Gov. Tim Kaine rolls out his final two-year budget proposal today, seeking to bring Virginia into the black through a mix of cuts and tax increases.
The proposed budget, which will cover the state government spending through mid-2012, is the last of Kaine’s four-year term and the first step in what promises to be a spirited round of partisan posturing between the outgoing and incoming executives.
Kaine, a Democrat, hands over the keys to the governor’s mansion on Jan. 16 to Republican Bob McDonnell, three days after the legislature goes into session. McDonnell will then submit his own changes, which — given the philosophical difference between him and Kaine — could be vast.
At issue are cuts, and who takes the blame for them. Legislators are staring down a $3.5 billion shortfall, without the hope of a massive federal stimulus windfall to stave off the most onerous of reductions to education and health care.
Gains by Republicans in the November elections have produced a consensus that tax increases have no chance of surviving when the General Assembly finally passes the budget next year. Still, Kaine is expect to propose new revenues, possibly in the form of scrapping the “dealer discount” that allows retailers to keep a portion of sales tax they collect, and by eliminating a nearly $1 billion annual subsidy for local governments to backfill the loss of the long-abolished car tax.
Republicans, who hold a majority in the House, have said the latter proposal still amounts to a tax increase — because the costs would be passed onto taxpayers through local government — and so will be dead on arrival.
Some Democrats are also sour on a proposal that could resurrect the car tax. The subsidy that replaced it is one of the few state revenues streams that gives Northern Virginia a decent return on its money.
“Any attempt to reinstate the car tax I’m going to be pretty skeptical about,” said Sen. Chap Petersen, D-Fairfax. “For the sole and simple reason that it is one of the few state programs that reimburses Fairfax County at the share at which we contribute to the state treasury.”
A McDonnell spokesman said the governor-elect would await the budget proposal before making any comment.
