Budget Battle Edges Toward Overtime
Va. Lawmakers Wrestling Over Transportation Funds

By Michael D. Shear and Chris L. Jenkins
Washington Post Staff Writers
Monday, March 6, 2006

RICHMOND -- With a week left until the scheduled end of the 2006 General Assembly session, Virginia is once again headed toward a political and legislative stalemate as lawmakers grapple with whether to raise taxes -- and if so, how -- for transportation improvements.

The pieces are all in place for a drawn-out debate.

There is a determined governor with a trial lawyer's confidence. There are House and Senate budget negotiators who can barely conceal their dislike for each other. And there is a sharp divide over taxes intertwined in the state's $72 billion budget, which must be approved before the session ends.

"Tensions are rising. I think we're trapped here," said Sen. Janet D. Howell (D-Fairfax).

The first fitful negotiations between budget conferees began Thursday afternoon and are set to continue until Saturday's deadline. Legislators, lobbyists and some advisers to Gov. Timothy M. Kaine (D) appear resigned to a sequel to 2004's historic clash over taxes, which came close to shutting down the government.

"Obviously, we are going to go overtime here," House Appropriations Committee Chairman Vincent F. Callahan Jr. (R-Fairfax), a key negotiator, said last week. "I don't see how we are going to resolve this thing in the next 10 days."

The "thing" Callahan mentions is the latest incarnation of a nearly five-year-old tug of war over taxes between the two legislative chambers, which are both controlled by Republicans but are far apart philosophically. Calling themselves "pro-investment," Senate leaders favor tax increases; House leaders oppose them on behalf of "overtaxed" constituents.

In 2001, then-Gov. James S. Gilmore III (R) stoked a bitter dispute and forced a series of budget delays by pushing his car tax cut in the face of a worsening economy. In 2004, his successor, Mark R. Warner (D), used the divisions to engineer a tax increase of $1.5 billion over two years despite an improving economy.

Now, Kaine is using widespread frustration with congestion to seek a $1 billion-per-year injection into transportation improvements and maintenance.

"The conferees on both sides, they know this issue. They've lived it. They've talked to their constituents about it," an optimistic Kaine said on a WTOP radio show last week. "People of goodwill can listen and compromise.

"May we go long?" the governor added. "Yeah, we might go a little bit long. I still think there's some chance we could reach a solution in regulation."

Negotiations Begin

For at least the next seven days, most of Virginia's lawmakers will sit around in Richmond, twiddling their thumbs, while a handful of colleagues attempt to resolve their differences over taxes and the budget.

As House and Senate negotiators huddled separately Sunday on the ninth and 10th floors of the legislative office building, several House Republicans mocked news that Kaine has been secretly preparing a media campaign targeting 26 GOP lawmakers. The program was first reported in The Washington Post on Sunday.

"I hope . . . he targets me," said Del. Leo C. Wardrup Jr. (R-Virginia Beach). "It will shoot my approval up by five points."

Said House Majority Whip M. Kirkland Cox (R-Colonial Heights): "It shoots a hole in his bipartisan argument, doesn't it?"

Discussions between the Senate and House have been testy and short. At an hour-long, face-to-face meeting Sunday afternoon, negotiators snapped at one another several times over taxes, borrowing and transportation.

"When you have a plethora of cash, as we do now, borrowing money is foolhardy," said Senate Finance Committee Chairman John H. Chichester (R-Northumberland).

"And raising taxes is not?" shot back Cox, who later added, "I'd like to have a new wing on my house, too, but I'm not going to do it this year, and I'm perfectly comfortable."

Said Chichester: "Then just sit back and don't do anything. I don't give a rip."

On Friday, lawmakers from the two chambers met for about a half-hour. At one point, Wardrup interrupted a Senate staff member who was explaining a proposed tax increase on the sale of homes.

"You make the statement that the rate hasn't increased for 50 years," Wardrup began.

