Va. Tax Turmoil to Resurface

House Speaker William J. Howell is surrounded at the lectern by other GOP lawmakers after this year's session adjourned. "We've got a united caucus, working together," Howell said of the outcome. (Steve Helber -- AP)

On Sunday, lawmakers approved a $63 billion, two-year budget, bringing to a close a short but intense session that included debates about transportation, abortion regulations, university governance, the rights of gays and illegal immigrants and how low pants should be worn.

Using a $1.2 billion surplus, they eliminated the state's portion of the tax on food, raised salaries for state workers and the governor and agreed to spend $50 million more on Chesapeake Bay cleanup.

Democrats said they expect that Kilgore and other Republicans will campaign for office touting their opposition to the tax increases while boasting about voting in 2005 for spending on popular state programs that the tax increases made possible.

"They will go back and take credit for unprecedented investments in education, the environment and transportation," said House Democratic Caucus Chairman Brian J. Moran (D-Alexandria). "They will be talking out of both sides of their mouths."

In an end-of-session meeting with reporters before heading to Washington for a meeting of the National Governors Association, Warner said the 2005 session had little of the "sound and fury" of last year's debates.

"There's a very solid record of achievement that an awful lot of members in the General Assembly can be proud of," he said.

Their key accomplishment is an $848.1 million package of spending for roads, rail, bridges and tunnels. Warner and Howell hailed the one-time investment as a first step toward relieving traffic.

Candidates from both parties will use transportation spending in their campaigns. But they will be challenged by some who argue that much more needs to be done. Central to that debate will be the question of whether gasoline taxes should be raised to finance billions of dollars of spending.

Kilgore has vowed not to raise the state's 17.5-cent tax on gas and has accused Kaine of planning to do just that. Kaine has said he would consider an increase in the gas tax only if action were taken to protect the state's transportation trust fund from being raided for other purposes.

In an interview, Kaine said he will continue to pursue a constitutional amendment to lock up the transportation fund, but he said he might support a tax increase before such an amendment was approved by voters.

"There would have to be absolute certainty about it," he said. "Could something make me feel certain short of the voters approving the change in a referendum? Maybe."

Each of the candidates for governor has signaled an intention to wrap himself in Warner's popularity. Polls show that the governor is seen by many as a bipartisan leader who is a guardian of the state's finances.

Potts said last week that Warner will "go down in history as one of our greatest governors." In Kaine's regular stump speech, he urges voters to embrace what he calls Warner's legacy of fiscal discipline.

And even Kilgore, who has clashed repeatedly with Warner over the years, said recently that "I'm more like Mark Warner than Tim Kaine will ever be."

That's a far cry from Kilgore's rhetoric during the debate over taxes, when he lambasted Warner for breaking his 2001 campaign pledge not to raise taxes. Political observers say they expect the 2004 tax fight to be the subject of campaign material throughout the year.

"What we did last year was still the defining moment, and it overshadows anything we did this year," Moran said.

During that fight, anti-tax Republicans in the House had argued that the increases should be put to a vote of the people. Warner and Democrats belittled the referendum idea as nothing more than a plan to defeat the tax increases.

Del. Clarke N. Hogan (R-Charlotte), who opposed the tax increases, said he is eager to see the outcome of Election Day.

"We're going to have a referendum this fall on [the tax] issue," Hogan said. "It's called the general election. We are going to get a gut check from the voters this fall."