Car Tax Giveaway

VIRGINIA Republicans, whose appetite for electoral victory exceeds their sense of responsibility, have proposed a massive tax break for car owners. No matter that Virginia can ill afford the cut, which would drain hundreds of millions of dollars annually from state coffers, nor that the proposal would subvert a landmark legislative compromise hammered out less than a year ago, nor even that it would imperil the state's top-shelf credit rating and leave its finances vulnerable to the next economic downturn. Republican state lawmakers, with their eye on elections for governor and House of Delegates this year, would throw fiscal common sense to the wind.

This is a rebottling of snake oil that worked wonders for former Republican governor James S. Gilmore III (R), who cruised to victory in 1997 by demanding the elimination of the car tax drivers paid to localities. Of course, he wasn't really saying that local governments would forgo the revenue, since they rely on it to pay for schools, public safety and other essentials. Rather, the gimmick he devised was to have the state reimburse localities for their lost income. On the stump, Mr. Gilmore assured voters that his scheme would cost the state $620 million. The price tag turned out to be more than twice that amount.

The rest is grim history. The dot-com crash sapped Virginia's accounts, leaving localities 70 percent of the way through Mr. Gilmore's reckless tax cut but unable to carry out the rest. By the time he left office in 2002, Virginia's finances were a shambles. His successor, Gov. Mark R. Warner (D), was left to clean up the mess, which he did in part by coaxing lawmakers (including a number of courageous Republicans) to approve a modest tax increase last year. The deal stanched the wound inflicted by Mr. Gilmore's folly; from now on, lawmakers decided, the state would transfer $950 million annually -- and no more -- to cover localities' lost car tax revenue. Essentially, the state decided that vehicle owners had had enough of a break already -- the equivalent of $500 or $600 in annual savings for a Northern Virginia owner of two cars valued at $10,000 each.

Now Republican leaders in the House of Delegates want to finish what Mr. Gilmore started. Emboldened by Virginia's robust finances, which have generated $1.2 billion more in tax receipts than was expected in the current two-year, $27 billion general fund budget, GOP lawmakers propose to scrap the car tax altogether and have the state reimburse localities for 100 percent of the lost revenue. Rather than the capped amount of $950 million, Richmond would fork over an estimated $1.3 billion a year right off the bat, equivalent to nearly 10 percent of the state's annual general fund expenses. And that could rise to $1.8 billion by 2015.

There's a fair argument to be had about how much of this year's unanticipated revenue to spend, return to taxpayers or put in reserve. But using a one-time windfall to justify a perpetual and growing commitment could derail Virginia's finances for a generation. Education, health care and public safety costs are sure to rise, and Republicans and Democrats agree that already there isn't enough money to pay for desperately needed transportation and Chesapeake Bay cleanup projects. "We have not worked out the details" of scrapping the car tax, said Del. Vincent F. Callahan Jr., a Fairfax Republican, who spoke instead of "honoring our commitment to the people of Virginia." Perhaps the "commitment" Mr. Callahan has in mind involves deep cuts for Virginia's public schools and colleges. Perhaps it involves reductions in state spending on Medicaid. Those would be the probable consequences of the Republican proposal to eliminate the car tax. But Mr. Callahan and his fellow Republicans would prefer not to discuss that. They would rather demagogue their way to victory this November, sparing voters the details.