Reform? Or increase?

 

It was tax reform. It was a tax increase.

The 2004 Virginia General Assembly session is being played out again in the 2005 Virginia gubernatorial campaign – and still the two sides can’t agree on even the most basic terms of what happened last spring.

“My opponent is using all these clever words to describe something that he claims to be proud about. I encourage him to be honest with the voters, to call a tax increase a tax increase, stop using the words ‘budget reform,’ stop using the words ‘moving forward,’ stop using the words ‘tax restructuring,’ ” Republican Party gubernatorial nominee Jerry Kilgore said.

“All it was was a tax increase. If he’s so proud of it, and that’s his crowning achievement as lieutenant governor, then start saying, ‘I’m Tim Kaine, and I’m proud to have raised your taxes,’ ” Kilgore told The Augusta Free Press.

Kaine, for his part, said he knows why Kilgore, the former state attorney general, wants to reduce what went on in the state legislature last year to “well, gosh, there was a tax increase.”

“Jerry points to one thing that we did and say, ‘Well, gosh, you increased the tobacco tax to half the national average and the sales tax by half a penny.’ But what I tell voters is, in 2002 and 2003, we reduced spending commitments by $6 billion. We reduced the size of the state workforce by 5,000 people. We consolidated or combined 50 state agencies,” Kaine told the AFP.

“Jerry doesn’t want to talk about that, because he didn’t have any part in making those hard decisions, and probably wouldn’t have,” Kaine said.

But that still doesn’t answer the question – what was it? Did the General Assembly raise taxes? Or was it tax reform that came out of the bipartisan wrangling?

“I’ve been concerned that the debate has gone politically out of whack. We need to look at the broader picture. Early on in this debate, some people took to calling this the largest tax increase in the history of the state of Virginia. That’s not the case at all,” said Mount Solon Republican Sen. Emmett Hanger.

Hanger, a proponent of tax reform dating back several years, was one of the more vocal supporters of last year’s effort. He told the AFP that a key element missing in the characterization that what was done was a tax increase is that it depends on “who you are and where you live as to whether you even saw a tax increase.”

“If you take a look at the package of additional monies that the state has been able to provide to localities for education and other local services, you’ll see that many have been able to relieve the pressure on using property taxes to provide for their services, which ends up benefitting residents on their local tax bills. And if you look at income taxes, the increases in personal exemptions has resulted in tax cuts,” Hanger said.

“The main increase for most people was the half-cent increase on the sales tax. But again, for lower- and middle-income individuals, the cut in the state’s share of sales taxes on food of two cents means that those people are seeing tax cuts as well because more of their money goes to purchasing food than is the case at higher income levels,” Hanger said.

Rockbridge Republican Del. Ben Cline sees 204 from a vastly different perspective.

“Without question, it was a tax increase that was proven unnecessary by the recent billion-dollar surplus,” Cline told the AFP.

“Not only do we still need to accomplish tax reform, we need to recognize that we overcharged the taxpayers this past cycle, and that they deserve a refund,” said Cline, who introduced a bill that would have provided refunds to taxpayers in the 2005 General Assembly session.

“I still hope to accomplish tax reform, especially now that I’m on the Finance Committee. But we still have to make responsible spending a higher priority,” Cline said. “We have to look more closely at excessive spending and wasteful spending and ways to save money, and we’re not doing that right now. We’re simply papering over the inefficiencies of government with more taxes, and that’s an irresponsible way to govern.”

Independent gubernatorial candidate Russ Potts said he calls the 2004 legislative effort “all three – an investment plan, tax reform and a tax increase.”

“To preserve the triple-A bond rating, there were two major policy decisions. One was to cap the car tax at $950 million, and two was to address funding for the four core services so that we wouldn’t have a deficit into the future,” Potts told the AFP.

“Had we not done that, we would have lost the triple-A bond rating. So we did the responsible thing on a bipartisan basis. I applaud the governor for doing what he did, and I know that we’d do it all over again if we had to,” Potts said.

The issue in 2005, Kilgore said, “is not so much about rebattling last year. It’s about a battle for the future.”

“(Kaine) believes in a bigger government. Every office he’s held, he’s raised taxes, or in his words, I guess he would call it ‘budget reform.’ That’s his instinct. When he sees government needing more dollars, he raises taxes. My instinct is to grow the economy, and to get out and bring in more jobs. That’s a huge philosophical difference in this campaign,” Kilgore said.

Kaine also evoked the future in his summary of why the issue of what 2004 really means is important in 2005.

“It was about, first, having the guts to make spending cuts, and second, trying to fight for a tax code that was fairer, third, saving the state’s triple-A bond rating, and fourth, and this was the real payoff, generating new revenues so that we could invest in public schools,” Kaine said.

“I know why Jerry wants to reduce the whole thing to, ‘Well, gosh, there was a tax increase.’ But my goal is to tell Virginians the full story of what happened. And when we do, what we see is, overwhelmingly, today, Democrats, Republicans, independents, strongly support the budget-reform efforts of the Warner-Kaine administration,” Kaine said.