By Larry Hincker
Well, that didn’t take long. Just about one month after the Democrats took complete control of both houses of the General Assembly, Gov. Ralph Northam rolled out the cookie jar. None of the cookies are free, however. With one of the largest stealth tax increases ever foisted on Virginians still moldering, the governor’s proposed FY 2020-22 biennial budget includes a bunch more levies.
But first, what about that stealth tax increase? Recall, that Virginia tax collectors got a dose of manna after the 2017 federal tax reduction act. Because we “conform” our tax codes to the U.S. Code, many Virginians who no longer itemize federal returns, paid significantly more in state income taxes.
That amounted to about $600 million annually in windfall tax collections for the state. During the last legislative session, Republicans stopped the governor from pocketing all the monies and passed legislation to return about half the bounty to taxpayers — $110 per individual or $220 per couple.
Based on my increases in state taxes paid, I personally underwrote a lot of those distributions. Now, the governor proposes cancelling even the meager $110/220 giveback…and pocketing your significant stealth tax increase. By the way, this $1.2 billion increase is just about the same size as the tax increase pushed by then Gov. Mark Warner in 2003-04 to close a huge budget deficit. Remember the wailing then? Why not now?
Gov. Northam hasn’t specifically linked the two, but his biennial budget includes an additional $1.2 billion for schools — mmm, just about the same amount as the stealth tax increase. But hey, mo’ money for schools, is a good thing, right?
Channeling days of yore, when subjects were persecuted for messing with the Crown’s monopoly on a market, the governor now proposes new taxes on “skill games” that compete with the Virginia Lottery. They are dubbed, “unlicensed, untaxed and unregulated electronic games that look like slot machines.” Okay, so maybe they gotta protect the funding source for schools.
Or do they? I’ve never bought the fig-leaf argument that all Lottery monies were devoted to education. The legislature simply used that excuse to reduce General Fund revenues that would otherwise have been devoted to legitimate K-12 educational appropriations.
In the end, Finance Secretary Aubrey Lane suggests the easier path might be to simply ban these games. Whoa…off with their heads, he says.
When it comes to transportation funding, this writer has long pushed for reasonable assessments to pay for roads. Last year’s last-minute compromise funding bill for I-81 improvements fits that category. It will pinch our drivers, but it’s necessary. However, the ink’s barely dry on that bill, and now the governor proposes a 12 cent per gallon increase in gas taxes statewide. That’s a 55-75 percent jump depending upon where one lives. (Current taxes are 16 cents per gallon state-wide, but some regions pay more because of local levies.) Interestingly, the governor’s budget estimates no price tag on the total cost to taxpayers. I might support this if we see how the proposed monies are to be spent.
And he proposes eliminating important funding sources: the annual $20 car inspection and cutting in half the annual vehicle registration fee (generally, $40.50 for most passenger cars). Why do that and then raise gas taxes?
Northam claims that studies show the annual car safety inspection show no link between inspections and highway safety. I don’t buy it. Show me the studies. Ever lived in a state without car inspections? If yes, you’ve seen a lot of bald-tired clunkers dangerously plying the roads.
Northam correctly argues that increasing certain transportation user fees like gas taxes will free up General Fund debt service by about $61 million per year. That make sense. Roads ought to be funded by drivers, not general tax collections.
FYI, two local legislators, Sen. David Suetterlein and Del. Joe McNamara, have introduced bills, independent of the governor’s action, to end car inspections. As of this writing, I’ve not yet heard their rationale.
As for the spending side, the governor’s budget calls for $200 million in “uncommitted contingencies.” Any budget ought to have a contingency, when faced with uncertainties. But critics decry this move when it’s devoid of “guiding or controlling budget language.” Taxpayers deserve more clarity and specificity in the budgeting process….even if only concerning a “mere” $200 million.
“It appears to be a little more spending that I would have anticipated and would be agreeable to. The numbers are big, the increases are significant,” said Sen. Emmett Hanger from Augusta the governor’s budget increases were announced. I tend to agree.
The voters called for change when they flipped both houses of the General Assembly. Fleecing? Not so much. Hopefully, this General Assembly will reign in this governor’s spending impulses or at least make compelling arguments.
Larry Hincker is a retired public relations executive and lives in Blacksburg.