he committed to 70 percent, the rest of the budget was written around that number.

A bad call?

But senators never bought into the inevitability of 70 percent. They almost prevailed, thanks to what they called the governor's second, nearly catastrophic, mistake his campaign to stir up support for the car-tax cut by using a phone bank to recruit constituents to pester their senators.
When senators and their aides heard noises in the background and concluded the phone operators were listening in on the conversations between constituents and Senate aides, they demanded a police investigation. The investigation would find that there was no intent to listen in, but the incident probably quashed any possibility that the senators would support the governor's position.
"I would be hard-pressed to point to an effort that was more poorly thought out or more disastrously put on than that one," said one Republican legislative aide.
But it didn't end there. Through an error at the phone bank operation, delegates started getting the same calls.
Only a quick stop to the calls and the fact that the House was already far along on a budget that included a 70 percent rebate kept Republican delegates unified.

The bitter end

After that, the House and Senate irked each other at every turn and were made each more committed than ever to their positions.
Some House Republicans said that if Mr. Chichester had come to the bargaining table early on in the session and said they could go higher than a 50 percent rebate, the House would have caved.
But senators refused to budge off 50 percent until late in the final week of negotiations, when they went to 55 percent and declared it their final offer.
That infuriated House negotiators, who in turn stirred other House members.
"You go into the House caucus meeting, you're conservative, and you look at two of your members you consider moderate, and they're telling you they were treated poorly," one Republican said.
But by that time the only way out would have been a collapse by one side or the other something neither side was ready to do. All that was left was to begin placing the blame.


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