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  •   Va.'s Car-Tax Cut Is Ready to Roll

    By Spencer S. Hsu and R.H. Melton
    Washington Post Staff Writers
    Saturday, April 25, 1998; Page A01

    RICHMOND, April 24—The Virginia General Assembly agreed tonight to launch Gov. James S. Gilmore III's car-tax rollback, the biggest tax reduction in the state since World War II, and to help local districts build and repair schools for the first time in more than 40 years.

    The legislative package includes $435 million to cut the car taxes paid by most Virginians by 12.5 percent this year and 27.5 percent next year -- making a down payment on Gilmore's $2.8 billion plan to virtually eliminate the unpopular levy over five years.

    It also delivers the Democrats' top legislative priority: $110 million to help schools build their way out of an estimated $2 billion backlog in needed construction.

    After a final frenzy tonight in which lawmakers amended legislation with scissors and tape on the floor, the Senate voted 35 to 0 for the Personal Property Tax Relief Act of 1998. The House of Delegates followed, 99 to 0, clearing the way for adjournment of the special session at 9:22 p.m.

    Gilmore, calling from Dulles International Airport after a fund-raising event, sounded ecstatic in separate speakerphone calls to legislators and reporters.

    "A bell has been rung in Virginia tonight that can never be unrung," he told Democratic and Republican leaders who gathered in the ornate conference room on Gilmore's floor in the Capitol. "We haven't gotten half a loaf. We have gotten the whole loaf!"

    Members of both parties agreed that Gilmore did have some reasons to crow -- he won the first installment of his key campaign promise and managed in recent weeks to capture a share of the credit for the school construction money that Democrats had needled him about incessantly during the regular session.

    Democratic leaders chose to focus on the school money, an accomplishment they hope to use to their advantage in the next elections.

    "We have made a historic step. We have not for 50 years provided money for school construction," said Del. Kenneth R. Plum (Fairfax), the state Democratic Party chairman. "We showed the viability of Democrats, that we have the ability to stand up for our ideas at a time we are evenly divided in the House and outnumbered in the Senate."

    In putting final touches on the car-tax cut, the lawmakers delivered on Gilmore's promise but also included measures designed to protect the state treasury.

    Taxes on the first $20,000 of a car's value will drop by 12.5 percent this year and by 27.5 percent in 1999. Drivers will pay the full amount this fall, but will get a rebate check. The bill for 1999 will include the reduction.

    The big winners are owners of cars, trucks or motorcycles valued at less than $1,000, for whom the entire tax is wiped out immediately.

    The tax cuts would continue in stages over the following three years, reducing the tax on the first $20,000 of a car's value by 47.5 percent in 2000, by 70 percent in 2001 and by 100 percent in 2002.

    For those years, however, lawmakers would have to vote again to include money in the state budget, and legislators also imposed several safeguards today that would delay the cuts if the state runs into budget trouble.

    The tax cut cannot go forward in any single year if the cost exceeds 8 percent of the state's general fund, or if revenue estimates for the year fall one-half percent below forecasts, or about $42 million off.

    "That does add more stability," said Del. John H. "Jack" Rust Jr. (R-Fairfax).

    About 40 percent of the tax cut will flow to Northern Virginia, home to about one-fourth of Virginia's population and its highest-valued cars and tax rates.

    Lawmakers also launched a $110 million financing program for school construction, overcoming contention between rich and poor districts over who would benefit most.

    They agreed to send $55 million to districts this year in grants requiring a local match.

    Half of that sum would be used to give $200,000 grants to all 137 districts, and the rest would be divided based on enrollment and economic need. The remaining $55 million would be distributed in 1999 based on a formula set by a legislative commission.

    The agreement came only after the Senate rejected House and Democratic efforts to sweeten the total program to $125 million and to make the two-year program permanent by funding it through the state lottery.

    Many Democrats, particularly in Northern Virginia, said the final deal was a "one-shot" program that would mean a drop in the bucket for the region.

    Fairfax County, which teaches one in eight Virginia students, will get $4 million under the program, or $14 per student per year. Fairfax carries more than $500 per child in construction debt. An earlier version of the bill would have been more generous to Northern Virginia and other affluent suburban areas. Under that formula, Fairfax would have gotten $6.8 million.

    "I'm disappointed. We could have gotten more, and we could have gotten permanent funding through the lottery," said Sen. Janet D. Howell (D-Fairfax).

    Under the final plan, Alexandria schools will get $597,111; Arlington will get $725,071; Loudoun County will get $1.2 million; and Prince William County will receive $3 million.

    The General Assembly session that ended last month was the first in at least 114 years in which control of the legislature was evenly split between the two parties. The division translated into the longest session in the state's history and made agreement on even seemingly minor issues elusive.

    "When you have a legislature almost perfectly divided between two parties, there will be a lot of sound and fury," said Sen. William C. Mims (Loudoun), one of three new GOP senators who gave the party control of the Senate for the first time since 1884. "Ultimately, when the dust settled, we did good work."

    Besides enacting the $500 million package to cut the car tax and build new schools, lawmakers approved a $40 billion budget, including a measure extending health insurance to 83,000 children of poor families.

    Although Gilmore won on the car tax, the General Assembly did manage to thwart him at other points. The first-year governor was forced into accepting the use of federal Medicaid to provide the children's health coverage, after lawmakers rejected his less comprehensive plan to use private insurers.

    And Gilmore failed to deliver his second big campaign promise, to add 2,000 new teachers to Virginia classrooms. The legislature approved $66 million to hire 600 additional teachers, but allowed schools to use the money to pay as many as 1,400 teachers already in classrooms.

    Somberly, Gilmore said that the legislature should have approved the additional teachers, but he added, "Those failings of the General Assembly should not be what we dwell on tonight."

    Many legislators, Republicans and Democrats alike, faulted Gilmore on perhaps more subtle matters, including an executive style that seemed to them at times needlessly confrontational.

    "There are things we do need to work more closely on," said state Sen. J. Randy Forbes of Chesapeake, chairman of the state Republican Party, who broke with Gilmore on new schools.

    Del. Robert H. Brink (D-Arlington) said Gilmore most often made mistakes with the assembly because he had never been a legislator.

    "The subtleties of communication and compromise still lie before him," said Brink, who watched Congress for 15 years as a Capitol Hill staff member. "It just seems needless, especially when the balance of power is so heavily tilted in favor of the executive anyway."

    But Gilmore wasn't listening to any criticism, for this was a night he savored. Not only was it his first session, but he also fell ill with pneumonia halfway through and rode the unfamiliar -- and jolting -- roller coaster of working with 140 egos. Still, he came out with much of his legislative package intact.

    Asked tonight to dissect his own performance, Gilmore paused on the telephone, cleared his voice and told reporters there were four key reasons for success: his own "focus and determination"; a "willingness to be open and listen"; the new dynamic of power sharing in the legislature between the two parties, which created "an entirely different legislature than we've seen in Virginia before"; and his own shrewd decision to sign the budget quickly to lock in the money for tax relief.

    Finally, one reporter called out to Gilmore and asked what he was going to do now, and another cracked, "Going to Disney World?"

    Then Gilmore, not an especially spontaneous politician, roared back: "I am going to Disney World! I'm flying back to the Capitol tonight!"

    © Copyright 1998 The Washington Post Company

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