BUDGET: Compromise may be in sight
Senate leaders indicated they would shelve income tax plans if the House package passes.
RICHMOND - The House of Delegates moved closer Wednesday to a high-stakes floor vote on a package of tax code changes that could move the chamber toward a compromise with the Senate on a new state budget.
A key House committee set the stage for a floor vote early next week by advancing legislation (HB 5018) that, among other things, calls for increases in the sales tax on goods and the excise tax on cigarettes and would generate nearly $1 billion in new revenue over the next two years. The bill's supporters hope the proposal will push the House toward an agreement with the Senate, which has passed a two-year budget plan containing $2.3 billion in revenue from new taxes.
Lawmakers have remained in session for more than three weeks beyond their scheduled adjournment date because the House and Senate remain at loggerheads over a biennial spending plan. Gov. Mark Warner expressed hope that the emergence of a House tax package could put lawmakers on course for a compromise after Easter.
Warner said Senate leaders indicated they would shelve plans to impose higher income tax rates on earnings greater than $100,000 if the House tax package passes.
"A step forward was taken today," Warner told reporters after the House Finance Committee endorsed the bill by a vote of 10-8.
The committee action came one day after the same panel voted to table the bill, a procedural move that kept it from going to the full House. After a flurry of negotiations involving House GOP leaders, four Republican opponents of the bill sat out Wednesday morning's committee meeting to enable the bill to get to the floor.
The bill's fate essentially rests with an emerging coalition of GOP delegates who appear ready to break from the majority of their 62-member caucus and support the kind of tax increases that many House Republicans have denounced for months.
Several GOP delegates have acknowledged getting pressure from local governments and school officials in their districts whose own budget processes have been delayed by the legislative gridlock in Richmond. Some Republican delegates insist the House will not reach an agreement with the Senate without yielding from its anti-tax stance.
Warner met privately Wednesday morning with 18 Republican delegates who may defy their party's tax-resistant leadership and support the bill.
"I think they're pretty committed," said Del. Preston Bryant, R-Lynchburg, an architect of the compromise bill. "We just had this quite long conversation sitting around the table with the governor. I'm not going to speak for anyone, but collectively I was pretty impressed with what everyone was saying."
Del. William Fralin, R-Roanoke, attended the meeting in Warner's office and later said he would vote for the bill "if this is the only way we can get a budget."
"It's a Hobson's choice," Fralin said. "I don't like tax increases. I don't like to shut the government down, either."
Fralin said he hopes the two houses "are reaching toward a compromise that will fund our basic needs and keep our taxes as low as possible."
Bryant wanted the full House to vote on the bill Wednesday. But GOP leaders refused to expedite action on the measure, hoping to hear definitive statements about the proposal from Warner and key senators before forcing members to vote on it.
"I don't want some of my people to take a bad vote on the assumption that this is it, it's a done deal, and it's not," said House Speaker Bill Howell, R-Stafford County, who plans to vote against the bill.
Bryant read delegates a written statement from Warner describing the bill as "a breakthrough."
"It makes the tax system more fair, meets our core commitments in education, public safety and health care, and protects the commonwealth's fiscal integrity," wrote Warner, who initiated the tax debate in November by introducing a package of increases and cuts that would generate nearly $1.2 billion in new revenue over the next two years.
But some House Republicans wanted a stronger statement of support from the governor.
"If the governor would come out strongly and say, 'This is 90 percent of what I wanted,' he would come out a big winner," said House Majority Leader Morgan Griffith, R-Salem.
Griffith opposes the bill. But if it passes, he said, "hopefully the Senate will see that a number of House members have put themselves out there on the line."
Howell concurred, saying: "I'm going to do my best to work with the Senate and make them see that the House has come up to a huge amount of money."
The bill would generate $972 million in new revenue over the next two years, about $200 million less than Warner's broader tax package and less than half of what the GOP-controlled Senate has endorsed.
The measure would increase the sales tax on goods from 4.5 cents a dollar to 5 cents and increase the excise tax on cigarettes from 2.5 cents a pack to 30 cents over the next 15 months. The House package also would reduce the sales tax on groceries from 4 cents a dollar to 3 cents over two years, repeal certain sales tax exemptions for businesses and increase income tax deductions and exemptions.
The Senate plan calls for a 1-cent-a-dollar increase in the sales tax on goods and several income tax changes, including higher rates on taxable earnings greater than $100,000.
Senate budget negotiators could not be reached for comment Wednesday. Sen. John Edwards, D-Roanoke, said his colleagues will probably consider the House bill merely "a first step."
"I don't think anyone in the Senate is going to be jumping up and down down saying 'We've got a deal,'" Edwards said. "It just simply keeps the process going forward."
The House on Wednesday also passed a stopgap budget proposal (HB 5008) that would provide basic funding for state government services through June 30, 2005. Warner and Senate leaders oppose the interim budget plan, but Griffith said it provides a "safety net" in case the House and Senate fail to reach an agreement on a two-year budget in time for the new fiscal year.
