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Beyer Cites Slide on Wall St. in Attacking RivalBy Ellen Nakashima and Spencer S. Hsu
Washington Post Staff Writers
Wednesday, October 29, 1997; Page B01
RICHMOND, Oct. 28 — Wall Street’s wild ride this week points out the risks Virginia would be taking in approving Republican James S. Gilmore III’s revenue-draining plan to phase out the property tax on cars and trucks, Democrat Donald S. Beyer Jr. said today.
Using Monday’s stock market slide and today’s volatile recovery as a convenient campaign prop, the Democratic candidate for governor — who is lagging in the polls — continued his assault on Gilmore’s popular tax-cut plan, urging Virginians not to divert money from education by buying into what he called "the myth of the no-car-tax slogan."
"What we’re seeing is, there are no free lunches," said Beyer, estimating that Gilmore’s plan could cost more than $4 billion over six years. "There’s no sustained predictable economic security. We can’t be sacrificing our future for a short-term political gimmick."
Gilmore’s plan, which is helping the former prosecutor from suburban Richmond cut into the Alexandria Democrat’s home turf advantage in high-tax areas of Northern Virginia, assumes that the state will experience greater economic growth during the next few years than in any period since the 1960s. That growth, Gilmore says, will create additional tax revenue that will allow the state to afford his tax cut.
But economic analysts say that a volatile market could quickly change Virginia’s revenue picture.
The state just ended the fiscal year with a $216 million surplus. More than three-quarters of that extra money came from higher-than-expected tax collections from residents and corporations, officials said, which largely were the result of capital gains created by the bull market.
"Revenue forecasting is loaded with uncertainties," said John Knapp, an economist at the Weldon Cooper Center for Public Service at the University of Virginia. "When you have fundamental changes in financial markets, it just complicates it."
Beyer and several economists haven’t been alone in questioning Gilmore’s assumption about Virginia’s future growth. Last summer, several members of Republican Gov. George Allen’s board of economic advisers said Gilmore’s plan rested on unlikely assumptions of revenue growth and on government spending limits.
But today Gilmore, who has called Beyer’s attack on his tax-cut plan an act of desperation by a trailing candidate, shrugged off concerns about the stock market and questions about the affordability of his tax-cut plan.
"I think people ought to relax," Gilmore said.
"The economy of the United States is strong, and the economy of Virginia is even stronger," said Gilmore, campaigning in a low-income Petersburg neighborhood with Gov. George Allen (R). "There’s nothing to shade over our campaign to make the essential investments I want to make in education and tax cuts."
Tonight, Gilmore attended a fund-raising reception in McLean featuring former Joint Chiefs chairman Colin F. Powell and Sens. John W. Warner (R-Va.) and John McCain (R-Ariz.)
Gilmore’s plan to phase out the tax on the first $20,000 in value of a car or truck counts on state revenue growth of 6.2 percent a year and low inflation. Beyer argues that that would drain $1.1 billion from public education, as part of a $4.5 billion toll over six years. Beyer has offered a smaller proposal for an income tax credit toward the car tax, a five-year plan that would cost about $1 billion.
"At a time when the stock market can lose 7 percent of its value in a single day, it is important for us to have a leadership that will make the fundamental investments in education and roads that will enable us to withstand the ups and downs in the economy," Beyer said today while stumping in the capital’s African American business district.
The sniping over whether Gilmore’s tax-cut plan is affordable indicates that the proposal — which was so popular that it led Beyer to come up with his own tax cut — is likely to be the dominant theme of the campaign through Election Day.
With Tuesday’s election drawing closer, Beyer and Gilmore are stepping up their attacks on one another over the car tax and a range of other issues, both over the airwaves and in campaign appearances.
Polls indicate the assaults on each other’s credibility have hurt both candidates, but especially Beyer, whom Gilmore has portrayed as a dishonest politician who frequently changes his positions on key issues.
Gilmore launched three new television ads pitching his tax cut on Monday. While one shows eight voters complaining how they hate the tax, two others accuse the Democrat of lying, without further explanation.
"Desperate and losing, Don Beyer has resorted to the most shameful attack of all: fear," a woman narrator says in both spots. "Now Beyer is running even more negative ads that lie about Jim Gilmore. That’s right, lie."
Firing back, Beyer began airing an ad in Northern Virginia today that calls Gilmore’s tax scheme a fraud. The ad claims Gilmore’s plan wouldn’t take full effect till 2003, would still allow localities to raise their car-tax rates, and would cut education $1.1 billion.
In person, Beyer assails Gilmore’s "dishonest tax plan" at every appearance.
"This car tax scheme is the opposite of what any good business leader would do," said Beyer, who ended the day at a rally in Fredericksburg. "The stock market goes up. But it also goes down, too."
© Copyright 1997 The Washington Post Company
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