Budget Negotiators to Try Again to Clear Roadblocks

By Rosalind S. Helderman and Chris L. Jenkins
Washington Post Staff Writers
Tuesday, March 21, 2006

RICHMOND -- The 10 Virginia lawmakers who will resume negotiations Tuesday on the state budget know they are far apart on transportation spending, but that is about the limit of their mutual understanding.

Transportation aside, the House and Senate still must negotiate on spending for other state services. In those areas, the two sides can't even agree about whether they disagree.

In the words of House Speaker William J. Howell (R-Stafford), those other differences are "minuscule." House members say senators are holding an agreement on the $72 billion budget hostage to their desire to raise taxes for road and transit improvements.

Senators counter that the transportation fight filters through much of the rest of the budget, because to avoid raising taxes, delegates have diverted money from the state's general fund for education, health and public safety to transportation spending and have proposed borrowing millions of dollars.

"It's very fundamental," said Sen. R. Edward Houck (D-Spotsylvania), one of the Senate's negotiators. "In the House budget, at the end of two years, you've put a drain on the general fund, you've incurred debt and you have no substantive transportation program. What have you gained?"

The General Assembly passes a budget every two years. Although the House and Senate are controlled by Republicans, this is the second consecutive time they have failed to reach a budget agreement during their regular session.

Virginia must have a spending plan by July 1. Gov. Timothy M. Kaine (D) called for a special session to start March 27, but the assembly's budget negotiators have met several times since the legislature adjourned March 11.

In the 2004 stalemate, the House resisted Senate attempts to raise taxes to support more spending on some services. The two sides were divided initially by $1.7 billion, of which nearly $1 billion was to pay for public education.

This year, the Senate would devote about $1 billion a year more to transportation spending by raising taxes on the sale of gasoline, cars and homes. The House would spend $350 million more a year.

Howell said there is "no justification" for the two sides to be deadlocked on anything but transportation. He pointed to areas where the gap is small. For instance, both sides would spend about $12 billion on public education, about $1.1 billion on mental health and $3.35 billion on public safety.

Add up all the differences over two years and, according to state Department of Education data, the gap for school funding is less than $100 million. Take one county, Fairfax, and that translates to a difference of $1.3 million in spending for schools. In 2004, Fairfax schools had $48.3 million riding on the outcome.

"You're not talking about a difference of millions and millions," said Michael Molloy, director of government relations for the school system. "Really, what we're focused on is trying to make sure . . . we end up with a budget that's right around where they are right now."

The Senate would provide the state's share of a 4 percent raise for all teachers, while the House would go for 3 percent and start the raise later.

The House would provide more funding for health care for retired teachers. Meanwhile, the Senate wants to refill the state's fund to help counties build schools and give more money to pre-kindergarten education. The House would instead spend more on vocational programs.

Each chamber would devote more than $200 million a year for Chesapeake Bay cleanup, an investment without precedent in Virginia history. Chuck Epes, communications coordinator for the Chesapeake Bay Foundation in Virginia, said with that kind of money, his group's lobbying efforts are over for the year. "This is a political issue that the House and Senate have to work out," he said.

There are differences in funding for universities. Close to half the total gap involves the state's community college system. Jesse Ferguson, executive director of the student advocacy group Virginia21, calls the figure "significant" -- roughly $200 for every community college student.

Still, across a more than $3.7 billion budget for colleges and universities, the two sides differ by only $57 million, according to a House Appropriations analysis.

"From my perspective and despite the rhetoric, these differences are hardly insurmountable and are very resolvable," Del. Phillip A. Hamilton (R-Newport News), a negotiator, said March 11 of the budget disagreements.

But some senators feel strongly that the House plan to borrow money when the state is running a $1.4 billion surplus is imprudent. They have been especially critical of the House proposal to take $40 million a year earmarked for schools and other programs and use it for transportation projects.

"We do not believe we should rob Peter to pay Paul," said Senate Majority Leader Walter A. Stosch (R-Henrico).

The House contends that now is the time to take advantage of the state's excellent credit rating by borrowing money to pay for needed projects.

"What's the point of having this triple-A bond rating if you can't even use it?" asked Del. Vincent F. Callahan (R-Fairfax), House Appropriations Committee chairman.

It's difficult to predict how the matter will be resolved. The narrower gulf on the issues besides transportation could make a settlement easier -- or it could cause the stalemate to drag on even longer, because fewer interest groups are waiting anxiously for the resolution.