Monday, November 12, 2001

The final 30 percent of Virginia’s car tax, set to be repealed by Gov. James S. Gilmore III in next year’s budget, won’t be going into the pockets of taxpayers after all.
State revenues have dipped too far in recent months for any last-ditch fiscal effort to slay the car tax to be successful.
Mr. Gilmore, a Republican who could not run for re-election in last week’s election, used the car-tax issue to carry him into office four years ago. He has managed to cut it by 70 percent a move that this year alone saved taxpayers an estimated $570 million.
But instead of finding the 100 percent repeal in the upcoming state budget, Virginians will continue to pay 30 percent of the car tax.
“It would have been futile for Gilmore to push a budget proposal that the new governor is going to scrap immediately,” said Delegate Richard H. Black, Sterling Republican.
That means a $20,000 car will be taxed as if it were worth $6,000. The amount of the tax owed will vary from county to county.
“No amount of smoke and mirrors can finance full car-tax relief next year. it’s a dead issue,” Delegate Vincent F. Callahan Jr., Fairfax Republican and incoming chairman of the House Appropriations Committee, told the Richmond Times-Dispatch.
Mr. Gilmore has lost hope that he can find the money to finish repealing the tax. The biggest beneficiary of this will be Gov.-elect Mark R. Warner, a Democrat who will be spared a great deal of political ill-will for abandoning the tax cut on his own watch.
“I think it is a gift to the incoming administration,” said Timothy M. Wise, president of the Arlington County Taxpayers Association. “It’s unfortunate and it’s a gift to play the bipartisanship game.”
Some General Assembly members yesterday agreed with Mr. Wise while others said the struggling economy makes the repeal no longer economically or politically feasible.
“The era of tax cuts ended with Mark Warner’s election,” Mr. Black said. “He once called the Republican plan to end the car tax ‘coocoo economics.’ Warner can’t undo the Republican cuts but he’ll defend what’s left of the car tax.”
Delegate Brian J. Moran, Alexandria Democrat, said Mr. Gilmore hasn’t had a “change of heart regarding the car tax, rather a recognition of the economic realities.”
“I don’t think this has anything to do with the governor-elect, it has to do with economics,” said Delegate Harry J. Parrish, Manassas Republican. “Mr. Gilmore almost has to do this. It wouldn’t go through the legislature if he didn’t.”
Delegate Robert D. Hull, Falls Church Democrat, said he is “glad to see that fiscal sanity has hit the governor’s office because it was clear that revenues are dropping considerably.”
“Governor Gilmore would have had to do this no matter who was elected,” Mr. Hull said. “It would have been irresponsible to go to the hundred percent if the revenue was not there.”
Delegate Marian Van Landingham, Alexandria Democrat, said it was “pretty well inevitable” that eliminating the car tax completely would go on the back burner.
“To put things in perspective,” she said, “a hundred percent repeal will cost the state about $1.5 billion a year. That’s as much as we now spend on education.”
When he ran for governor in 1997, Mr. Gilmore vowed to have the car tax completely phased out by the time he left office and until now he has steadfastly held to the vow.
His commitment to staying on schedule with the phaseout pushing this year for a jump from 47.5 percent to the present 70 percent repeal in the tax was at the heart of the unprecedented budget impasses.
“Mr. Gilmore’s done a great job of following through on his car-tax-cut promises and he shouldn’t let the Democrats off the hook with his budget proposal,” said Peter Ferrara, president of the Virginia chapter of Americans for Tax Reform, the nation’s largest taxpayer activist organization.
Mr. Gilmore’s administration is well along in drafting its budget proposal, which will outline how the state should spend about $50 billion during the next two years.
“I would urge Governor Gilmore to propose a budget to complete the tax cut,” Mr. Ferrara said. “State spending has increased 42 percent over the last four years. All they need to do is retrench a small part of that increase.”
Mr. Gilmore and his budget advisers are scheduled to brief Mr. Warner on Virginia’s budget outlook this week when the governor-elect returns from a family vacation in Puerto Rico.
Mr. Warner, who takes office Jan. 12, will have only a few weeks to write up changes in the budget before the General Assembly convenes.

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