Gilmore Plan Overhauled in Assembly

RICHMOND, Feb. 22 – Deeply divided over Gov. James S. Gilmore III's centerpiece car-tax cut, Virginia House and Senate lawmakers overhauled his two-year, $40 billion budget into sharply different versions today, splitting with the Republican governor not just over tax relief but over how to aid schools, colleges and other programs.

Awash in $2.5 billion in new revenue, budget committees in both houses lavished money on public education, school and college construction, and social programs at levels unseen since the 1980s. But the House of Delegates led the way in casting aside, or at least modifying Gilmore's key programs, hijacking his plan to add 2,000 schoolteachers and proposing $100 million in road-building bonds over his objections.

"It's different, it's all different. That's the operative language," said Del. John A. "Jack" Rollison III (R-Prince William), a member of the House Appropriations Committee. "We've been responsive to the governor's intentions but in a different way than he asked."

Gilmore fared better in the Senate, which also was gentler to his $493‚million car-tax cut last week. But Finance Committee members still were more generous to colleges, state workers and children's health than the governor requested.

"By and large, [Gilmore] got most of what he wanted in the budget," said Senate Minority Leader Richard L. Saslaw (D-Fairfax), who said a healthy economy was creating "the best of times" this year in Virginia.

However, Saslaw cited a bipartisan fear of the long-range impact of Gilmore's five-year, $2.8 billion tax cut. "The problem is not next year – it's in the out years."

Today's separate House Appropriations and Senate Finance Committee budget documents set the base line for torturous, three-way budget talks between the House, Senate and administration that will likely dominate the final 20 days of the session.

Those talks will provide a major test for Gilmore, who suffered some Republican defections today, as well as for divided government, given that both the GOP-led Senate and an evenly split House are under party power-sharing agreements.

"We're at the end of the second inning; we've got a lot of time left . . . to deliver on the promises to the people of Virginia the tax relief they so clearly demanded," said David Anderson, chief counsel to the governor.

"It's going to be a rough couple of weeks," said Katharine M. Webb, lobbyist for the hospital industry and a former Democratic gubernatorial aide, echoing consensus of expectations among many Richmond observers. "There's still so much work to be done."

The widest gulf between the House and Senate budget writers came over the car-tax cut, Gilmore's premier campaign pledge and the heart of his first year's agenda.

Senate budget writers endorsed a GOP plan approved by the full Senate to trim about 20 percent from Gilmore's fully implemented tax cut, which would cost $2.8‚billion over five years, and to slice $20‚million from Gilmore's request over two years by lowering the vehicle value eligible for tax relief from $20,000 to $15,000.

The House panel voted to slash $110 million from Gilmore's tax cut over the next two year to pay for school building grants and to devote at least a share of the remaining $380‚million to cutting the state's 4.5 percent sales tax on food.

Elsewhere, the House panel diverted $58 million Gilmore had sought to fulfill a campaign pledge to hire 2,000 elementary school teachers into a $59 million, Democrat-led effort to reduce class sizes for kindergarten through third grade and to provide elementary school reading specialists.

Both are part of a $780 million infusion of new money to public education.

The House included $100 million for a Northern Virginia transportation bond program to aid local projects in all five major counties and cities, which Gilmore opposes. The House and Senate also split over school construction, with the House devoting $128 million in grants to local districts overall and the Senate proposing to raise the amount of low-interest loans that localities can borrow from the state by $100 million.

Both houses boosted salary increases to state workers, teachers and professors by $33 million and used cash instead of bonds to pay for about $60 million in college capital projects, despite Gilmore's preferences.

Lawmakers also agreed to spend $37 million to expand Medicaid-style health insurance for the first time to 83,000 children in low-income working families under a federal matching program, discarding a $30 million, non-Medicaid program Gilmore sought.

Northern Virginia did well, getting House approval for $4 million for teachers to help offset the region's higher cost of living. Both houses approved several million for capital and operating programs at George Mason University and expanded worker retraining and technology funding.

"Everything we asked for, we seem to have gotten something," said Del. Vincent F. Callahan Jr. (R-Fairfax), who is co-chairman of both the Appropriations Committee and Northern Virginia delegation.

Overall, Senate Finance Committee Co-Chairman John H. Chichester (R-Stafford) said, the budget's $300‚million, debt-free capital spending plan "marks the commonwealth's return to financial stability."