- The Washington Times - Tuesday, January 25, 2005

RICHMOND — House Republicans began a drive yesterday to finally phase out the car tax, but Senate leaders and Gov. Mark Warner said they think the move is just election-year posturing.

The proposal comes a year after the Republican-controlled General Assembly placed an indefinite $950 million cap on the state’s car-tax-relief program. The House leaders said yesterday that it is the state’s responsibility to its taxpayers to finish eliminating the final 30 percent of the car tax, because the state has a nearly $1 billion budget surplus.

“I can’t think of a commitment more important than the promise to phase out the car tax,” House Appropriations Committee Chairman Vincent F. Callahan Jr. said. “We pledge now to end this interruption and honor our commitment to the people of Virginia.”

Mr. Warner and Senate Finance Committee Chairman John H. Chichester said the latest House proposal would hurt the state’s basic commitments to education, health care and public safety.

“Today’s proposal to restart the car-tax phaseout places that at risk,” said Mr. Warner, a Democrat. “Everyone was on the same page for many months in support of fiscal restraint. I guess election-year pressures are mounting, and Virginians should be wary of a predictable onslaught of promises of a free lunch once again.”

Mr. Chichester said the Senate does not have “an appetite” to lift the cap.

“It took us 115 days to accomplish what we accomplished last year,” the Stafford County Republican said. “To undo what we did would send a very negative message to Virginia stakeholders who depend on core services.”

Last year, Mr. Warner and Mr. Chichester each proposed a broad plan that included a state income-tax increase that would have helped to fully phase out the car tax. The House rejected both plans.

House Republicans said yesterday that they weren’t worried that their proposal would create a deadlock between the two chambers and force a repeat of last year’s 115-day budget impasse.

“We’ll work this thing through,” said House Speaker William J. Howell, Stafford County Republican.

The final budget compromise approved last year included a $1.38 billion tax package and the $950 million cap on the car-tax relief program. The cap ensures that drivers will pay higher car-tax bills next year as they buy more expensive cars and localities continue to get the same amount of money from the state.

Mr. Warner also said the car-tax cap was one of several key factors cited by financial analysts last June when Wall Street affirmed Virginia’s coveted AAA-bond rating.

The latest plan would lift the cap and then establish new triggers that would dictate when the state can increase the percentage of car-tax relief. Mr. Callahan, Fairfax County Republican, said the triggers will keep the promise and do it “in a fiscally responsible manner.”

Mr. Callahan, who carried the original bill to wipe out the car tax in 1998, said he thinks that it would take about six years before motorists are fully freed from their car-tax bills.

Many lawmakers said they think the measure may not be successful this year, but that it will help delegates who support it in November, when all 100 are up for re-election.

“Just remember guys, it’s an election year,” House Minority Leader Franklin P. Hall, Richmond Democrat, told House Democrats yesterday. “I don’t think we need to go any further than that to explain what we’re seeing.”

When asked why he is pushing now to resume the phaseout, Mr. Callahan replied, “Because it’s there.”

In 1997, Gov. James S. Gilmore III was propelled to victory on a simple “No Car Tax” pledge that many lawmakers also used in their campaigns. The Republican governor had estimated that it would have cost the state $660 million to eliminate the tax.

However, finishing the car tax proved more costly. The relief has been frozen at 70 percent since 2002. It still costs the state about $1 billion annually, and it is one of the largest expenses in the budget, behind education and health care.

Mr. Chichester said some relief is better than none.

“To keep it at 70 percent is far more than it was 10 years ago, and keeping it at 70 percent still maintains our core obligations. Everybody comes out a winner,” he said.

Delegate Brian J. Moran, Alexandria Democrat and chairman of the House Democratic Caucus, said the proposal must be studied.

“If they can achieve all our needs and still balance the books, I see no reason we can’t do it,” he said.

Delegate R. Steven Landes, Augusta Republican who last year voted for the cap, said yesterday he supports finding a “long-term solution” to finally phase out the tax.

“We need to deal with it once and for all,” he said.

Mr. Gilmore told the Associated Press yesterday that he was gratified that the House is restoring his political legacy.

“All we ever asked is that the new revenues that come in from the hard-working people be shared with the people, and second of all, it’s right because it’s been promised to them and we ought to keep our word,” he said.

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