- The Washington Times - Monday, March 22, 2004

RICHMOND — The House and Senate rejected each other’s budgets yesterday, forcing negotiations back into a conference committee, where appointed members will try to reach a compromise.

The move returns the process to the same lawmakers who could not agree on a state budget during the regular 60-day session, with leaders yesterday naming the same five delegates and four senators as conferees.

The House drew the ire of the Senate last night when it recessed until Saturday, giving its members the break they had long been asking for.

The House conferees won’t return to the Capitol until Wednesday to start negotiating.

“There’s something wrong with this whole charade,” said state Sen. R. Edward Houck, Spotsylvania Democrat. “The Senate conferees are here and ready to meet.”

The full Senate will return Wednesday at noon.

Meanwhile, the Senate Finance Committee deconstructed the House revenue plan to eliminate tax exemptions for businesses and put forth its own, sharply modified plan.

The Republican-crafted House plan removes tax exemptions for industries, including airlines, public utilities, telecommunications companies, overseas shippers, railroads and the media. Its proponents estimated that it would raise about $561 million, but opponents question the validity of the figures.

Delegate Phillip A. Hamilton, Newport News Republican, defended his bill: “This is a small measure … to provide a little more balance and a little more fairness.”

The Senate disagreed.

“If this bill has the effect I think it will have, the businesses will just leave Virginia,” said state Sen. John C. Watkins, Midlothian Republican. “It will have an adverse affect on this state in terms of business.”

After hearing similar complaints from lobbyists that the House version of the plan was “antibusiness” and “harmful to Virginia,” Sen. John H. Chichester, Fredericksburg Republican and the committee’s chairman, put forth a substitute stripping most of the initial language of the bill.

“For the film industries, their sales-tax exemptions would remain, as would airlines and shipbuilding and [reasearch and development]” Mr. Chichester announced to relieved lobbyists.

Mr. Chichester’s substitute was unanimously adopted and went for a vote on the Senate floor. The Senate, which rejected the House’s revenue plan outright during the regular session, approved the change on a 26-4 vote and sent it to the House. The House leadership did not like the change, and killed the bill.

The Senate rejected the $58 billion House budget and conformed it to the $60 billion Senate budget on a 27-5 vote. The Senate budget raises about $2 billion in new revenue by increasing the state cigarette, sales and income taxes.

The House rejected those amendments on a 77-12 vote.

“I don’t believe this is a responsible budget for the taxpayers of Virginia,” said Delegate H. Morgan Griffith, Salem Republican and House majority leader.

The House budget — approved Saturday on a 60-35 vote — now calls for a referendum on taxes to be held on Nov. 2.

The referendum would ask voters whether they want to raise the sales tax from 4.5 percent to 5.5 percent and whether they want to add two new income-tax brackets. If the referendum were to gain voter approval, the legislature would figure out how to use the extra money during the 2005 session.

Most of the weary lawmakers, in their 68th day of legislative work after Gov. Mark Warner called them for a special session on the budget, had to spend more than four hours “at ease” yesterday, while the Senate committee made its recommendations. The House and Senate also are at odds with the procedures that will govern the special session and have forced a resolution setting the rules into a conference committee.

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