HB 6055

Absolutely Nothing

As the Special Tax Session approached, we posed two poll questions, one of which asked, "What do you think will happen at the Special Tax Session of the General Assembly?" One choice we provided was "Absolutely nothing." As it happened, it won the polling with 36%, while some of the more pessimistic in the crowd thought some tax increase was imminent. As it turned out, the session ended with a wimper and, as some of us guessed — or at least hoped — absolutely nothing got done. Now, it appears His Excellency is jumping on the bandwagon, describing the session to the media with an attempt at hipness: "It was like a Seinfeld episode — a show about nothing." How clever.

But what did he expect? Special sessions are called when there is a consensus and all involved — both parties in both chambers and the executive — have some type of understanding as to what they want to do and agree to do. So he calls for a session, proposes a whopping statewide tax increase during trying economic times, and blames the other side. That's helpful.

If he was serious, there were three issues that — as with most commonsense solutions — are popular and could make great progress toward Virginia's transportation problems.

  1. The House voted 95-0 for HB 6023, an independent, outside audit of VDOT. Governor Kaine's friends in the Senate let it die in committee. How can we spend billions on new projects when we don't have a clue now (or else we wouldn't be in this condition, now would we?). Washington state did an audit of its transportation department and discovered overlap and duplication in planning, projects and bureaucracy (what's new there?); and misplaced priorities. It found simple solutions to correct problems that were thought to cost billions more. The savings? $18 billion — and Washington is a lot smaller than Virginia. (Tertium Quids has more here.)
  2. Senator Frank Wagner (R-7, Virginia Beach) had a proposal to take profits from the Port of Virginia — no tax money involved — and apply that money to transportation. Better still, HB 6055, which originally was loaded with tax increases for Hampton Roads and Northern Virginia residents, was smartly amended by Delegate Glenn Oder (R-94, Newport News) with input, our sources tell us, from Delegates Brenda Pogge (R-96, Yorktown) and Sal Iaquinto (R-84, Virginia Beach), to strip out all tax increases and use profits from the Virginia Port Authority and Dulles International and Reagan National Airports. Following the lead of Yankees may be painful to some down here, but New York and New Jersey do this successfully with their port revenue. After all, according to the governor, his mates in the Senate and the big business special interests, we need transportation to help facilitate the growth of our ports, right? These bills also died in Senate committees.
  3. As ever, a transportation fund lock box (HJ 6001). Let's constitutionally seal up that money so it can't be used for, say, new government run baby sitting programs. The governor, like other famous campaign promises, seems content not to act or, if he acts at all, it's counter to his campaign rhetoric. HJ 6001 was changed by the Senate and eventually died.

So, if nothing was done, who's to blame? Why is it "bipartisan" only to increase taxes but a "waste of time" to adopt other measures proven to work elsewhere? Why do liberals, who know so much, are such great problem solvers and are smarter than the rest of us, only know one solution for every problem? Good, commonsense, practical measures were defeated while liberals scream that their tax increase schemes died — even though they got a full debate in the Republican controlled House in contrast to the committee killing Senate actions. Besides, if nothing was done, it's not like we didn't tell you, governor; and with our wallets still intact, we're better off for this "nothing" as well. In this case, nothing is something, indeed: A win for hard-working, taxpaying families and individuals.

The Same "Just One Question" For House Republicans

As The Special Tax Session of the General Assembly was about to get underway, we posed one question we said we'd love Governor Tim Kaine to answer. Now that House Republicans, or at least some of them, are getting behind HB 6055, which would raise numerous onerous taxes in Hampton Roads and Northern Virginia (such as the real-estate killing grantor's tax), we want to pose to them the same question:

Before we go raising taxes for a bloated government to pave over the Commonwealth by taking more money from people already finding it tough to get by, shouldn't we first spend the $500 million in new money still around from last year's transportation bill?

Okay, it's worded slightly differently, but it's the same question, and rightfully posed as the bill's patron, Delegate Phil Hamilton (R-93, Newport News) today cited that same pot of money of new funding on "Richmond's Morning News with Jimmy Barrett" on WRVA-AM/1140. Despite the House Republican leadership's public statements about fixing the parts ruled unconstitutional from last year's bill, it doesn't seem to have the whole team reading from the same playbook.

New Republican Party of Virginia Chairman, and Delegate, Jeff Frederick (R-52, Woodbridge), told the blog Tertium Quids:

. . . he plans not only to vote against HB 6055, but to make the case, in his role as party chairman, that tax hikes such as this make little policy sense while also harming the GOP brand.

What does it say about the bill's policy and those well-meaning legislators who want to do something "to make the issue go away" when the party's chairman, and a colleague of the patron, is adamantly against it? Who was elected statewide most recently and has heard from the grassroots? Not only that, but statewide and regional polling makes it pretty clear: No new taxes will be tolerated, no matter what they're called, how they're imposed or what it's for. Delegate Frederick is not the only one concerned. Senator Ken Cuccinelli (R-37, Fairfax), who also has traveled the state much recently in his bid for attorney general, told TQ:

"I'm very concerned that the Republican tax bill will pass, further enraging our already-dispirited base over what they will perceive as an abandonment of Republican principles — again."

