- The Washington Times - Wednesday, March 1, 2006

RICHMOND — Virginia’s car-tax relief program is stuck in reverse.

Starting next year, taxpayers will be required to pay local governments more money for the privilege of owning their cars.

The state currently picks up 70 percent of motorists’ car-tax bills, leaving car owners to pay the remaining 30 percent to their locality.

However, the state’s reimbursement will fall to 68 percent next year and 66 percent in 2008; it will continue to fall to 58 percent in 2013.

Two years ago, the Republican-controlled General Assembly approved a $950 million cap on the state’s total reimbursement. As more Virginians buy more expensive cars, the amount set aside for car-tax relief is stretched thin, leaving each individual car owner with less relief.

House Republicans are arguing for a $50 million addition to the cap before the higher car-tax bills are due next year, when all 140 seats in the House and the Senate will be up for election.

Senators, however, say state funds would be better used for education and transportation initiatives.

Delegate Vincent F. Callahan Jr., chairman of the House Appropriations Committee, is at the center of the standoff. He says if the senators reject his proposal they are essentially raising taxes on drivers.

“We made a promise to the people of Virginia to eliminate the car tax and we haven’t done it. It really bothers me,” the Fairfax County Republican said. “We could have been at 100 percent phase out by now, it’s just being held up at the other side.”

The state has been paying for car-tax relief since 1998, and lawmakers have continually pledged to end the tax once and for all.

But a sluggish economy stalled the program, and motorists have been paying 30 percent of their bills since 2001, instead of zero as promised.

The General Assembly imposed the 2004 cap as part of a compromise when negotiating a $1.38 billion tax increase package.

Lawmakers argued then that the cap was needed because the program would grow out of control as more people buy more expensive cars, and Wall Street bond-rating firms praised the cap as a smart financial move.

Mr. Callahan, who would prefer to end the tax entirely, says the $50 million is a “stopgap measure” that would allow motorists the full 70 percent relief for at least one more year.

His proposal is embedded in the House’s proposed two-year spending plan, and is likely to be a sticking point that prolongs budget negotiations.

Senate negotiators — who want higher taxes for transportation improvements — say they do not want the cap lifted. Efforts to end the tax have died in the Senate.

“We had agreed on the cap,” says Sen. William C. Wampler Jr., Bristol Republican, predicting Mr. Callahan’s proposal would reach an “elevated” fight during budget negotiations.

Both chambers are expected to reject the other’s budgets and force discussions into private meetings between key lawmakers who meet mostly behind closed doors.

House Republicans yesterday made their case for increased car-tax relief at a press conference that also touted the likely end to the estate tax and the creation of a sales tax holiday for school supplies.

“We have ample opportunities to treat the taxpayers of Virginia with the respect that they deserve,” said House Speaker William J. Howell, Stafford County Republican. “We are not turning a cold shoulder to those who own cars.”

Three House Republicans who voted for the cap in 2004 stood at yesterday’s press conference in favor of adding more money to the program — Delegates Harry J. Parrish of Prince William, Bob Tata of Virginia Beach and R. Steven Landes of Augusta.

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