Reworking a Bad Plan is Rarely a Good Idea
By Victoria Cobb, Family Foundation
On Wednesday, the Virginia General Assembly will return to Richmond to vote on at least two proposals that would require Virginians to send more money to government bureaucrats in Richmond. Without your vigilance, a tax increase of some type is likely.
One proposal, SB 6009 passed on a party line vote through the Democrat controlled state Senate, would increase the gas tax by nearly 35 percent! Such a proposal at a time when gas prices continue to rise and families search for ways to cut their budgets is beyond simple partisanship. It is reckless and arrogant. The patron of this legislation, Senate Democratic Majority Leader Dick Saslaw (D-35, Springfield) said recently, "One way or another, people are going to pay." While there appears to be little appetite for this proposal in the House of Delegates, speculation exists that they could agree to this bill in some form or another to provide a legislative vehicle to create a "reworked proposal" in conference. While specific strategies are difficult to evaluate without a lot of details, moving this bill forward with expectations of cleaning it up pose risk to taxpayers.
The other proposal, HB 6055 patroned by Delegate Phil Hamilton is more complex, but is also harmful to taxpayers and the economy. This legislation is an attempt to "fix" last year's transportation package, a large portion of which was struck down as unconstitutional by the state Supreme Court. Many legislators may be making the political calculation that if they simply "fix" last year's plan, voting for HB 6055 won't really be considered another bad vote to raise taxes in the minds of most Virginians who want to see the General Assembly make hard decisions instead of asking for more money from families. Smart citizens know fixing a bad plan often makes for a worse plan.
This "solution" circumvents the Court ruling that an unelected body can not raise taxes by increasing fees and taxes through both the General Assembly and individual localities rather than through the originally proposed regional authorities. Among the various taxes is one particularly heinous tax, a $.40 per $100 increase in the "grantors tax" in Northern Virginia. This is a tax home sellers pay at closing. As home sales continue to plummet such a tax is reckless.
Earlier this month in the process of detailing the state's current financial picture, Secretary of Finance Jody Wagner revealed a devastating downward trend in home sales to the House Appropriations Committee. At this time, several Republicans appropriately drilled Secretary Wagner regarding Governor Kaine's transportation proposal that included a grantor's tax. The Family Foundation hopes that those same legislators and others will fight this proposal. The effect on the housing industry is the same whether the tax is introduced by Democrats or Republicans, the Governor, the Senate or the House.
HB 6055 also includes a $20 increase in the car inspection fee (in Hampton Roads), an extra $100 fee on those who receive their first drivers license (in NOVA), a hotel tax (NOVA) and a rental car tax (in both areas), among others. While it may appear more palatable to have a large variety of tax and fee increases and have them imposed by both the state and the localities, it's still another transfer of money from the pockets of Virginia families to the government and it adds up.
Four years ago, then-Governor Mark Warner cited education, health and public safety to pass the largest tax hike in the Commonwealth's history. Apparently in 2004, transportation was no longer the "crisis" Warner had said it was in 2002 when he tried unsuccessfully to pass regional sales tax hikes via referenda in Hampton Roads and Northern Virginia citing transportation. But now Governor Kaine and some allies in the legislature have decided to dust off the transportation "crisis" to raise taxes. This action comes only a few months after they proposed raiding the Transportation Trust Fund for non-transportation expenditures.
Some of the same lawmakers who opposed a constitutional amendment restricting the Transportation Trust Fund to transportation-only spending now support a tax hike. Even Governor Kaine prior to his election endorsed a "lock-box" for transportation prior to any request for tax increases. So what we're left with is a thinly veiled attempt to raise taxes on Virginia's families simply to raise money, not specifically for transportation.
Besides the usual ability to raid transportation monies for other projects, it appears that the specific projects in HB 6055 and use of the money is overwhelmingly flexible. In the bill, directives are given to regional authorities that are to be carried out "in consultation with members of the General Assembly" whatever that might look like. Sadly the level of linguistic complexity required to raise some taxes in some areas that affect only some people in order to fix some of the transportation needs all the while appearing like no taxes are being raised makes for a legislative nightmare.
The bottom line is that for over a decade the General Assembly has bowed to the powerful education union and funded public education incorrectly, refused to reduce spending in pet projects, and counted on Virginians to pony up under the threat of disaster if they don't. If we don't stop this mentality now in difficult economic times, believe me, this legislature will be back in two years with yet another crisis (health care, Medicare, etc.) in need for yet more revenue.
ACTION: Contact your state Senator and Delegate and urge them to reject any proposal that raises taxes or fees during the special session of the General Assembly. Ask them to go back to the drawing board and really reform our budget.
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