Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, September 14, 1995 TAG: 9509150006
SECTION: EDITORIAL PAGE: A-15 EDITION: METRO
SOURCE: RAY L. GARLAND
DATELINE: LENGTH: Long
The governor is now asking voters to renew his mandate by giving Republicans control of the General Assembly for the first time this century. At the moment, he's not being very specific as to what he would ask that majority to do, though that could change as we get closer to Nov. 7.
Having been burned last winter when he wanted to eliminate all local taxes on the gross receipts of retailers, contractors, professional practitioners, etc., replacing most of the lost money with state grants, Allen is unlikely to revisit this issue and shouldn't. It was ill-conceived from the start.
But the governor also proposed a far more sensible idea of increasing the personal and dependent exemption on the state income tax from the current $800 each to $2,400, phased in over five years. When fully implemented, it would save a typical middle-class couple with two dependents about $400 a year. It was also projected to reduce state revenue growth by $1.3 billion from 1995 through 1999.
Allen blundered by trying to graft the tax cut to the 1994-96 budget already in progress, which required a small beginning plus reductions in promised outlays. The small dollars taxpayers would see the first year gave Democrats an opening to ask if it was worth no more than 10 cents a day to most people if it meant significant cuts in education, museums, etc. The proposal never resonated with voters, and Allen hasn't said whether he will revive it in the 1996-98 budget that is his to shape from the outset.
Because taxation in this state is quite regressive, a good case can be made for increasing the personal exemption. That is, those with modest incomes pay a far larger share of what they make to support state and local government than those with more. By the same token, an increase in the personal exemption is worth far more to a family earning $40,000 than one earning $140,000.
If Republicans want an issue that every voter can understand, cutting the average family's tax bill $400 a year would appear to be it. That assumes they have already lost the votes of most of those who want government to spend more. Democrats clearly understand this and may win by rallying those who feel they gain more than they lose when government has extra money to spend.
For now, Allen has adopted a round-about strategy on spending and taxes. Instead of emphasizing a direct tax cut, he is touting an idea he floated in the waning hours of the assembly's '95 session to return all lottery profits to localities. When fully implemented, this would deprive the state of some $350 million a year, or roughly 2.5 percent of general-fund revenues. In the governor's scenario, local officials would use the windfall to cut local taxes or fund their own priorities. Democrats charge this is nothing more than a shell game, that earmarking lottery profits for local coffers will only mean less growth in those state grants already going to counties, cities and towns.
But even if Republicans gain a majority, the fate of the lottery-profits' gambit is far from certain. Allen may have logic on his side in saying it doesn't make sense to send money to Richmond and have the legislature dole it out to localities, but it won't get many voters excited. And seldom is found a legislative body entirely pleased with the prospect of cutting the legs from under its own ability to play Santa Claus.
Allen may also ask legislators to approve a sizable bond issue to build prisons, but that isn't an issue that can be profitably introduced in this campaign. If that request is made, virtually all Democrats (and some Republicans) will ask why the state should cut taxes or send lottery profits to localities and then turn around and borrow.
You can make a good case, however, that given the low premium over inflation at which the state is likely to be able to borrow if it's ready to enter the tax-exempt bond market as soon as voters give their consent, it should do so. That assumes a general-obligation bond issue submitted to voters no later than next year's presidential election and additional reductions in interest rates between now and then.
In this scenario, it's likely the state would be borrowing at an average cost of about 5 percent a year. If, over the life of the bonds, inflation averaged 3 percent, we would rent the money for next to nothing. And more inflation might see bondholders subsidizing the state, as routinely happened between 1945 and 1990.
Allen would need a larger GOP majority than seems possible to win approval of more than a token bill to allow charter schools as competitors to regular public schools. Nineteen states have already passed laws permitting them, and several hundred "charters" have been granted teachers, parents or other interested parties to operate public schools that aren't burdened by the public-school bureaucracy.
The idea is that charter schools will get the same money per student the state and local government is spending on public schools. That would be roughly $6,000 a year now. While subject to the general supervision of the state and local boards of education, they can offer their own brand of instruction and rise or fall on their ability to attract patrons.
My own view is charters are a poor substitute for vouchers that could be redeemed at real private schools. To appease critics, I would have vouchers means-tested and good only above the sixth grade. That would sharply reduce their cost and target public money where it would do the most good. But a truly effective program must allow vouchers at schools with a church affiliation, as the city of Milwaukee is now doing.
Of course, the constitutional issues raised here will have to be resolved by the Supreme Court. Given proper safeguards on religious instruction and considering the content of several recent decisions, the court may look with favor. But insofar as Virginia is concerned, vouchers haven't a prayer yet, and charters are on life support.
Ray L. Garland is a Roanoke Times columnist.
by CNB