Wednesday, May 26, 2004

A key Republican state senator says Virginia needs more new taxes despite the improving economy, but the state’s Democratic governor said more tax increases aren’t necessary.

Senate Finance Committee Chairman John H. Chichester says Virginia will need to spend more to fund transportation, which is not addressed in the state’s new two-year, $60 billion budget.

“Somewhere and somehow, Virginia is going to have to face and remedy the transportation dilemma,” the Stafford County Republican said.

The senator said he won’t propose a gasoline tax, but said other taxes must help pay for the state’s needs.

Gov. Mark Warner, who supported a $1.38 billion tax-increase plan, agreed that transportation is a problem, but did not advocate more taxes.

“Clearly, transportation stands out as not having been adequately addressed in this whole effort,” Warner spokeswoman Ellen Qualls said yesterday. “That being said, there is no appetite for higher gas taxes while we’re paying record prices at the pump. … We’re going to have to allocate existing resources in a way that addresses transportation problems.”

Mr. Warner’s proposed budget devoted $400 million to transportation without raising the gasoline tax. Miss Qualls said the governor might propose a balanced budget that funds transportation in a similar way at the end of this year.

When the Republican-controlled legislature passed the budget on May 7, Mr. Chichester warned fellow senators: “We will return another day for the unfinished business.”

He said this week the budget “does nothing to alleviate traffic problems.”

Since then, the Virginia Department of Transportation has said it must cut $1.3 billion from its new road-construction plan and highway-improvement projects because the agency didn’t get enough money from the state budget.

The legislature passed a record $1.38 billion tax-increase last month. This month, the state Finance Department said that the economy is rebounding and that by June 30, the end of the state’s fiscal year, there could be a budget surplus of about $300 million.

Mr. Chichester championed a much larger tax-increase package — about $4 billion — during the legislative session, but ultimately supported the compromise plan that raised the state sales, cigarette and real-estate taxes.

Mr. Chichester’s original plan included a gasoline tax to raise about $1.6 billion for transportation, but he agreed that high gasoline prices prevent the legislature from increasing gasoline taxes next year.

“A gas tax is not popular, and I won’t propose that,” he said.

However, Mr. Chichester said he will look at other tax increases to raise revenue for transportation.

Many Republican leaders said Mr. Chichester’s push for more taxes is undermining their party’s antitax stance.

“In the 1990s, the Republicans certainly stood for working families and for people, and we were going to hold the line on taxes and allow the economy to grow,” former Gov. James S. Gilmore III said. “That has completely exploded under Senator Chichester’s leadership.”

Earlier this year, the 1st Congressional District Republican Committee had issued a resolution suggesting Mr. Chichester should leave the Republican Party after the senator proposed his tax-increase plan.

Mr. Chichester, a 26-year legislator who was once a Democrat, said he had no intention of leaving the party and called the resolution “embarrassing” and “offensive” to Republican voters.

Mr. Chichester also said any attempts to cut taxes or to reverse a cap the legislature put on the state’s popular car-tax relief program would be unsuccessful. He said the $300 million surplus will boil down to only $12 million or $14 million after it is deposited into various funds, including the state’s rainy-day fund.

But delegates have been calling for tax cuts since learning about the surplus last week. The Finance Department said projected revenue growth for the year-end appears to be 9.5 percent, well ahead of the forecasts of 6.7 percent growth.

All 100 delegates are up for re-election next year. Senators don’t face voters until 2007.

House Majority Leader H. Morgan Griffith said he is sure new tax increases will be proposed, but pledged the House would beat them down.

“It won’t happen,” the Roanoke County Republican said. “If you take a hard look at transportation, there’s lots of things you can do without raising taxes.”

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