"That's a statement of fact," staff member Neal Menkes quipped.

"Okay, fine," Wardrup said, flicking off his microphone.

Later, it was the senators' turn, as several hinted that the House budget was parochial in nature.

"In your budget . . . there is some flavor of that," Chichester said.

A House negotiator, Del. Phillip A. Hamilton (R-Newport News), took offense at his suggestion.

"As I look at both plans, I think that both plans do a pretty good job" of being parochial, Hamilton said. "The reference was just that the House was parochial."

Asked earlier whether he felt a deal could be struck by Saturday, Cox suggested looking to the oddsmakers in Las Vegas. Are the odds 100 to 1, he was asked.

"It's not that bad," he said.

Regional Differences

One of the chief issues on the table is how any final transportation plan will raise money for the state's most congested areas, Northern Virginia and Hampton Roads.

Leaders in Northern Virginia have said that the region needs at least $400 million a year. Hampton Roads legislators say they need about $250 million a year. Any deal that budget negotiators work out must satisfy the representatives of those two areas.

"For Hampton Roads, it has to be long-term . . . and sufficient," said Sen. Kenneth W. Stolle (R-Virginia Beach). "If you're not doing that for Hampton Roads, you can count me out of any plan."

Likewise, said Del. David B. Albo (R-Fairfax), his Northern Virginia colleagues will not vote for a budget that does not make their region a top priority.

"If I walk out of here and Hampton Roads is allowed to raise its money but I'm not allowed to raise mine, I'm going to have a conniption," said Albo, who had sponsored his own legislation that would have raised $468 million a year for the Washington suburbs.

Meeting those demands while not sacrificing transportation projects in other parts of the state will be a delicate balancing act, several negotiators said.

The House plan is designed to pump much of its new money for transportation into those two high-growth regions, where GOP members could be politically vulnerable in the coming years. But they have been criticized by some for not providing enough money to either.

"In the short term, we're where we need to be. It's in the outer years where we need the work," said Del. Joe T. May (R-Loudoun). When asked whether he would work to convince his colleagues in the House that their plan needs more money, he said: "Absolutely. But we're going to have to come up with something that is palatable to everybody."

That won't be easy because there is disagreement in the chambers about how much each region should get and how each should get it.

Senate lawmakers say their plan provides more money than the House for the two regions. In a side-by-side comparison by Senate staff, Northern Virginia would get $470 million under the Senate plan and $268 million under the House proposal.

House leaders say those comparisons are misleading, but senators say they will insist that tax increases are necessary to provide enough of a boost in spending. Statewide, the Senate plan would put about $1 billion a year toward transportation, and the House plan would allocate about $350 million annually.

"It makes little sense to go through this grinding and gut-wrenching exercise" for what the House package would raise, Chichester said.

A Budget by June

In addition to solving their dispute over transportation, budget negotiators also must find a way to compromise on numerous other budget issues, including funding for colleges, health care, police officers and education.

But lawmakers said they believe little can be achieved in those areas until they reach a deal on whether to raise taxes for roads and transit.

"Transportation is so intertwined in every aspect of the budget," said Stolle, the Virginia Beach delegate.

He said pressure will rise as March turns into April and then May and the state becomes desperate to have a budget to plan for the next fiscal year. "Transportation is extremely important, but the integrity of government is terribly important," he said.

Del. Timothy D. Hugo (R-Fairfax) said he does not believe the House will vote for tax increases. Unlike 2004, he said, he feels little pressure from interest groups to buckle to higher taxes.

"The pressure is not even close to what it was two years ago," he said. "People posture. It's people playing chicken. But at the end, I hope people work things out."

Chichester, too, said he is hopeful for a resolution. But he dangled the possibility of a long wait until the budget is settled.

"I'll stay as long as it takes. I don't have anywhere to go," he said. "We have to have a budget by the end of June. I'll expect we'll have one by then."

Staff writer Rosalind S. Helderman contributed to this report.