'No car tax' promise might not roll into reality in Va. Plan could bust budget, analysts tell state Senate

November 21, 1997|By KNIGHT-RIDDER NEWS SERVICE

FREDERICKSBURG, Va. -- Firing the opening shots of a budget showdown that's sure to come, analysts told the Virginia Senate Finance Committee yesterday that it would cost the state as much as $2.8 billion to turn Gov.-elect Jim Gilmore's "no car tax" promise into reality -- nearly twice what Gilmore has estimated.

Even with a sunny budget outlook showing that Virginia could have more than $1 billion in surplus over the next two years, committee staff members estimated that the cost of virtually eliminating the unpopular personal property tax would eat up at least half that.

Gilmore says the first two years of his plan to phase out the tax will cost about $260 million.

That would be a fraction of the state's estimated budget outlined yesterday, which analysts said would be fueled by strong growth that is expected to continue to outpace the national economy.

But the disparity in costs of the tax plan caused several lawmakers to question whether the state can afford Gilmore's tax-cut promise and pay for a host of new programs that will be on the table as work on the budget begins when the General Assembly meets in January.

"This thing is much more expensive than it was alleged to be in the beginning," said R. Edward Houck, chair of the Senate's Democratic Caucus and a member of the Finance Committee. "How it fits with all the other needs -- I guess that's what's yet to be decided."

State Sen. Joseph V. Gartlan Jr., another Democratic committee member, added that he expects even some Republicans to balk at the expensive plan.

"It's pretty hard for them to swallow this thing, too," Gartlan said. "It doesn't make business sense; it doesn't make good government sense. I think information like this is going to cause some defections on their side."

Other lawmakers insisted that they will find a way to deliver on Gilmore's tax-relief promise, whose popularity carried the former attorney general to a landslide victory this month.

"It is clearly doable," said Republican state Sen. John H. 'N Chichester of Fredericksburg, who also co-chairs the Finance Committee. "In order to do so, it will require some self-discipline on the part of localities and the legislature. We are going to rid people of the personal property tax on cars."

The "no car tax" campaign slogan that got Gilmore elected promises to eliminate the personal property tax on the first $20,000 of all cars and trucks over the next five years.

Gilmore also promises to reimburse cities and counties "dollar for dollar" for the loss of their second-largest source of money. And he has always said his tax-relief plan depends on the state economy continuing to grow at its present rate of about 6 percent. If it doesn't, the plan would be delayed.

But that won't be necessary, insisted David Anderson, co-chairman of Gilmore's transition team. Noting that state tax revenues are expected to increase by more than 7 percent, Anderson said, "Given the amount of surplus we're looking at, this continues to be a realistic proposal."

Lawmakers, who weathered several budget-tightening years as the state recovered from a recession in the early 1990s, said they are heartened by the healthy budget picture offered yesterday. Analysts, however, warned lawmakers of the danger of relying on such new growth year after year. They suggested that the legislature be careful in committing millions of dollars that might never materialize if an economic downturn occurs.

Pub Date: 11/21/97

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