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An
extraordinary event in Virginia
politics occurred on Tuesday, February 17. Senate
Majority Leader Walter Stosch, R-Henrico, and Republican
Whip Ken Stolle, R-Virginia Beach, came to a meeting
of the Republican state central committee, which I
attended, to explain why the entire Senate
Republican leadership has co-sponsored the largest
tax increase in the history of
Virginia.
Their bill would raise taxes by a net $3.7 billion
over the next two years, over three times what
Democrat Gov. Mark R. Warner has proposed. It would
raise sales taxes by 22 percent, general income tax
rates by 10 percent to 15 percent, the gas tax by 20
percent, and the cigarette tax by 1,000 percent
(that’s not a typo).
At the meeting, Stolle did the talking. Effectively,
he told the Republican governing committee that the
era of Big Government is back. For more than half an
hour, he went over a litany of state government
programs he insisted must be increased more and
more.
From 1998 to 2001, just three years, state spending
in Virginia
rose by one-third, with spending from the general
fund increasing by 41 percent. But Stolle defended
those runaway increases as desirable, taunting the
crowd to tell him what they would have cut out of
the increases.
Like the rest of the campaign for the tax increases,
Stolle’s talk was basically a long recital of fish
story whoppers. He started his talk by saying that
the House Republicans had come to the same
conclusion as the Senate about the need to raise
taxes.
But the Senate’s tax increase is five times larger
than the House increase, which at least is focused
on Big Business interests who have been fighting
viciously for higher taxes for years.
Stolle also remarkably told the assembled
Republicans that former Gov. Jim Gilmore had come to
the same conclusion. This was just one day after the
Washington Post ran an op-ed by Gilmore
opposing the tax increases.
Stolle also recounted the whopper about how state
spending has already been cut by $6 billion. Besides
the enormous increases from 1998 to 2001, state
spending has increased since 2001 by another 11.6
percent.
So there have been no cuts. Stolle and his new
liberal special interest pals wanted to increase
state spending by another $6 billion in the past
couple of years, but thankfully they didn’t have
the money for that.
That is what the proposed record tax increases are
really all about. They are not needed to close any
budget deficits. The current budget, with the
highest level of spending in state history, is in
surplus. The tax increase is to satisfy the special
interests who just want to increase state spending
even faster.
The governor’s own budget report shows that state
spending can increase 11 percent in the new budget
without any tax increase. But that is not enough for
the big spending liberals. The governor’s proposed
tax increase would finance a 13 percent increase in
state spending.
The whopping tax increase proposed by the far left,
extremist, Republican Senate leadership would
increase state spending by 16 percent.
Working people in Virginia
are not getting wage increases of 16 percent, or 13
percent, or even 11 percent. So how can the
government demand more from them?
Stolle argued that it is somehow unfair to look at
total state spending. About half of the budget is
financed by non-general fund revenues that are
dedicated for specific purposes and cannot be
redirected to other programs. These include gas
taxes, fees for services such as car registration,
and federal funds.
Stolle wants voters to look only at the spending
from the general funds, which include primarily
state revenues from sales and income taxes. But for
taxpayers this distinction makes no sense.
All of the state’s revenues, general and
non-general, come out of the taxpayers’ pockets.
The same Virginia
taxpayers pay gas taxes, state fees, and even federal
taxes, as pay state income and sales taxes. Indeed,
the Senate tax increase proposal raises both general
fund and non-general fund taxes.
But even looking just at the state general fund, the
tax increases are unjustified. General fund revenues
are up 5.6 percent this year from last year.
Moreover, without any tax increase, general fund
revenues would still be up another $1.8 billion in
the new budget, an increase of about 7.5 percent.
Former Gov. L. Douglas Wilder, a Democrat, was much
better for taxpayers than the current liberal left
Senate Republican leadership. He faced real budget
deficits in the early 1990s, due to the poor economy
then.
But he responded by just holding spending growth
down, with no significant tax increases. The result
was that for the rest of the decade Virginia
enjoyed one of the fastest growing economies in the
entire country.
The Republican state central committee was uniformly
negative regarding Stolle’s presentation, though
polite, perhaps excessively so. But that will be
irrelevant if anything like the Senate Republican
tax increase passes.
The Republicans will then have lost the tax issue
for many years. With that will go their Assembly
majorities and state level offices for many years as
well.
The Senate Republican leaders, however, could care
less about that. They think their own seats are
irrevocably safe, and they have effectively already
left the party.
--
March 1, 2004
This
article was originally published in "Policy
Commentary" by the Virginia Club for Growth.
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