- The Washington Times - Wednesday, January 23, 2002

RICHMOND State employees and teachers will not get raises, tax breaks will be scaled back and fees will be raised to balance Virginia's budget over the next 2-1/2 years, Gov. Mark R. Warner proposed yesterday.
"These are additional burdens placed on all of us," Mr. Warner said after presenting the details of his budget amendments. "It's going to be a tough year."
The state faces a $3.5 billion shortfall over the next three years, Mr. Warner said yesterday, which was the deadline to submit amendments to former Gov. James S. Gilmore III's budget for the remainder of fiscal 2002 and the 2003-04 budget.
The car tax also will remain frozen at 70 percent through the end of fiscal 2004, as The Washington Times reported last week.
Mr. Warner said he will have to use some onetime budget moves like tapping nearly half of the roughly $1 billion "rainy day" fund and using $317 million of the $653 million Transportation Trust Fund, at least in 2003, to plug the budget hole.
But House Appropriations Chairman Vincent F. Callahan Jr., Fairfax Republican, said the transportation fund money which is used for road-building projects should be left alone.
"I don't think we should raid that fund," Mr. Callahan said.
The Democratic governor said three tax credits aimed at businesses would be trimmed back. Among them is a 20 percent reduction in the sales and use tax exemption granted to Internet access providers, which will generate $1.4 million over the next two-year budget cycle. Mr. Warner has identified 50 tax breaks created since 1995 that account for $600 million a year the state does not collect.
Before detailing his budget amendments with Secretary of Finance John M. Bennett, Mr. Warner stood with a bipartisan group of about 20 legislators to announce that they had reached an agreement on the "framework" of the budget.
Under the agreement, state workers will not get a 2 percent pay raise and the half-cent sales tax revenues for highway construction will not be used in fiscal 2004.
Typically, legislators especially those of the opposite party do not agree with the governor on what should be in the budget until later in the legislative process.
House Speaker S. Vance Wilkins Jr. said there will be disagreements about the budget, but the framework agreement is a good start.
"It's going to be difficult to live with because a lot of cuts have to be made," said Mr. Wilkins, Amherst Republican.
Senate Finance Committee Chairman John H. Chichester, Fredericksburg Republican, insisted that the agreement with Mr. Warner "was just a framework," and that disagreement is inevitable.
But Republican strategists, muzzled by House and Senate leadership from speaking on the record, said they were disappointed that Mr. Wilkins and other members of the Republican caucus agreed to freezing the car-tax cut at 70 percent and supported Mr. Warner's decision to forgo pay raises.
"He broke about 10 campaign promises up there," one Republican source said.
During his campaign, Mr. Warner pledged to raise teacher salaries to the national average of about $41,000 by the end of his term.
In announcing the amendments, Mr. Warner primarily blamed his predecessor for the state's economic troubles. "Virginia should not be facing this level of crisis," Mr. Warner said. "We got to this point because state government failed to plan properly for the future."
Democrats were supportive of Mr. Warner's proposals, saying he was making a strong effort to balance the budget while still making education and social services priorities.
Senate Minority Leader Richard L. Saslaw, Fairfax Democrat, said he was pleased Mr. Warner returned $27.5 million in school-construction funding that was not in Mr. Gilmore's budget.
"He gave the people of Virginia the straight story on the budget and restored public education to the top of the priority list," Mr. Saslaw said.
Mr. Warner's budget plan also adds $23.8 million for terrorism preparation, bringing the total to $44 million in 2003-04. The additional funding is needed, said Sen. Mary Margaret Whipple, Arlington Democrat and chairman of its Senate caucus.
"Governor Warner's plan addresses Virginia's vulnerability to terrorism in the wake of the September 11 attack on the Pentagon," Mrs. Whipple said.

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