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Virginia Gov. Tim Kaine will make budget proposals today. |
RICHMOND--
Gov. Tim Kaine will propose a 30-cent a pack increase in the cigarette tax today as part of his plan to fill a nearly $3 billion budget shortfall.But Republican leaders say that could lead to job losses at cigarette manufacturer Philip Morris, something they want to avoid in the current recession.
Kaine is presenting his two-year budget proposal to the General Assembly money committees this morning. He outlined the key elements of his budget to legislative leaders in phone calls yesterday.
Kaine spokesman Gordon Hickey would not confirm or deny any of those elements.
That includes the proposed increase in the cigarette tax from 30 cents per pack to 60 cents per pack, according to the Associated Press and lawmakers.
Sen. Edd Houck, D-Spotsylvania, said his understanding is that the increased money from the cigarette tax would go toward health programs, which the Associated Press reports will see a $400 million cut in Kaine's budget.
Houck said he wants to see more details of where the new money would go, but is open-minded.
"I'm not opposed to a cigarette tax increase. I'm still not exactly clear what it was going to be used for and the parameters of it. I'm going to reserve judgment on it until we hear the details about it," Houck said. "But I wouldn't reject it out of hand at all."
But House Speaker Bill Howell, R-Stafford, and U.S. Rep. Eric Cantor, R-Henrico, disagree. The two held a joint press conference call yesterday to blast the tax proposal.
"What the governor is going to do now, is he is going to go after one of Virginia's biggest employers by imposing a job-killing tax," Cantor said. "This issue is about jobs, it's about the economy and this is an attack on Virginia's economy."
Cantor represents Richmond, home of Altria, the parent company of cigarette-manufacturer Philip Morris. Altria recently moved its corporate headquarters from New York to Richmond. The Richmond area has already seen numerous layoffs from various companies, Cantor said, and can't afford more.
Howell said Philip Morris employs about 5,500 people, and it's "perplexing" to him why Kaine would tax a company that has worked to create jobs.
While Virginia's cigarette tax is one of the lowest in the nation, Howell said if Kaine's increase were passed, smokers in Virginia would likely cross state lines to North Carolina, West Virginia and Kentucky to buy cheaper cigarettes.
"This is a job killer," Howell said. "This is going to impact the jobs in Virginia at a time when we need to be doing everything we can to preserve jobs."
Howell later said he can't speak for other legislative Republicans, but he believes opposition to Kaine's proposal will come from lawmakers from both parties.
"I suspect a lot of them will share my concern," Howell said. "I bet you there's going to be bipartisan opposition to it. It's an issue on the economy and an issue on a certain part of the commonwealth."
Virginia last raised its cigarette tax in 2004.
Kaine's budget proposal today will also incorporate a new revenue shortfall prediction of $2.9 billion over two years.
That's a bit more than he predicted a few months ago, and less than state lawmakers fear.
Houck said there is time for legislators to get more up-to-date revenue data before finishing the budget process in late February.
Kaine is expected to tell lawmakers about 1,500 job cuts in state government--not all layoffs, but also retirements, attrition and vacancies going unfilled. Many of those job losses may be at the Virginia Department of Transportation, Houck said.
Public education is expected to see about a $400 million cut, something Houck said troubles him because Kaine wants to make the cuts through reductions to basic aid, Standards of Quality funding to schools.
"I think the K-12 cuts are inevitable. I think there's going to be some difference of opinion as to how we go about making those reductions," Houck said. "I'm sure there's going to be other options to consider, and frankly I would rather not reduce Standards of Quality basic aid funding unless we absolutely have to do it, and I'm not convinced right now we have to do it."
Education and health care make up a large portion of the state's budget, something Howell pointed out in his conference call. Those areas are growing at a disproportionate rate, and that keeping pace through tax increases is futile.
"That's a situation that is doomed for failure let's address that root problem instead of going out and raising taxes," Howell said.
Kaine's budget proposal is the beginning, not the end, of a long process throughout the upcoming legislative session, which starts in January.
House and Senate budget-writing committees will take his budget and rewrite it to suit their own priorities. Eventually both houses and Kaine will all have to agree on a budget for it to become law.
Chelyen Davis: 804/782-9362
Email: cdavis@freelancestar.com