A key House committee set the stage for a floor vote early next week by advancing legislation (HB 5018) that, among other things, calls for increases in the sales tax on goods and the excise tax on cigarettes and would generate nearly $1 billion in new revenue over the next two years. The bill's supporters hope the proposal will push the House toward an agreement with the Senate, which has passed a two-year budget plan containing $2.3 billion in revenue from new taxes.
Lawmakers have remained in session for more than three weeks beyond their scheduled adjournment date because the House and Senate remain at loggerheads over a biennial spending plan. Gov. Mark Warner expressed hope that the emergence of a House tax package could put lawmakers on course for a compromise after Easter.
Warner said Senate leaders indicated they would shelve plans to impose higher income tax rates on earnings greater than $100,000 if the House tax package passes.
"A step forward was taken today," Warner told reporters after the House Finance Committee endorsed the bill by a vote of 10-8.
The committee action came one day after the same panel voted to table the bill, a procedural move that kept it from going to the full House. After a flurry of negotiations involving House GOP leaders, four Republican opponents of the bill sat out Wednesday morning's committee meeting to enable the bill to get to the floor.
The bill's fate essentially rests with an emerging coalition of GOP delegates who appear ready to break from the majority of their 62-member caucus and support the kind of tax increases that many House Republicans have denounced for months.
Several GOP delegates have acknowledged getting pressure from local governments and school officials in their districts whose own budget processes have been delayed by the legislative gridlock in Richmond. Some Republican delegates insist the House will not reach an agreement with the Senate without yielding from its anti-tax stance.
Warner met privately Wednesday morning with 18 Republican delegates who may defy their party's tax-resistant leadership and support the bill.
"I think they're pretty committed," said Del. Preston Bryant, R-Lynchburg, an architect of the compromise bill. "We just had this quite long conversation sitting around the table with the governor. I'm not going to speak for anyone, but collectively I was pretty impressed with what everyone was saying."
Del. William Fralin, R-Roanoke, attended the meeting in Warner's office and later said he would vote for the bill "if this is the only way we can get a budget."
"It's a Hobson's choice," Fralin said. "I don't like tax increases. I don't like to shut the government down, either."
Fralin said he hopes the two houses "are reaching toward a compromise that will fund our basic needs and keep our taxes as low as possible."
Bryant wanted the full House to vote on the bill Wednesday. But GOP leaders refused to expedite action on the measure, hoping to hear definitive statements about the proposal from Warner and key senators before forcing members to vote on it.
"I don't want some of my people to take a bad vote on the assumption that this is it, it's a done deal, and it's not," said House Speaker Bill Howell, R-Stafford County, who plans to vote against the bill.
Bryant read delegates a written statement from Warner describing the bill as "a breakthrough."
"It makes the tax system more fair, meets our core commitments in education, public safety and health care, and protects the commonwealth's fiscal integrity," wrote Warner, who initiated the tax debate in November by introducing a package of increases and cuts that would generate nearly $1.2 billion in new revenue over the next two years.
But some House Republicans wanted a stronger statement of support from the governor.
"If the governor would come out strongly and say, 'This is 90 percent of what I wanted,' he would come out a big winner," said House Majority Leader Morgan Griffith, R-Salem.
Griffith opposes the bill. But if it passes, he said, "hopefully the Senate will see that a number of House members have put themselves out there on the line."
Howell concurred, saying: "I'm going to do my best to work with the Senate and make them see that the House has come up to a huge amount of money."
The bill would generate $972 million in new revenue over the next two years, about $200 million less than Warner's broader tax package and less than half of what the GOP-controlled Senate has endorsed.
The measure would increase the sales tax on goods from 4.5 cents a dollar to 5 cents and increase the excise tax on cigarettes from 2.5 cents a pack to 30 cents over the next 15 months. The House package also would reduce the sales tax on groceries from 4 cents a dollar to 3 cents over two years, repeal certain sales tax exemptions for businesses and increase income tax deductions and exemptions.
The Senate plan calls for a 1-cent-a-dollar increase in the sales tax on goods and several income tax changes, including higher rates on taxable earnings greater than $100,000.
Senate budget negotiators could not be reached for comment Wednesday. Sen. John Edwards, D-Roanoke, said his colleagues will probably consider the House bill merely "a first step."
"I don't think anyone in the Senate is going to be jumping up and down down saying 'We've got a deal,'" Edwards said. "It just simply keeps the process going forward."
The House on Wednesday also passed a stopgap budget proposal (HB 5008) that would provide basic funding for state government services through June 30, 2005. Warner and Senate leaders oppose the interim budget plan, but Griffith said it provides a "safety net" in case the House and Senate fail to reach an agreement on a two-year budget in time for the new fiscal year.
