Stopgap budget passes

RICHMOND — The House yesterday gave preliminary approval to a one-year, stopgap budget that will keep the state open for business July 1.

On a 60-39 vote, the House passed the one-year budget, which includes no general tax increases. It will receive a final vote today, but is likely to be rejected in the Senate. Gov. Mark Warner, a Democrat, also opposes the plan.

House Appropriations Chairman Vincent F. Callahan Jr., Fairfax County Republican, said the one-year budget would allow local governments to pass their own budgets. He also said the nine House and Senate budget negotiators would continue to talk about the state’s tax-and-spending plan.

“To me, a vote against this bill would be a vote to close Virginia or a vote for the option of closing Virginia,” Mr. Callahan said. “Such a vote would be irresponsible.”

Meanwhile, the House Finance Committee tabled two bills that called for tax increases. Both bills were proposed by House Republicans.

One bill would raise the 4.5 percent sales tax to 5 percent, coupled with a sweeping reform of the state tax code. Another bill would simply raise the sales tax to 5 percent. Those measures could be taken up again at any time.

Those Republicans who proposed the sales-tax increase said yesterday they were breaking ranks with the staunch antitax House Republican leadership because their constituents want the legislature to reach a compromise to the weeks-old budget stalemate.

“I did not approach this in a haphazard or cavalier way” said Delegate S. Chris Jones, Suffolk Republican, who supported the half-percent sales-tax increase. “My obligation to those who elected me as a responsible legislator is to try to come up with a solution to what is an impasse. I guess some of us are crazy enough to say we’re willing to try. It will, in a good faith way, restart the negotiations.”

Mr. Jones was speaking in favor of the 24-page bill, authored by Delegate Harry J. Parrish, Prince William County Republican and House Finance Committee chairman.

The bill would raise the sales tax to 5 percent; increase the cigarette tax from 2.5 cents per pack to 25 cents per pack immediately and to 30 cents per pack in 2005; raise the tax on real estate transactions to 25 cents from 15 cents per $100; remove the sales tax on public service corporations; and close corporate-tax loopholes to raise $972 million over two years.

The bill also includes many tax cuts, such as eliminating the estate tax; reducing the sales tax on food from 4 percent to 3 percent by the end of 2006; increasing the personal exemption from $800 to $1,000; eliminating the marriage penalty; and changing the filing threshold so 140,000 of the state’s poorest residents pay no taxes.

“It represents true tax reform,” said Delegate L. Preston Bryant, Amherst County Republican. “This bill is a tax cut on every Virginian.”

Mr. Bryant said he was told that if Mr. Parrish’s bill was approved, the Senate would drop its demand to raise state income taxes.

“That is a huge concession for the Senate,” Mr. Bryant said. “This is the first significant step forward in this overly long stalemate. We’re trying to stay as true to the House position as possible and move this deadlock off the dime, move it off of dead center.”

But several Republicans on the committee disagreed.

“Think about those people who have to pay for what we’re about to do,” said Delegate John “Doc” Welch, Virginia Beach Republican.

Also tabled was a bill authored by Delegate Robert “Bobby” Orrock, Caroline County Republican, that would raise the sales tax to 5 percent to fund education. Mr. Orrock’s bill did not include tax cuts.

During its meeting, the committee also killed a bill authored by Delegate Phillip A. Hamilton, Newport News Republican, that would have allowed local governments to raise the sales tax to 5 percent and would have raised the cigarette tax and some fees.

The Republicans who offered the plan as a compromise yesterday assumed that antitax Republicans would pass the bill, so it could head to the House for a full vote.

House Speaker William J. Howell, Stafford County Republican, last Friday urged committee members to pass a bill for a full House vote, and then asked delegates “to vote his or her conscience” on a bill.

However, yesterday, on nearly straight party-line votes, the two proposals for sales-tax increases were left in limbo, leaving those Republicans surprised with the outcome.

“I thought we were going to report something out,” Mr. Parris said.

Antitax groups have since warned Republicans who planned to vote for tax increases that they will face conservative challengers next year in the party primary.

James Parmelee, president of Republicans United for Tax Relief, yesterday blasted the supporters for deviating from the Republican credo of lower taxes and smaller government.

“This is absolutely embarrassing for you and hurtful to the taxpayers,” Mr. Parmelee said.

Pressure also came from the Republican Party of Virginia, which yesterday sent an e-mail urging delegates to resist any general tax increases unless they are approved by voters.

In addition to the antitax groups, three former governors — Republicans George Allen and James S. Gilmore III and Democrat L. Douglas Wilder — and Attorney General Jerry W. Kilgore have stated their opposition to tax increases and asked the proposals be put to a voter referendum.

Voter surveys have shown mixed results. Some show that Virginians don’t mind the increases on the sales and income taxes, while others conclude that residents are opposed.

One poll, conducted by Fabrizio, McLaughlin and Associates, a Republican strategist firm, showed that 60 percent of Virginians want to freeze the budget rather than raise taxes.

Another poll conducted by the senior citizens’ lobby AARP concluded that 60 percent of Virginia voters support a tax-reform package that raises the state sales, cigarette, gasoline, corporate and income taxes.

A survey by the Richmond Times-Dispatch showed that 47 percent support a combination of reduced spending and higher taxes.

Another survey conducted by Virginians for a Healthy Future in January showed that 71 percent favor a cigarette-tax increase.