Virginia Emerges from Budget Gridlock

I note with relief that the Virginia legislature finally seems to have agreed to a budget solution. It took more than three months, much vitriol, and chronic wailing and gnashing of teeth. But our Republican controlled legislature seems to have bit the bullet and ever so modestly raised taxes. In brief our sales taxes will be going up from 4.5 cents per dollar to 5 cents, while taxes on groceries will be eased. The cigarette tax, currently the lowest in the nation at 2.5 cents a pack will go to 30 cents a pack, which is still a bargain. The personal property tax on cars, which former Governor Jim Gilmore tried to phase out altogether, will be frozen. This means no further relief for Virginia drivers, who will have to pay 30% of the car tax out of their own pockets. Income tax rates remain unchanged.

It seems that since Virginia can’t print its own money it can’t have its cake and eat it too. No matter how many times the legislature did the math it couldn’t satisfy its constituents, fund basic services and not raise taxes. It appears that even in my notoriously anti-tax state there are certain minimum expenditures that if not met the public will squawk about. This includes basic funding the public schools, prisons, public safety and roads.

To come to agreement Republicans in the Virginia House had to actually turn against their own speaker. It was House Speaker William J. Howell who overreached his power. Time and time again he refused to even allow conversations of new taxes to come up. Eventually Republicans felt stifled and frustrated, and a critical mass joined with the Democrats to do the people’s business. Consequently we have the bizarre reality of a Republican controlled legislature falling behind a moderate Democratic governor and minority Democrats to raise taxes.

The reason it happened first in Virginia is not because Virginia is a progressive state. Far from it. It happened here in Virginia because Virginia has always been a niggardly state. Advocates for the infirmed and mentally retarded made numerous trips to Richmond to try to persuade the legislature to support basic services for those who could not help themselves but who had been a casualty of declining tax revenues. In the Virginia House their pleas fell on deaf ears. If you can believe it, our legislature was more concerned about not raising taxes than about assuring basic mental health care for our most needy and desperate citizens. “Let all but a handful wander the streets,” seemed to be their enlightened motto in dealing with the mentally ill. However, when asked to cut subsidies for Virginia tobacco farmers they couldn’t summon the will.

Maybe there is a silver lining in this. Perhaps this is the beginning of the end of the “no new taxes ever” revolution. If it can happen here in Virginia it can happen anywhere. A precedent has now been established. Apparently there is a point to having a state government. If our House had had its way, the tax increase would have had to be put to a referendum. But this strategy failed. Citizens began telling their representatives they were elected to make tough decisions, not pass the buck. Duh!

Anti-tax advocates are threatening to have those Republicans who voted for the tax increase voted out in 2005. It remains to be seen if they will succeed. But I sense even among Virginia’s most conservative voters there is some floor of basic fiscal sanity that they expect from their legislative representatives. In their zeal for no new taxes, they aren’t going to turn the state into a dysfunctional organization. In 2004 we may have found that boundary at last. Ideology, however reluctantly, has yielded to pragmatism.

I salute those brave Republicans who broke with the party leadership on this issue. Their “leaders” demonstrated zero leadership and zero courage. This $1.36B tax increase is hardly more tax and spend. It barely makes a dent in the state’s needs, which have been woefully out of balance since the economy tanked in 2001. But at least during this year this new revenue will keep Virginia from irretrievably falling into fiscal madness. While insufficient it is a step in the right direction. And it does allow counties, cities and colleges to now plan their own budgets.

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