A strong desire to avoid an election-year tax increase is generating growing support for tax collection speedups, spending deferrals and highway fund transfers to wipe out a projected $103 million budget deficit in Virginia.
During the last five days, all three candidates for governor and the joint Republican caucus of the Virginia General Assembly have endorsed these measures as the best way to close the budget gap.
The leader of the Senate Democratic majority, Sen. Adelard L. Brault of Fairfax County, also has spoken favorably of the solutions to the budget crisis without tax increases, but said in a floor speech today he thinks it is "premature" to make a final decision.
The non-tax increase solutions being discussed also would avoid the necessity of cutting state aid to cities and couties. And $80 million cut in state aid earmarked for local school programs had been suggested by Gov. Mills E. Godwin as one step toward balancing the budget.
It is clear, however, that the most appealing aspct of the new budget-balancing proposals is the hope they offer of avoiding an increase in either the state sales or income taxes. There are obvious political reasons for avoiding these increases, but many legislators also feel that major taxes should be raised only during even-numbered-year legislative sessions when Virginia's two-year budget is adoptd. The odd-year sessions, like the current one, are-supposed to be short and concerned with minor budget adjustments and general legislation.
The two Democratic candidates for governor, former Attorney General Andrew P. Miller and former Lt. Gov. Henry E. Howell, have said they are flatly opposed to any tax increases. Howell made a Jan. 8 speech in Richmond criticizing proposals to raise the 4 per cent sales tax to 5 per cent.
He said any major tax increase would make Virginians the most heavily taxed people in the South. He also said current levies are straining the pocketbooks of a state where he said 85 per cent of the workers make less than $15,000 a year.
A week later, Miller said in a speech in Blackburg that it would be wrong to raise taxes to solve an over estimation of state revenues made when the two-year budget was adopted last year. Miller said he doubted that the Assembly would have raised taxes in 1976, even if it had known that revenues would grow as slowly as they have.
In addition to $35-million highway fund transfer to the state's general fund, the new proposals call for employers and retailers to pay their withholding and sales tax collections to the state in the month they are withheld or collected. Under current law, those taxes are paid on the 20th of the month following the month of collection.
The effect of this would be to add part of one month's total sales and withholding tax colletions to the current biennium's revenues. This would happen when taxes that normally would be paid to the state in July, 1978, would be paid in June, the last month of the two-year budget period.
State tax officials are still compiling estimates of the revenue addition that might be realized from the tax speedup, but those making the proposals are saying it would produce from $35 million to $45 million.
The collection speedup is being called the "Illinois plan" because it was recently adopted in that state. Legislators apparently were first told of the possibility of using it in Virginia during a meeting between Gov. Godwin and members of the Tax and Budget Committees before the Assembly session began.
All advocates of the nontax increase budget solutions - including the prospective Republicans gubernatorial nominee, Lt. Gov. John N. Dalton - favor the two tax collection speedups. But there are some differences over how to handle the highway fund where quality standards are not as transfer and over other proposals.
The Republicans, in a statement released today, said they want the highway funds to be repaid when the next general fund budget is adopted. Highway funds come from gasoline taxes earmarked for road construction. Highway officials and lobbyists always have opposed their use for general programs, supported by general taxes.
Miller said he would leave a decision over whether to repay the $35 million until 1978. Howell said he favors a permanent return to funding of the state police wit highway funds. Current police costs are about $35 million.
The Republicans also want to complete closing the budget gap with another 2.5 per cent cut in state agency spending. Godwin already has trimmed agency budgets by 5 per cent.