RICHMOND — Senior Senate Republicans privately presented a draft tax plan containing a car-tax reimbursement freeze yesterday to 17 House Republicans critical to a compromise revenue package and a belated state budget.
Wary of upsetting nearly a week of delicate, nonstop negotiations, top members of the Senate’s tax-writing Finance Committee huddled behind closed doors and disclosed nothing publicly.
If lawmakers can’t put a new two-year budget in place by the start of a new fiscal year July 1, state operations will begin to shut down. Tomorrow marks the 100th day the General Assembly has been in session without producing a budget.
The informal Senate plan has the grudging assent of Senate Democrats, sources said, and retains features of the original $972 million House tax plan: a sales-tax boost from 4 percent to 5 percent, increasing cigarette taxes from 2 cents to 30 cents and raising the tax on recording real estate deeds and closing loopholes through which corporations funnel profits out of state tax-free.
But discussions involving Senate leaders, the 17 Republican delegates who broke with their party’s staunch antitax leadership and Gov. Mark Warner, a Democrat, took on heightened urgency yesterday as lawmakers headed back to Richmond for today’s veto-override session.
Senate Finance Committee Chairman John H. Chichester refused to disclose the committee’s plans, saying only that the plan would become public “when the time comes.”
“It would be no time now to make any disclosures,” the Stafford County Republican said. “It helps no one to disclose anything that is going on at this juncture. I’d like to get us to a common denominator eventually.”
“It will be done when it’s done,” said Sen. Charles R. Hawkins, Pittsylvania Republican.
Democrats have to deliver most of their 37 delegates, and most of the 17 Republican centrists would also have to sign on to any Senate plan to assure that it can pass in the 100-member House. Most of the 61 House Republicans have opposed general tax increases.
A proposed cap on the car-tax reimbursement has been discussed for days. Some senators wanted the reimbursement the state provides cities and counties for local revenue lost to the phaseout of the car tax capped at $600 million annually. Some want it as high as $1 billion.
The reimbursements now cost the state about $860 million annually, but the cost is growing at about $150 million a year. Fully phased out, the reimbursements would cost nearly $1.5 billion.
The cap the Senate proposed does not reverse the level of car-tax reimbursement, according to lawmakers and other sources knowledgeable about the back-channel offer. It was not clear, however, at what level the Senate proposal caps the reimbursement.
“You can’t cap it at less than it is now,” said House Appropriations Committee Chairman Vincent F. Callahan Jr., one of the 17 breakaway delegates.
“That will be a tax hike, particularly for my constituents,” the Fairfax County Republican said.
Regional interests could be as big an obstacle to any curbs on the popular 1998 car-tax cut as partisan concerns are, said Delegate Brian J. Moran, Alexandria Democrat who is chairman of the House Democratic Caucus.
Smaller, rural localities with low car taxes have less of a problem limiting the car-tax rollback than do major urban areas, particularly Northern Virginia, where more people own expensive cars and car-tax rates are higher.
“Politically speaking, I just don’t think it’s feasible,” Mr. Moran said.
Senate Democrats pushed for additional money for their priorities, such as public schools, colleges, public safety and health care, and mental health services for the needy. Mr. Chichester and Mr. Warner have struggled to accommodate those concerns without exceeding a $1 billion net revenue ceiling the House Republican mavericks say is not negotiable.
Mr. Warner huddled privately in his third-floor office yesterday afternoon with Senate Democrats.
Earlier in the day, Ellen Qualls, the governor’s spokeswoman, said the administration has been urging delegates and senators to work toward a compromise.
“We feel the negotiations are on track,” Miss Qualls said. “We just need a few more days to work this next step out. We’re getting closer and closer.”
Miss Qualls said Mr. Warner hasn’t come out in support of the car-tax cap idea.
Mr. Chichester said it’s more complicated than simply a House vs. Senate or Democrat vs. Republican dynamic.
“There are actually six sets of dynamics out there,” Mr. Chichester said. Each chamber has blocs of conservative Republicans, centrist Republicans and Democrats. Republican centrists and Democrats must vote together in both chambers to enact a tax increase.
House Speaker William J. Howell, Stafford County Republican and an opponent of the tax increase, said the House has no option but to wait for the Senate to strike what it believes is the right balance.
“I think they’re having trouble finding what they can do that a majority of people can agree to. We’ve done our part. The ball is in their court. I personally don’t like it, but nevertheless, it’s over there,” Mr. Howell said.
Mr. Moran said he was optimistic that a breakthrough was possible this week. “The House Democrats are ready to reach a deal and want to avoid a government shutdown,” he said.
• Staff writer Christina Bellantoni and Larry O’Dell of the Associated Press contributed to this report.
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