The Northern Virginia Daily's Political Depot

A service for our readers outside the Northern Shenandoah Valley... a sampling of The Daily's political coverage, plus unofficial, 'reporter's notebook' stuff. And occasional dry humor...

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Location: Strasburg, Virginia

Thursday, June 16, 2005

State revenue up substantially; A1

Va. may have $600 million surplus after tax increase

By Garren Shipley
(Daily Staff Writer)

RICHMOND — All but one of the six “maverick” House Republicans who backed a $1.6 billion tax increase in 2004 survived primary challenges Tuesday — the same day the state quietly announced a potential $600 million surplus.

Secretary of Finance John Bennett submitted the May revenue report to Gov. Mark R. Warner earlier this week, and the news was excellent.

Total collections for the state’s General Fund, which pays for a laundry list of government services, were up 23 percent in May over the same period last year.

Factoring out the tax increases that took effect in September, revenue was up more than 19 percent.

“Through May, revenues have grown 15.2 percent above the same period last year — substantially ahead of the mid-session forecast of 10.3 percent,” Bennett wrote. “This extra-ordinary growth continues to be fueled largely by the three most volatile revenue sources — individual non-withholding, corporate income and recordation taxes.”

To break even for the year, the state needs to take in $1.1 billion in June. Last June, it collected $1.5 billion.

“That $600 million may not be the only surplus we have,” said Del. Allan Louderback, R-Luray. If the current trend continues, it could push the surplus significantly higher.

“I told you so” is the wrong position to take for those who opposed the 2004 tax hike, said Del. Clay Athey, R-Front Royal, who did vote against the budget deal.

Those who said Virginia’s economy would grow its way out of the budget gap have been vindicated for two years in a row, Athey said.

By the end of this year, the economy will have produced nearly $2 billion in tax surpluses — $1.2 billion last year, $600 million this year. The tax hike generated much of that.

“Our economy is continuing to grow, as we predicated,” Athey said. But “I think those that believe that the tax increase was necessary believe that in good faith.”

Some 17 Republicans crossed the aisle and voted with Democrats and the majority in the state Senate to approve the deal.
Of those, six, including Del. Joe May, R-Leesburg, faced primary challenges. Only one, Del. Gary Reese, R-Oak Hill, lost his seat.

The Virginia Education Association’s Political Action Committee touted its success defending the six to reporters on Wednesday.

“In these six races, where VEA-PAC provided direct mail, member to member phone calls, monetary contributions, [get out the vote] calls and the hard work of VEA members, we had a success rate of 83 percent,” the PAC says in a statement.

“Our party-blind, issue-driven approach is protecting advocates of public education regardless of party affiliation,” VEA President Princess Moss said.

May’s challenger, Chris Oprison, lost by 20 points, but said Wednesday that his challenge was never about May as a person, but about tax policy.

“Joe May is a nice man, and indeed a brilliant inventor,” the Leesburg attorney says in a statement to supporters.

“My concern was simple: that families today — yours and mine — are overtaxed, and we deserve to keep more of our own money, not send more and more of it to fund unchecked government spending.”

It all goes to show that one vote won’t “determine someone’s future in the House of Delegates,” Athey said.

Running that far into the black should be a red flag for legislators, Louderback said.

“I think we ought to seriously look at what we need in the way of revenues,” he said. Tax relief of some kind, like completing the car-tax rollback should be on the table come January, he added.

The General Assembly should also look at major needs, namely transportation issues, Athey said.

“If we don’t give the money back to the people who paid it … it would be a really good idea to try to move that funding over into transportation,” he said, “which goes along with reforming transportation, I might add.”