A Virginia Senate committee today scuttled House-passed legislation that would have cut in half the state's unpopular 4 percent sales tax on food and drastically revised the state's income taxes, abruptly erasing any hope for major tax revision this year.
The votes also strangled the only serious threats to Gov. John N. Dalton's carefully orchestrated budget plans. Dalton, a conservative Republican, had argued with the Democrat-controlled assembly that a food tax reduction would jeopardize may popular state programs, including aid to localities and schools.
"They [the committee] just refused to listen to the voters, who have said time after time that this is the one tax that is the most unfair and unpopular," fumed Del. Warren Stambaugh (D-Arlington), an ardent opponent of the food tax.
The income tax revisions, which some legislators argued would have increased taxes on many Northern Virginians, fell victim to charges that the measure was too significant to be considered in the final week of the assembly's current session.
Despite their popularity in the 100-member House of Delegates, which is up for election this fall, neither tax measure had any appreciable support today in the 15-member Senate Finance Committee. It dispatched the cut in the food tax by a 12-to-3 vote and then killed the income tax revision by a lopsided 14-to-1 margin.
Many Northern Virginia legislators had opposed the income tax measure, sponsored by populist Del. Johnny Joannou (D-Portsmouth), saying that by eliminating the current tax credit for interest paid on home mortgages, it would unfairly increase taxes on homeowners in Washington suburbs where home costs are among the state's highest.
The food tax bill, which would have halved the present tax and provided an $18-a-year state income tax credit for Virginians earning less than $20,000, was the latest -- and traveled the furthest -- or repeated effort to cut the tax, enacted 16 years ago largely to finance the state's community school system.
In the end, the bill's fate was sealed by a coalition of Dalton allies, including Finance Committee Chairman Edward E. Willey (D-Richmond), and liberals like Sen. Adelard L. Brault (D-Fairfax) who feared the measure would trigger cuts in social programs.
Proponents of the tax cut today refused to concede that the issue is dead for this year. "The session isn't over yet," said Del. Archibald Campbell (D-Wythe), the bill's sponsor and chairman of the House Finance Committee. "You just keep your eyes open, and see what you'll see.
Campbell's committee still holds two other versions of the tax repeal, but most legislators said it is unlikely Willey and his colleagues will approve either bill after today's vote.
Sen. Dudley J. Emick Jr. (D-Botetourt) led the committee fight for the tax cut, arguing that the state's estimated $201 million budget surplus this year offered legislators a "golden opportunity . . . to leave this session with the idea that the big boys don't always win." Supporters of the measure had estimated it would cost about $110 million in lost revenues in 1982, when it was to have become effective.
Emick, who recently declared his candidacy for lieutenant governor, warned his colleagues that a vote against the tax cut could be politically damaging. "If we defeat this bill, one thing is going to be the hallmark of this assembly," he said. "That is that we afforded tax relief to people who drink liquor in restaurants, and beyond that we afforded no other tax relief."
Earlier this session, legislators approved and sent to Dalton a bill to lift the state's $2-per-gallon tax on liquor consumed in restaurants.
Opponents of the tax cut bill countered that its potential for reducing state revenues, coupled with expected Reagan administration cuts in federal aid, could lead to heavy cutbacks in social programs.
"We've got to substitute some other revenues for the revenues that are lost when you lift the sales tax on food," said Brault. "I haven't seen anyone come before us in any one of these public hearings and suggest which of these services ought to be cut."
Dalton last month threatened deep cuts in state aid to schools and other local government services if the assembly passed the food tax repeal. Some liberal groups which have traditionally supported the repeal, including the Virginia Education Association, backed away from the issue this year in apparent reaction to that warning.
The governor's chief finance aide, Secretary of Administration and Finance Charles B. Walker, who observed today's vote from a front row seat, declared himself "satisfied" with the result.
"It shows the Senate understands that revenue is directly related to the cost of services and that you can't cut one without cutting the other," he said. Walker added the administration was so confident of the outcome that it had not bothered lobbying any committee members on the bills.
Joannou's income tax measure, which would have knocked out deductions for such items as interest on home mortgages and charitable contributions and replaced them with a standard $4,500 deduction for individuals, died on a vote of 14 to 1. The only favorable vote came from Sen. Willard Moody, a Democrat who represents Joannou's Portsmouth district.
The measure had been opposed by Northern Virginia real estate salesmen and leaders of charitable institutions, who argued it would disrupt their business. Dels. Vincent F. Callahan and Martin Perper, both Republicans from Fairfax, had supported the bill in the House, but backed off after learing it would have added almost $7 million to the annual tax bills of Fairfax residents.