- The Washington Times - Thursday, December 2, 2004

Anti-tax Virginia lawmakers are demanding that part of the state’s estimated $1 billion budget surplus be used to fund the long-promised phaseout of the car tax.

One proposal — the Keep Our Promise Act of 2005 — would lift the cap placed on the car-tax-relief program earlier this year when legislators raised taxes on sales, cigarettes and real estate by $1.38 billion. The cap virtually assures higher car-tax bills in the next few years, instead of no tax — as lawmakers have promised voters since 1997.

“I thought it was important to call it like it is: This was a promise and we need to put car-tax relief into the posture it was in before 2004,” said Delegate Jeffrey M. Frederick, Prince William County Republican and the bill’s main author. “There’s a lot that we can do with that billion dollars that I think is legitimate. … I would like to see [the tax] fully phased out so people don’t pay car-tax bills anymore.”

The bill has the support of one of the most powerful budget writers in the legislature.

House Appropriations Chairman Vincent F. Callahan, who opposed the cap, noted that the car-tax-relief program was his “baby,” because he wrote the bill granting tax relief in the 1990s.

“I’ve stood by it ever since,” the Fairfax County Republican said. “At the very least that meaningless piece of legislation [the cap] should be repealed.”

Mr. Frederick’s bill has a good chance of narrowly passing the more conservative House of Delegates, but its chances in the state Senate are slim.

Senate Finance Chairman John H. Chichester, Stafford County Republican, said he anticipates seeing many bills like this one, which “make good brochures” in an election year.

“The legislature spoke last year and hopefully it will be sustained,” he said.

State Sen. Kenneth T. Cuccinelli, Fairfax County Republican, supports Mr. Frederick’s bill but said the cap is not the main issue.

“I’m more interested in keeping the promise Republicans made to the taxpayers seven years ago,” he said. “Keeping promises like that is very important. I’d like to see us over the next year or two wipe it out, constitutionally forbid it, have the voters vote on it and be done with it.”

Currently, car owners pay to the localities a tax on each vehicle they own, and Virginia reimburses the localities for money lost in the phaseout.

In his 1997 campaign, Gov. James S. Gilmore III, a Republican who spearheaded car-tax relief, initially said the full phaseout of the car tax would cost the state about $660 million. That figure has grown to nearly $1 billion.

Last May, the legislature approved indefinitely capping the amount the state pays localities at $950 million a year.

Under the cap, car owners pay 30 percent of their tax bills, and the state pays the remainder. However, those bills are likely to rise as residents buy more-expensive cars and localities continue to get the same amount of money from the state.

Because of the tax increases and rebounding economy, state officials expect a nearly $1 billion surplus next year. Most of that money is accounted for, but many anti-tax lawmakers want to see some of it used for car-tax relief or other tax cuts.

Gov. Mark Warner, a Democrat, has warned lawmakers not to spend the surplus on programs, and reminded them that the state still has hefty core commitments.

He promised his budget — which will be presented this month — will be “a lean one” and said legislators can’t “spend willy-nilly.”

Mr. Warner yesterday said he will announce a transportation reform package that will include money to pay off debt owed on highway projects completed long ago and an infusion of cash from the surplus into the state’s dedicated roads fund.

Both Mr. Chichester and Mr. Callahan said the surplus is accounted for with commitments to the state Rainy Day Fund and to increased Medicaid premiums. In addition, lawmakers have promised pay raises to state employees that have not yet been budgeted.

“You add up all this stuff and it’s all used up,” Mr. Callahan said of the surplus. “We should spend it for one-time obligations. This bubble we’re in is not going to last.”

Mr. Chichester agreed. “When it’s all said and done, it’s my hope that we will do only those things that we absolutely have to do,” he said.

This article is based in part on wire service reports.

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