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WILLIAMSBURG--The leader of the House Appropriations Committee says legislators may look at targeted tax increases to pay for Virginia's increasing health care and transportation needs.
Del. Vincent Callahan, R-McLean, said yesterday that he could support raising the tax on cigarettes to help pay for spiraling Medicaid costs and perhaps would also support changes to the gasoline tax to cover transportation improvements.
Medicaid in particular is taking an ever-increasing chunk out of the state budget--about $2 billion in the next biennium, Callahan said.
That, plus the fact that 2004 is not an election year, may make lawmakers more willing to raise the cigarette tax, a proposal they have rebuffed in years past.
"The need is obvious," Callahan said. "I'd certainly support something like that these are things out there that are options for people to look at user taxes is what we're talking about."
Callahan was speaking at the House Appropriations Committee's retreat in Williamsburg. Committee members are spending two days being briefed on the state of the economy and the budget.
Lawmakers expect to have to deal with a $1.3 billion shortfall in the next two-year budget. Callahan said yesterday the state would need revenue growth of more than 8 percent to balance the budget, which is unlikely.
That means legislators will have to make spending cuts or increase revenue. But many lawmakers, particularly House Republicans, are adamantly opposed to large-scale increases in taxes such as the sales or income taxes.
House Speaker Bill Howell, R-Stafford, is among them. He yesterday reiterated his opposition to a major tax increase, but seemed more willing to consider Callahan's position on "user" taxes on items like cigarettes and gasoline.
"Things like that are doable," Howell told reporters. "I'm not adamantly opposed to user fees, and a cigarette tax or a gas tax is a user fee."
Howell repeated his opposition to general tax increases, but added that he has promised Gov. Mark Warner to keep an "open mind" on tax issues this session.
Warner is crafting a slate of proposals to reform the state's tax system. He is expected to announce his tax reform plan right before or right after Thanksgiving.
While Warner has not released details of that plan, Republicans fear "tax reform" will mean "tax increase," and they've been vociferous in their warnings to Warner against proposing higher taxes.
In his monthly "Ask the Governor" radio show on WTOP yesterday morning, Warner said that if lawmakers can't agree on a way to restructure state taxes during the regular General Assembly session, he'll call a special session to finish the job.
"There'll be a great deal of debate about this, but this will be something we will debate from November, December, January, February, March and if the legislature needs to stay 'til summertime, I'm going to keep them," Warner said.
The idea of a special session for tax reform drew mixed reviews from Howell and Sen. John Chichester, R-Stafford, who attended yesterday's retreat meeting.
Howell, who spent the summer prodding Warner to release his reform proposals before the November elections, said yesterday that if lawmakers had seen a tax reform plan earlier, there would be no need for a special session.
"I would have rather seen it three months ago" and dealt with it in the regular session, Howell said.
He acknowledged that the late release of a tax proposal may make a special session necessary.
"Because we're not seeing it till the first of December, it doesn't give you a lot of time to look at it," Howell said.
But he also said it is "premature" for Warner to threaten a special session when the plan hasn't even been released yet and the regular session has not begun.
Chichester, who chairs the Senate Finance Committee, said Warner has a responsibility to keep lawmakers working as long as he thinks necessary.
"He's the governor, and he has the obligation to keep us there if we don't perform as the executive branch thinks is necessary," Chichester said.
Chichester will lead the Senate Finance Committee's own retreat Thursday and Friday in Fredericksburg.
The Associated Press contributed to this story.
To reach CHELYEN DAVIS: 804/782-9362 cdavis@freelancestar.com