Virginia's Budget Deadlock Is Broken

By Rosalind S. Helderman
Washington Post Staff Writer
Saturday, June 17, 2006

RICHMOND, June 16 -- Senior Virginia lawmakers agreed Friday to a new two-year spending plan, setting up a final vote of the General Assembly to end the longest budget stalemate in the state's history.

The agreement between 11 negotiators from the Senate and the House of Delegates broke a deadlock of principle and pride that for the first time had brought Virginia to the brink of a new fiscal year with no budget to finance state services.

Ninety-six days after the end of the regular legislative session, the handshake deal means lawmakers should avoid a government shutdown or the need to adopt a Washington-style continuing resolution to keep the state's current spending plan operating.

But it leaves unresolved the major issue that had held up adoption of a new budget: the promise by Gov. Timothy M. Kaine (D) to provide about a billion dollars in new funding for transportation each year.

In May, Kaine's allies in the Senate agreed to House demands that they back off their proposal for tax increases to pay for transportation improvements. Instead, both the House and Senate agreed to debate transportation funding in the summer or fall, a discussion likely to prove contentious.

"A lot of lessons were learned this year," said Del. Vincent F. Callahan Jr. (R-Fairfax), chairman of the House Appropriations Committee. "You just don't play brinksmanship."

The budget would provide the state's share of a 4 percent raise for teachers and state employees. It would pump $200 million into Chesapeake Bay cleanup and provide $17 million for rivers in southern regions of the state that don't feed the bay.

Legislators decided to repeal Virginia's estate tax, levied on holdings of at least $2 million. They also would impose a cap on a popular program that provides tax credits for landowners who promise to conserve open space. The program has placed tens of thousands of acres in conservation easements but has cost the state far more than anticipated.

Even as the group signed off on the deal, lawmakers acknowledged it will take about two weeks for their colleagues to vote and the governor to have his say, meaning the legislature still will bump up against the June 30 deadline to pass the $72 billion budget.

When it seemed uncertain that they would meet the deadline, Kaine asserted that he had the constitutional authority to run the government without the budget. Attorney General Robert F. McDonnell (R) warned of a constitutional crisis if he did so.

Their conflicting opinions helped motivate legislators to break the impasse.

"The governor is certainly pleased that an agreement is reached, and he congratulates the conferees," Kevin Hall, Kaine's press secretary, said Friday night. "We are pleased with the commitment to continue a meaningful discussion on our transportation challenges."

The Republican-controlled House and Senate have clashed over the budget three times in the past five years. The repeated failure of the GOP's conservative and moderate factions to resolve their differences over taxes and spending has given Democrats hope that they might retake control of one or both legislative chambers next year.

"I hope the people are repulsed by this," said Sen. R. Edward Houck (D-Spotsylvania), one of the budget conference's three Democratic members. "I hope they see fit to grab the reins and make a change."

Still, Houck acknowledged that a public tired of the unending legislative fights may not spare either party. "The pox is on all of our houses," he said. Republicans, meanwhile, insisted that despite the recent past, this year's grinding dispute will end up an aberration.

GOP delegates said senators learned a lesson that will improve future negotiations: They cannot embed proposed tax increases in the state budget. "That will ensure a smoother process in the future," said Del. M. Kirkland Cox (R-Colonial Heights).

Senators countered that the lengthy fight resulted from their attempt to boost transportation funding, a politically tricky proposition that was last tackled significantly 20 years ago.

In the final week, negotiations became a frustrating stop-and-go affair as each side took turns predicting a quick resolution or a total meltdown. "Wintering in Richmond is one thing; summering is quite another," said John H. Chichester (R-Northumberland), chairman of the Senate Finance Committee, at an evening news conference announcing the deal.

The group would deadlock on a few spending items for hours, only to quickly resolve them and a dozen others.

For more than two weeks, they discussed only construction projects at state colleges and other agencies before finally agreeing to a record $1 billion that would result in a building boom at Virginia's public institutions of higher learning.

Despite agreeing to put off debate about new transportation funding, both sides said they would add some money now. They argued for weeks about how much. Delegates and senators knew action on that issue would set up the larger debate on transportation that is to come: Spend more now, as delegates wanted to do, and the case for higher taxes will be weaker. Spend less, as senators now argue, and the need for new revenue will be more apparent.

In the end, the senators' point of view held sway: The deal includes only $339 million from the budget surplus for roads and rail, and that money will be spent this year only if the General Assembly can adopt additional legislation addressing the transportation issue by Nov. 1.

Delegates said they will hold senators responsible for the paltry sum.

"We had a real chance to put some significant funds into transportation this session, and we didn't, and it wasn't our choice," Cox said.

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