Va. Assemblies Pass Budgets

Senate Plan Increases Taxes, House Version Ends Breaks for Some Businesses

The House and Senate on Thursday approved competing versions of a new state budget that are radically different except in one aspect: Both were based on revenues presumed in tax bills that are no longer in play.

On a mostly party-line 65-35 vote, House Republicans muscled through a spartan $58 billion measure that provides nearly $9 billion for public schools the next two years but strips about $250 million from transportation and freezes the money used for local police agencies.

The Senate passed a two-year, $61.5 billion budget that substantially increases spending for education, transportation and the environment, while also increasing taxes by about $3.8 billion.

The House budget advances to the Senate, and vice-versa, where each is likely to be rejected early next week. That sets up a $3.5 billion disagreement a handful of lawmakers designated from each chamber will be asked to resolve by the March 13 adjournment deadline.

Both plans recognize a need for new revenue from tax restructuring, though the Senate budget includes a far more comprehensive tax reform package, including a 1-cent sales tax increase, higher tax brackets for the wealthy and higher taxes on gasoline and cigarettes.

As much as $520 million in the House budget was to have come from repealing sales tax exemptions a dozen categories of industries have for purchases of fuel, equipment and other operating needs. That legislation is bottled up in the Senate Finance Committee.

The Senate rejected several floor amendments, including one to remove funding that apparently targeted Planned Parenthood and an attempt by a conservative member to strip the budget of an omnibus tax increase proposal that already passed the Senate.

Both the Senate and House plans call for 3 percent raises for state employees, college professors and state-supported local employees. The Senate's raises would take effect this fall, while the House raises would begin in December 2005.

Neither plan includes a step that would ensure the final phase-out of the car tax. Warner's proposal would remove the remaining 30 percent of the locally imposed tax on personal cars and trucks in four annual increments of 7.5 percent.

Also, neither plan affords pay raises for school teachers, leaving that to local governments.