The Robb administration today admitted for the first time that Virginia needs to make up some of the losses it will suffer under federal tax cuts and endorsed a revised version of a corporate tax increase passed by the state Senate last month.
Appearing before the House Finance Committee, Secretary of Administration and Finance Wayne Anderson said Gov. Charles S. Robb would support amendments that would "stablilize revenues" from corporations and restore an estimated $94.4 million to the state coffers.
Later, Anderson explained that the administration now believes "it needs flexibility" on the state's two-year budget, currently before the Senate Finance Committee. The $13.1 billion budget was approved by the House of Delegates last week.
The Senate, following the lead of its Finance Committee chairman, Sen. Edward E. Willey, passed a bill a month ago that would have raised $96 million in corporate taxes. Robb had withheld any endorsement of the Willey bill in hope of being able to achieve his spending goals with existing revenues.
"We're back on track," said Senate Majority Leader Hunter B. Andrews (D-Hampton), who today sponsored the revised tax amendments. Andrews and Willey, who is now in the hospital recovering from a heart attack, have argued since the start of the session that the state would have to recoup some of the revenue losses caused by the changes in the federal tax laws.
"Revenue recovery--that's all it is," Andrews said today. "All we're doing is saving the money the federal government took away from us."
Because Virginia conforms to federal tax laws, the state automatically lost $190 million of its own revenues when Congress passed President Reagan's tax cut package. One of the items was accelerated depreciation for business assets, estimated to cost the state $112.1 million.
The Andrews amendments would make major companies in Virginia defer accelerated depreciation for three years, allowing them to recoup accumulated credits at the end of that period. The original Willey bill would have imposed a tax surcharge on corporations, rising from 6 to 7 percent from corporations doing more than $100,000 worth of business in Virginia.
"These are two different approaches," said Anderson. "We support the approach that would keep things where they are now." According to Anderson, the plan endorsed by Robb would not amount to a tax increase, but would be a "revenue stabilizer."
By deferring tax breaks for accelerated depreciation, the administration hopes to collect another $75.6 million during the next two years. Anderson said Robb also supports a freeze on public utility gross receipts tax--a feature of the original Willey bill--that would produce an extra $34 million over next two years.
Another $35 million would be saved by eliminating federal tax breaks for child care and married couples, provisions which are already provided for under Virginia tax laws.