RICHMOND, JAN. 25 -- The first winning number hasn't been scratched off a Virginia lottery ticket, but legislation has been introduced in the General Assembly to use its profits to eliminate the sales tax on food. Another bill would extend state-sanctioned gambling to parimutuel betting on horses.
Sen. Wiley F. Mitchell Jr. (R-Alexandria) proposed today using profits from the lottery, which is expected to begin operations late this spring or early summer, to repeal the state's 3.5 percent sales tax on groceries, which he called "one of the greatest economic burdens" on state residents.
House Minority Leader Raymond R. (Andy) Guest Jr. (R-Front Royal) said he will offer a bill to put a parimutuel betting referendum on the ballot in November.
"The success of the lottery referendum shows that Virginians are not adamantly opposed to at least some type of gaming activity," Guest said.
Because both measures are sponsored by Republicans, neither can win without bipartisan support because Democrats control both houses of the legislature.
Mitchell's bill would create "humongous problems" for merchants about what qualifies as food, said Sumpter T. Priddy Jr. of the Virginia Retail Merchants Association. For example, he said, "Is ginger ale a food when served to a sick person and not at a cocktail party?"
Gov. Gerald L. Baliles, whose biennial budget proposal calls for lottery profits to be used for capital construction projects, said he is opposed to Mitchell's idea because, at least in its early stages, the lottery would not provide "a reliable revenue stream," according to his press secretary, Chris Bridge. Baliles might support a proposal such as Mitchell's "in the future," she said.
Sen. Clive L. DuVal 2d (D-McLean) said he doubted that the lottery would make enough money to offset the food tax, "especially since we can't promote it by advertising." He was referring to a compromise, made to Mitchell and other legislators who opposed the lottery, to get the lottery referendum on the ballot last November, where it won overwhelming approval.
Sen. William E. Fears (D-Accomac) told colleagues that Mitchell was "one of the main opponents of the lottery . . . . Now he wants to use the money. I hope you don't fall into that trap."
Mitchell's plan, which has the backing of all 10 Republicans in the 40-member Senate, calls for the state to retain lottery profits in a "food tax repeal fund" until enough money is accumulated to offset the state's portion of the sales tax on groceries -- between $600 million and $900 million -- for two years.
Mitchell estimated that would happen in about three years, whereupon the food tax would be abolished and the lottery profits would be put into the state's general fund.
Beyond that, Mitchell said, the natural growth in the nonfood portions of the sales tax, along with lottery profits, would more than offset the loss of the food tax.
The additional 1 percent sales tax that all local governments tack on -- for a total tax of 4.5 percent -- would not be affected by Mitchell's proposal, although the cities and counties could choose to also eliminate the food tax on their share.
The parimutuel proposal is essentially the same measure that Guest sponsored in 1978, when it was defeated at the polls, but he said this bill would give a greater share of the profits to race track operators at the expense of the state.
"Some will see this proposal as being very sinister, but it's meant to assist an ailing industry, horse breeding in Virginia," Guest said.
Richard R.G. Hobson, a former delegate from Alexandria who heads a statewide group opposed to parimutuel betting, vowed at a news conference here today to "work to defeat any efforts to expand organized gambling in the Commonwealth of Virginia, especially parimutuel betting." He said Virginians "have got to swallow the lottery first."