Budget Flap Is Gilmore's Legacy in Va.
Former Governor Trails In Race for U.S. Senate

By Anita Kumar
Washington Post Staff Writer
Wednesday, October 29, 2008

RICHMOND -- Republican James S. Gilmore III swept into the governor's office a decade ago on a pledge to cut taxes at a time when Virginia's soaring economy left the state with extra money to spend.

He put thousands of new teachers in classrooms and pumped millions of dollars into the state's historically black universities. He hired the nation's first secretary of technology. He beautified the state's rest stops and supervised a makeover of the historic governor's mansion.

But Gilmore's inability to reach agreement on a spending plan with legislators his final year in office led to months of bitter public bickering with Republicans as well as Democrats. His reputation still hasn't recovered.

"The first three years were fabulous. Then came year four," said House Majority Leader H. Morgan Griffith (R-Salem). "He was a rising star, and in the span of three months, he left a negative impression he is unable to stave off."

Gilmore, 59, now a candidate for U.S. Senate, faces an uphill battle in an increasingly lopsided race against his popular successor, Democrat Mark R. Warner.

The former leader of the Republican National Committee, once a sought-after speaker, trails Warner by 30 points in most polls and by millions of dollars in fundraising.

The race to replace Sen. John W. Warner (R), who is retiring, has largely centered on the candidates' records as governor. Gilmore and Warner accuse each other of financial mismanagement, ineffective leadership and concealment of the truth.

"I would match my administration with Mark Warner's any day of the week and twice on Sunday," Gilmore said.

Gilmore, a lawyer who served as state attorney general before he was elected governor in 1997, traded in his first campaign slogan, "Education First and Then Cut Taxes" for "No Car Tax!" when he realized that Virginians wanted their taxes cut first and foremost, he said.

He promised to eliminate the dreaded personal property tax that localities levy on vehicles and to fully reimburse local governments for their revenue losses. The legislature quickly agreed to phase it out over five years but froze the phaseout in 2002 at 70 percent because of a budget shortfall.

Gilmore's campaign estimated that a full elimination o f the car tax would cost the state at least $620 million a year, but the actual cost ballooned to twice that amount.

Steve Horton, Gilmore's former deputy chief of staff, attributed the increase to "miscalculations" because of a lack of accurate information and a spike in the number of Virginians buying expensive cars in the booming economy.

For the first few years of Gilmore's term, the economy fueled record increases in state spending, even while the car tax was being phased out. In his four years in office, the budget grew 43 percent, one of the fastest rates in the nation during that period.

Gilmore focused much of the increase on education.

His administration paid for 4,000 new teachers to reduce class sizes and developed the Standards of Quality program established under his predecessor, George Allen (R). He cut college tuition by 20 percent while reimbursing schools for their revenue losses. He boosted funding to the state's historically black universities, Norfolk State University and Virginia State University, and to George Mason University.

Alan G. Merten, GMU president since 1996, said Gilmore called him after he was elected, eager to learn more about a school that he wanted to better reflect Northern Virginia's booming technology industry.

"Sometimes governors from down south don't understand Northern Virginia," Merten said. "He was from Richmond. He wasn't a tech person. But he wanted to learn."

Gilmore said he came to appreciate Northern Virginia's unique role in the state and wanted the region to receive the recognition it deserved.

"This was a very successful community . . . and it was not getting the support and the attention it deserved," Gilmore said.

A conservative who talked about limited government, Gilmore nevertheless created programs and championed a variety of issues other than education and technology.

He started an educational campaign to combat teen pregnancy and promote marriage. He overhauled Virginia's drug laws and looked for new ways to combat school violence. He expanded long-term care and services for the elderly and put money into the state's neglected mental health care system. He began cleaning up Bayview, a poor Eastern Shore community that had attracted worldwide attention.

But Northern Virginia leaders were frustrated with his failure to spend significant portions of the record budget surpluses on roads and mass transit.

He defends his record on transportation, saying he managed significant projects, including the Woodrow Wilson Bridge and the Springfield Mixing Bowl. Documents show that the federal government threatened to withhold money for the Mixing Bowl project because the Gilmore administration purchased the wrong parcel for a construction staging area. But Gilmore downplayed the trouble, saying he revamped a mismanaged and politicized transportation department plagued by lengthy delays and budget overruns.

Gilmore made headlines when he reached out to the African American community, condemning slavery and proposing a separate holiday for Martin Luther King Jr.

But his successes were often overshadowed by a confrontational style that did not sit well with Democrats and, many times, members of his own party -- even though they credited him with helping Republicans capture complete control of the General Assembly for the first time in more than a century.

"He never understood the difference between campaigning and governing," said Del. Kenneth R. Plum (D-Fairfax), who served as Democratic Party chairman when Gilmore was governor.

Gilmore punished those who did not support him by firing them, removing their spouses from appointed boards and vetoing pet projects.

"I can't remember a Republican governor that has had so many problems with the business community," said Clayton Roberts, executive director of Virginia Free, a Richmond-based coalition of businesses from across the state. "He can be very, very difficult and abrasive."

For many, Gilmore was never more difficult or abrasive than the times he discussed the car tax.

There had been signs early in his term that Virginia's economic growth could not sustain its record pace, and by 2000, that fear had become reality. But Gilmore insisted on continuing to cut the car tax.

"I think that when you run for office and you tell people you are going to try to do something and it's a significant reason they elect you, then you really ought to try to keep your word," Gilmore said.

The Republican-controlled General Assembly was divided. Legislators haggled for months, but Gilmore and his allies would not budge.

"He's one of those 'my way or the highway' kind of guys," said former senator H. Russell Potts Jr., a moderate Republican from Winchester who supports Warner. "He was hellbent on his legacy."

The legislature left Richmond without passing a revised budget for the first time in history. That left Gilmore to modify the state's old spending plan, shifting money and trimming more than $400 million from agencies to make up a shortfall while still paying for the car tax cut.

"Gilmore never told me anything he didn't follow through on," said former Virginia House speaker S. Vance Wilkins (R-Amherst), who supported him. "He did everything he said he would."

Critics, including Warner and his allies, accuse Gilmore of resorting to "gimmicks" to pay for the tax cut, including using money designated for transportation or from the national tobacco settlement. Gilmore and his former staffers acknowledge that they employed some of the maneuvers but said they were all legitimate.

By the end of his term, Virginia endured the bursting of the dot-com industry, the start of a national recession and the Sept. 11, 2001, terrorist attacks. The state faced a budget shortfall that many people thought Gilmore exacerbated by his insistence on cutting taxes.

"I think he started out pretty well, but there was a very different ending to the administration," said Sen. Kenneth W. Stolle (R-Virginia Beach), who has been critical of Gilmore but supports him in the Senate race.

Tomorrow: A look at Democratic candidate Mark R. Warner's record as governor.