
DATE: Tuesday, June 24, 1997                TAG: 9706240314

SECTION: FRONT                   PAGE: A1   EDITION: FINAL  

SOURCE: BY WARREN FISKE, STAFF WRITER 

DATELINE: RICHMOND                          LENGTH:  120 lines

CORRECTION/CLARIFICATION: * There are 40 cities and 95 counties in Virginia. A story Tuesday on the car tax had the number of cities wrong. Correction published Friday, June 27, 1997 on page A2 of THE VIRGINIAN-PILOT. * CAR-TAX CUT WOULD COST DOUBLE WHAT GILMORE SAYS, GROUP CLAIMS HIS RESPONSE: THE VIRGINIA MUNICIPAL LEAGUES IS WRONG.

Republican gubernatorial nominee James S. Gilmore III has underestimated by more than 50 percent the cost of his plan to wipe out the tax most Virginians pay on their autos, Virginia Municipal League officials said Monday.

The influential lobbying organization for the state's 95 cities announced that it opposes Gilmore's signature campaign proposal, calling it a usurpation of local governments' rights to assess personal property taxes on autos.

``Even after taking into account all of the safeguards built into the proposal, we have to conclude that it is unacceptable to local governments,'' said James S. Harris, president of the league and mayor of Blackstone.

The Gilmore campaign and several Republican lawmakers responded by labeling the league part of ``the big tax lobby in Richmond'' and insisting the organization's figures are in error. The arguments were voiced during an emotionally charged meeting of a legislative and citizen committee appointed earlier this year to study matters of local taxing authority. Republicans argued that the panel was set up to discredit Gilmore.

``This is nothing more than an orchestrated attack on Jim Gilmore at taxpayer expense,'' said Mark A. Minor, the candidate's spokesman.

The hearing follows an opinion last week by A.E. Dick Howard, a noted University of Virginia law professor, that the auto tax repeal could not be implemented without amending the state Constitution - a process that could take three years. Howard was the main author of the revised 1971 Constitution.

Gilmore, who hopes to begin phasing in the tax relief next year, said Howard is wrong.

Polls have long shown that the personal property tax on autos is Virginia's most-hated levy. Gilmore has proposed eliminating the tax over five years on all privately owned vehicles assessed at less than $20,000. The break would not apply to vehicles owned by businesses.

Because localities set their own personal property tax rates, savings to Hampton Roads residents would vary depending on the city. On a car with an appraised value of $10,000, for example, savings would range from $370 a year in Virginia Beach to $435 in Portsmouth.

The proceeds of the tax go entirely into the coffers of local governments, which have long opposed state efforts to regulate their streams of revenue. Gilmore has sought to allay those concerns by promising the state would reimburse localities ``dollar for dollar'' for revenues lost by the repeal. He estimated it would cost the state $620 million annually when the program was fully phased in.

But the Municipal League estimated the annual cost of the program at $1.37 billion. Betty S. Long, league director of fiscal policy, said Gilmore failed to factor in 9 percent average annual growth in personal property tax revenues over the past decade caused by growing population and increasing vehicle prices.

Gilmore's campaign officials insisted the league is wrong, saying that only a small portion of the annual growth in personal property tax revenues comes from autos. The bulk of the growth, they said, has come from levies on an ever-increasing number of computers and machinery used in business.

Long disputed that contention, however, noting that 75 percent of all money collected in personal property tax comes from assessments on cars.

Spokesmen for Gilmore also said the league failed to consider that savings from the repeal would be plowed back into the economy and would result in greater sales tax proceeds for the state. They also argued that with the state paying the auto tax, localities no longer would have to write off payments they could not collect from individuals.

Even so, Gilmore has said that if the state cannot afford his tax-relief program, he would scale it back.

Beyond disputing the numbers, the league said localities object to being forced to rely on the state to replenish money lost from the repeal.

``How many of you would feel comfortable if the federal government proposed that the state stop collecting state income tax from its residents and rely instead on a check from Washington once a year?'' asked Harris, the league president.

Also voicing concerns was the Virginia Association of Counties, which said tax relief from the repeal would be inequitable across the state. Residents in poor, rural counties that have kept personal property taxes low would see far less in savings then the inhabitants of wealthy suburban areas.

For example, in Bath County the repeal would save only $25 in taxes on a $15,000 car. But residents in affluent Fairfax County would save $568 on the same auto.

``This is truly a reverse Robin Hood plan in its worst form,'' association president-elect Charles Curry said.

The presentations brought on sharp debate between Democrats and Republicans sitting on the commission. Del. C. Richard Cranwell, D-Roanoke County, argued that in lieu of a tax cut, money would be better invested in education.

Republicans dismissed the hearing as a sham. They noted that Democratic gubernatorial nominee Donald S. Beyer Jr. had been chairman of the commission before abruptly resigning last weekend.

Gilmore declined an invitation to address the panel. Del. Thelma Drake, R-Norfolk, said it was ``unprecedented'' that a gubernatorial candidate would be ``summoned before an official legislative study commission to explain his campaign proposals for official government scrutiny.'' ILLUSTRATION: [Color Photo]

James Gilmore has said that if the state cannot afford his

tax-relief program, he would scale it back.

THE TAX

The proposal: To end the personal property tax on privately owned

autos assessed at less than $20,000.

The local impact: On a car with an appraised value of $10,000,

owners' savings would range from $370 a year in Virginia Beach to

$435 in Portsmouth.

The proceeds: The state would reimburse local governments for the

loss of revenue.

The cost: GOP gubernatorial candidate James Gilmore says it would

cost the state $620 million annually. The Virginia Municipal League