- The Washington Times - Tuesday, July 22, 2003

State legislative leaders said yesterday Virginia’s surprise $55 million budget surplus will not affect plans to restructure the state’s antiquated tax code or repeal the car tax.

“To have a $55 million surplus is a pretty good situation, but it doesn’t have anything to do with the tax commission work and it shouldn’t,” said state Sen. John H. Chichester, Fredericksburg Republican, who is one of the 12 members of the state’s Tax Reform Commission.

State Sen. Charles J. Colgan, Manassas Democrat and a member of the commission, agreed. “I doubt it has anything to do with it. We had to cut $6 billion to get this $55 million surplus, and we froze a lot of agencies in the process,” he said.

Gov. Mark Warner, a Democrat, said Monday the spending cuts imposed over the last year by his administration and the General Assembly produced the unexpected surplus. He added, however, that uncontrollable costs for required programs mean the state will soon cope with shortfalls again.

“Today is one day of good news, but we will be back, starting tomorrow, [working] on how we look at revenue projections and expenditure projections for [next year,]” Mr. Warner told reporters Monday.

Much of the surplus is already spoken for, Mr. Warner said. About $21 million will go to the Transportation Trust Fund, Mr. Warner said. Another $11 million, representing profits from the state lottery, must be allocated to public school use under state law, he said.

Last August, Mr. Warner began cutting $6 billion from state expenditures when budget forecasters predicted shortfalls. Higher education and the Department of Motor Vehicles were most affected by the cuts. The cuts limited DMV service hours and reduced course selections at state colleges and universities.

In the coming months, the commission is expected to meet several times to come up with a plan to change the state’s tax code, which hasn’t been revised in 88 years. Mr. Warner pledged he will introduce his tax package after November, when all 140 General Assembly seats are up for re-election.

The commission met formally for the first time last week, and it suggested several ideas including raising taxes on Internet and catalog purchases. Lawmakers acknowledged that under the current financial climate, taxes will have to be raised so the state can meet other responsibilities, such as fully repealing the car tax.

“If we finish the car tax and the estate tax, which I want to do, we can’t expect the economy to grow at [a high] rate,” said state Sen. Emmett W. Hanger Jr., Augusta County Republican who is the commission’s co-chairman. “We are going to have to replace that revenue.”

However, House Speaker William J. Howell, who is not a member of the commission, said he didn’t think the House would be willing to support tax increases and suggested the commission look elsewhere.

Republicans control both chambers. The House currently has 64 Republicans, 34 Democrats and two independents. The Senate has 23 Republicans and 17 Democrats.

“Tax increases will have a tough sledding in the House,” said Mr. Howell, Fredericksburg Republican.

“And I think they will also have a tough time in the Senate, too. Everyone says it will be smooth sailing there, but I have talked to [senators] who do not like the idea.”

Mr. Warner’s proposal and the commission’s recommendations are expected to be addressed by lawmakers when the General Assembly convenes in January.

Mr. Colgan, one of three elected Democrats on the commission, said there is little left for the commission to do other than recommend some sort of tax increases because the state is falling behind in its responsibilities.

“We had no increases [in the last budget] for mental health or higher education. Tuition rates at our colleges are out of sight. I think we have cut as far as we can,” he said.

This article is based in part on wire service reports.

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