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TAX REFORM in Virginia is, increasingly, a small-p political issue apt to spawn partisan rhetoric. Yet it might also be a matter about which state political leaders are more in agreement than their sharp words suggest.
Del. William Howell, R-Stafford and speaker of the House of Delegates, fired a Halloween broadside against Gov. Warner's pledge to reform the Virginia tax code. In a speech before state Chamber of Commerce directors, Mr. Howell urged the governor to abandon any reform plan that would beget a major tax increase.
The speaker had wanted the issue to be part of the campaign debate. But Mr. Warner didn't cotton to having tax reform--which, for many, translates as a tax increase--make the campaign trail any more treacherous for Democrats than GOP-crafted redistricting already had made it. Too bad that the governor didn't trust the voting public to separate reasoned discourse from demagogy.
Exactly when Mr. Warner is going to offer specifics on his tax-reform plan is unclear. Possibly viewing the issue as an 800-pound gorilla that would sit on the General Assembly this winter and suffocate the rest of the legislative agenda, the governor is hinting that he might call a special session later in 2004. Well, the reality is that whatever plan Gov. Warner offers, and whenever he offers it, the proposal probably won't be "revenue neutral."
At that point, he can make a good argument that if Virginians really want the level of services they say they do, they ought to be prepared to pay for them. These services include more money for secondary and higher education; funding to relieve near-gridlock conditions on Virginia roads; a greater commitment to the Chesapeake Bay and other resources in environmental sick bay; more Medicaid slots that would allow retarded Virginians to live in group homes rather than institutions; and funds for prosecutors and police to do their jobs better. Also: Could tax reform not allow Virginia to better prepare for future economic downturns?
Mr. Howell, while insisting he's not drawing a line in the sand, believes that with the help of a recovering economy, Virginia might achieve its goals under its existing tax structure. Nevertheless, he tells us that while he would try to spike increases in sales, income, and corporate taxes, he's open to discussing hikes in tobacco and fuel taxes. He calls that "restructuring" as opposed to the more comprehensive-sounding "reform."
In his speech, Mr. Howell acknowledged the need to provide a growing source of revenue to local governments, particularly when the car-tax repeal is fully implemented. That might involve carving out a percentage of income-tax receipts to pass along to localities--which the speaker says will grow at a faster pace than property-tax revenues anyway. Mr. Howell's protestations aside, that sounds to us like reform (though it would maintain Virginia's adherence to the Dillon Rule, which prevents all those untrustworthy localities from generating revenue on their own).
Mr. Howell argues that after yielding enormous annual revenues just a few years ago, Virginia's tax system should not be labeled dysfunctional today. But the economic growth of the late 1990s, based substantially on the ability of gelded e-stocks to impersonate stallions, won't soon be repeated. Also, after severe cuts to cover Virginia's budget shortfall of more than $2 billion, government belt-tightening won't produce much more cash.
One message from Virginia voters in the recent election is that while they share a distaste for taxes, they don't take a shine to partisan pigeonholing. No-tax pledges are carrying less weight now because voters have confidence that, in Virginia at least, elected officials know better than to view them as automated teller machines.
Regardless of their philosophies about government, Virginia's elected leaders should see that they share a similar goal: making the state's tax structure as fair as it can be. Even if, as Speaker Howell suggests, that structure isn't broke, a major tuneup couldn't hurt.
