Gov. James S. Gilmore III, right, takes the oath of office from Chief Justice Harry L. Carrico of the Supreme Court of Virginia. (By Robert A. Reeder–The Washington Post)

By R.H. Melton
Washington Post Staff Writer
Saturday, January 24, 1998; Page C01

RICHMOND, Jan. 23—Virginia Gov. James S. Gilmore III detailed his plan to cut the car tax today, conceding that its first two years would cost nearly twice his initial estimate and likely require less spending on other state initiatives -- including some proposed just last month by outgoing Gov. George Allen.

Gilmore is banking on Virginia's bustling economy to cover much of the rising cost of the first two years of his tax cut, which he said will be $493 million, compared with his fall forecast of $260 million. In the proposal he outlined today, the new Republican governor was not shy about slicing into the two-year spending plan Allen sent to the legislature in December.

Among $134 million in suggested cuts, Gilmore proposed putting off an Allen proposal to raise higher education funding by $25 million -- a spending increase that was widely praised by Democrats -- and trimming $37 million from a plan for the state to buy group life insurance for public employees.

But Gilmore confidently predicted that Virginia's robust economy will make the five-year, $2.8 billion phaseout of the car tax affordable, without causing many painful budget cuts.

"I have been looking forward to this day," a beaming Gilmore said as he began a Capitol news conference. "It's good policy; it's the right thing to do for the people of Virginia."

Some Democrats pounced immediately on the tax-cut plan, saying it favored the rich and would bleed vital state government programs. But even the most ardent foes said that the political realities in a General Assembly tilting increasingly toward Republicans favor relatively easy passage of the rollback.

At one point this week -- the legislature's first full week of work this year -- Del. C. Richard Cranwell (D-Roanoke), the House floor leader, shook his head and said wistfully, "I expect I'll be the lonely voice in the wilderness" opposing Gilmore's plan.

Gilmore's campaign clarion call, "No Car Tax!", helped to create a climate to repeal the bulk of the personal property tax, which costs most Virginia households several hundred dollars a year. Passage of the repeal is w idely viewed here as a test of the new governor's leadership, and the leadership of GOP lawmakers who already have consolidated their power significantly this session.

The tax cut would apply only to the first $20,000 of a car's value, which in Virginia would encompass 5 million vehicles. Owners of expensive cars likely would get the most money back in the early years of the cut, which is based on reducing the tax 15 percent the first year, and 30 percent the next.

While preaching about the tax cut's affordability, Gilmore and his senior aides also took pains to point out their plan's safety valve -- a provision in the tax-cut legislation they will file on Sunday that would freeze the phaseout if the economy softens, slowing state revenue growth.

"It sets a steady source of giving back to the people what they've earned," said M. Boyd Marcus Jr., Gilmore's chief of staff. "It's a responsible plan."

Gilmore's $134 million in budget "adjustments," or cuts to the Allen budget, also include $14.5 million in savings and cuts in Medicaid and welfare programs, and saving $12 million by limiting grants to non-state agencies.

Gilmore also plans to save $1 million by changing the funding source for the Smithsonian Air and Space Museum expansion at Dulles International Airport, a project that eventually will cost the state $40 million, mostly for roads and other infrastructure.

Some Democratic legislators said they were particularly rankled by the proposed education cut, which comes at a time when state universities are clamoring for more money to uphold or improve their programs.

"It was the one singular standout of Allen's budget," said Del. Kenneth R. Plum, a Reston Democrat and educator who is on the powerful Appropriations Committee.

But fellow Democrat James W. Dyke Jr., a Northern Virginia lawyer and education adviser to recent Virginia governors, said the legislature should let Gilmore craft his education agenda at his own pace, starting with the latest in a long series of studies of state schools.

"Obviously, we'd like to see some things happening, but the governor wants to have all the information in front of him," Dyke said. "They should give the governor a little room to maneuver."

Dyke, who as secretary of the Fairfax County Chamber of Commerce is helping to lead a program to enhance George Mason University, said Gilmore deserved credit for his commitment to bolster GMU's technology program.

Gilmore said today that he is setting aside $4.1 million for two years to establish a minor-degree program in information technology at GMU to meet the pressing regional demand for skilled workers in that area.

High-technology companies in the Washington suburbs are expected to match the state money dollar for dollar; the program will also include fast-track certificates in information technology and merit-based scholarships in that subject area.

Meanwhile, Plum and others attacked the tax cut on several other fronts. Plum said the phaseout would offer little real relief this year. "It's a little, incremental step," he said.

"When people see their actual bills, they are going to be upset," Plum added. "We're a long way from eliminating the car tax."

Del. Clifton A. Woodrum (D-Roanoke) derided the tax cut as the "rich man's approach" to governing.

"The owner of a $130,000 Rolls-Royce will get tax relief and the guy driving around a $12,000 pickup will get 30 percent back," Woodrum said. "You can do the numbers, but it's not fair nor even-handed nor equitable."

But Del. Vincent F. Callahan Jr. (R-McLean), who will manage the tax-cut bill on the House floor, said the plan was well constructed, with important safety valves to satisfy skeptical Democrats and localities that initially opposed the program.

"There is a historical animosity of local government towards state government," he said. "They feel like they have to come crawling to Richmond to get their place at the table."

Callahan, Gilmore and other Republicans said they were generally unfazed by the far higher cost of the tax cut. "I thought they underestimated the cost from the beginning," Callahan said of Gilmore's team.

Staff writer Spencer S. Hsu contributed to this report.