Partisans may think this split in the ranks is bad. Taxpayers, perhaps otherwise, since it gives us hope of defeating a massive tax hike (however "regional" in nature) — never good, and particularly disastrous in these uncertain economic times. So, we ask again, to House Republicans — and, for that matter, Senate Democrats, Senate Republicans, House Democrats, Governor Kaine and anyone else who will have a say in the matter:

Shouldn't we first spend what we already have?

 

Reworking A Bad Plan Can Make It Worse (Or, The Son Of 3202 Rises)

The Special Tax Session of the General Assembly resumes tomorrow and anything can happen. Some capitol insiders are predicting the session could end by the end of the day, with nothing done. That would be good. Some think the House could pass some watered down Senate tax increase, send it back to Senate Majority Leader Dick "The People Will Pay" Saslaw (D-35, Springfield) and his crowd down the hall, who will change it and take it to a conference committee, which would be dangerous enough. But others think that if anything gets out of the House, Senate Dems will pass it immediately and let Governor Tim Kaine amend it to include all the extra taxes his heart desires (we'd say that would be Christmas in July for the liberals, except many don't believe . . . oh, never mind) and send it back for an up or down vote. If that version passes, it would be a Kaine victory at the expense (literally) of the public; a taxpayer loss. If nothing happens, believe your bottom dollar (that may be all you have left right now) that the governor and the Dems will demonize conservatives as not wanting to address the transportation "crisis." 

They better be careful for what they ask. It may be anecdotal, but evidence is the public, across all lines, doesn't seem to have much of an appetite for tax increases when gas is at $4.00 a gallon and all the ripple effect cost increases it is causing. Senator Saslaw during the regular session was fond of saying that his gas tax increase would cost the equivalent of one Big Mac meal per year. Actually, it was closer to a Ruth Chris dinner, but regardless, most families don't even have a Big Mac to cut back right now.

Not only that, but his proposal in the winter was a 5-cent increase over five years. Now, I guess because he wants us to cut back on apple turnovers, too, his bill would increase the gas tax by six cents over six years (SB 6009). That's a 35-percent increase. It doesn't appear as if this will pass. The House Republican leadership let it come to the floor in a procedural move in committee to force House Dems to vote on recordin anticipation of next year's House elections. The money is on many House Dems getting cold feet on this one.

However (there's always a "however"), the House GOP doesn't want to get left out of the game. They want to be sure no one can claim they have no ideas themselves, so instead of no ideas they are proposing old and bad ideas. They want to "fix" the aspect of last year's transportation package (HB 3202) that the Virginia Supreme Court ruled unconstitutional. This new package, HB 6055, patroned by Delegate Phil Hamilton (R-93, Newport News) is more complex, but is also harmful to taxpayers and the economy. Its main feature is to give local governments in Hampton Roads and Northern Virginia taxing authority in certain areas so as to spend it themselves for transportation, rather than the original, and unconstitutional, law that let unelected boards tax and spend. (To be fair, the original bill passed by the House in 2007 was to give local governments the authority; the governor amended it to give it to the unelected boards, and bipartisan majorities in the General Assembly concurred.)

While many legislators may make the political calculation that by "simply fixing" last year's plan (by voting for HB 6055) Virginians won't consider it a vote to raise taxes, they may be calculating wrong. People want the General Assembly to make hard decisions instead of asking for more money from families — again. Smart citizens know fixing a bad plan often makes it still worse. 

Among the various taxes in HB 6055 is one particularly heinous tax — a $.40 per $100 increase in the "grantor's tax" in Northern Virginia. This is a tax home sellers pay at closing. As home sales continue to plummet, and some of those sales are "short" (sold for less than what is owed on it), such a tax is reckless. 

Earlier this month, while 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 the time, several Republicans appropriately drilled Secretary Wagner regarding Governor Kaine's transportation proposal that included a grantor's tax. It would be peculiar for those same legislators to agree to one now, but this is the General Assembly, after all. Regardless of whether the tax is introduced by Democrats or Republicans, the governor, the Senate or the House, the effect on the housing industry is the same — it will ensure a housing recession.

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 N.Va.), a hotel tax (N.Va.) and a rental car tax (in both areas), among others. Americans For Tax Reform mailed each legislator who signed its No Tax Pledge that a vote to pass the tax-increasing buck to localities is still a tax increase and violates the pledge.

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 for transportation via referenda in Hampton Roads and Northern Virginia. 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" to secure transportation funds from general fund spending and tax increases. Three years later, he has done nothing to support efforts to secure one. 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 that, it appears HB 6055 is more flexible than a Russian gymnast. Specific projects are to be carried out "in consultation with members of the General Assembly" — whatever that might mean. Sadly, the level of linguistic complexity required to raise some taxes in some areas, that affect only some people in order to fix some transportation needs, all while appearing as if 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 this mentality doesn't change now, in difficult economic times, what will it be like in good times? Believe me, it will be Bonnie and Clyde all over again, with a new crisis (health care or Medicare, perhaps?) and guess who they think is the bank?

The good news is that this can be stopped. Many legislators are being pressured by big-time lobbyists of big businesses who will benefit from government spending, from the teachers union which wants to ensure their portion of the pie isn't touched, and other special interest groups. But when enough concerned voters let their senators and delegates know enough is enough, it gives them the courage to resist the special interest pressures (click here to contact them). Instead of raising taxes, it is time for them to get some new ideas, such as comprehensive spending and budget reform.