Tuesday, March 30, 2004

RICHMOND — House Republicans yesterday proposed an unprecedented budget compromise that would fund state operations for one year without raising taxes.

The proposal shocked House Democrats as well as Senate Republicans, who have been locked in a stalemate with the House on raising taxes.

House Appropriations Chairman Vincent F. Callahan Jr. said the proposal would allow local governments to pass their budgets instead of waiting for the General Assembly, which is in its 78th day of a 60-day session.

“Continued delay in passing a state budget is harming local governments,” said Mr. Callahan, Fairfax County Republican. “It’s a serious problem. … Without a state blueprint, localities soon could be budgeting in the dark.”

But Senate Finance Committee Chairman John H. Chichester said the bill is not a good solution and would not likely pass the Senate.

“The concept is completely out of order,” said Mr. Chichester, Stafford County Republican. “You can’t continue to be in denial forever that we have real problems in Virginia and we need to respond to them. It’s just not a good answer to a rather significant question.”

Democrats likened the proposal to a “grenade” and said the state was close to becoming like the federal government.

“This is ridiculous, folks,” said Delegate Albert C. Pollard Jr., Lancaster County Democrat. “We can’t pass a budget, and your solution is to go to a continuing resolution? If we wanna tax, let’s tax. If we wanna cut, let’s cut. Let’s not sit down here and lob a hand grenade over to the Senate just so we can, then go back to our folks and say, ‘Duh, we passed something,’ and now it’s their responsibility. We’re just trying to pass the buck.”

Gov. Mark Warner, a Democrat, said he will veto the one-year budget, if it reaches his desk.

“It’s Washington-style budgeting,” Mr. Warner said, noting the General Assembly should pass a two-year budget. “I’m not going to sign it. … This doesn’t move us toward where we need to go. That’s just not going to fly in Virginia.”

Mr. Callahan said he was disappointed that Mr. Warner didn’t agree with the House plan. He also said he didn’t expect budget negotiators to meet again for at least a few days.

“We’re going to give staff some time off,” Mr. Callahan said.

The House Appropriations Committee quickly passed the House proposal on a 14-3 vote yesterday. The full House is expected to vote on — and pass — the proposal next Tuesday and Wednesday. The bill then will go to the Senate for a vote.

Under the Republican plan, the legislature would adopt the 2005 budget immediately and then return to finish the special session by talking about taxes.

House Republicans want to put the tax issue on a voter referendum, which they would push for during the special session.

Lawmakers have until June 30 to draft a new budget. If they don’t, most state government functions will likely cease July 1.

Mr. Callahan said the 2005 budget gives the same K-12 education funding that Mr. Warner proposed in his budget, which relied on $1 billion in new revenue from raising the state sales, cigarette and income taxes.

It also allots some funding for the Department of Corrections and for a part of Medicaid to offset inflation costs.

“We’re not giving up on a budget,” said Delegate David B. Albo, Fairfax County Republican who supports the bill. “We want to be able to say that government will continue to operate.”

But Mr. Chichester, looking at the preliminary numbers in the House proposal, said the House and Senate still are about $511 million apart on public-education funding.

Mr. Chichester also said he thinks a one-year budget without tax increases would prompt Wall Street to downgrade the state’s coveted AAA bond rating. The state has been on credit watch since September.

He also said that if the proposal were to pass, there would be no incentive for lawmakers to finish negotiations. He predicted the tax debate would stretch on into the summer, then winter and then never would be heard at all.

“We need to keep the pressure on,” Mr. Chichester said. “We need to stay at the table and continue to work and negotiate and find out where we want to be 10 years from now.”

The Senate is pushing a budget plan that includes $2.4 billion in new taxes by raising the state sales, cigarette and income taxes.

Senate negotiator William C. Wampler Jr., Bristol Republican, echoed Mr. Chichester’s argument. “We’ll be right back here trying to solve this six months and 12 months out,” he said.

The Senate will return Friday, and the House will meet Tuesday.

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