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Economic Uncertainty Confounds Va. Budget Planning

Most of the growth in Virginia's economy has been in Northern Virginia, where new, higher-paying jobs have pumped up the state's sales and income taxes.

But the Warner administration says the remarkable increase in state revenue is being fueled by growth in taxes on corporations, a small group of wealthy individuals and home deeds.

Gov. Warner says tax increases last year were necessary because state regularly outspent state revenue. (Scott K. Brown -- AP)

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Full Report

As Virginia's lawmakers craft a spending plan in the next several weeks, they must make two critical assumptions, both laced with uncertainty: How will the economy fare? And how much will expenses grow?

House Speaker William J. Howell (R-Stafford) and other senior Republicans in the House are making the rosiest assumptions.

Howell and his caucus have proposed a $1 billion transportation plan for the current budget and have offered legislation that would cost the government several hundred million dollars every year.

The proposals include spending $50 million a year to clean up the Chesapeake Bay, $130 million a year for transportation, $100 million a year on phasing out the car tax and $165 million a year to eliminate the estate tax.

Howell and other Republicans in the House say they believe the economy's robust growth can be sustained at high enough levels to cover the cost of those programs.

Warner has offered a slightly smaller transportation plan.

He also has been urging lawmakers to consider the rising costs of providing health care, education, prisons and insurance. Administration figures show the cost of providing those services will grow by $2.9 billion in 2007 and 2008, even if no programs are added.

Staff writer Rosalind S. Helderman contributed to this report.

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