DATE: Tuesday, August 26, 1997              TAG: 9708260379

SECTION: FRONT                   PAGE: A1   EDITION: FINAL 

SOURCE: BY WARREN FISKE, STAFF WRITER 

DATELINE: RICHMOND                          LENGTH:   57 lines

$216 MILLION STATE SURPLUS COULD GO TO CAR TAX CUT

Gov. George F. Allen on Monday projected a $216 million surplus for the state this fiscal year, but he declined to say whether he will recommend that the money be used to reduce car taxes.

``I think it's a good idea, a darn good idea,'' Allen said of Republican gubernatorial nominee James S. Gilmore III's five-year proposal to phase out the personal property tax on privately owned cars and trucks appraised at less than $20,000.

But Allen, a Republican, said it is too early to commit to the reduction in a two-year budget that he doesn't submit to the legislature until December.

``It's possible,'' Allen said after addressing the General Assembly money committees on the state's fiscal outlook. ``I think things look very good, but I can't give you an exact answer now.''

Allen, who cannot succeed himself under the state constitution, will present a final budget to the legislature before leaving office in January. Even if Allen did not include the tax cut in his budget, the next governor - Gilmore or Democrat Donald S. Beyer Jr. - would have an opportunity to amend the spending document after his inauguration.

Gubernatorial spokesman Ken Stroupe later added that Allen might put the surplus in a budget reserve set aside for tax relief and leave the rest up to the next legislature and governor. ``It would be difficult for us to put in a detailed plan (for cutting the tax) since it would be Jim Gilmore's proposal,'' he said.

Beyer has proposed a more modest tax relief plan. He would give tax credits to those who pay the car levy. Individuals with incomes up to $40,000 could receive a maximum $150 credit; families that earn up to $75,000 could get a $250 credit.

But legislators sounded a cautionary note when it came to tax relief.

``I would not expect that to pass through this legislature regardless of who's governor,'' Del. Clifton A. Woodrum, D-Roanoke, said after Allen's speech. ``I think that'll be met with bipartisan resistance.''

Though he declined to comment on the merits of Gilmore's and Beyer's tax plans, Sen. John H. Chichester, R-Fredericksburg, didn't sound like someone who was ready to set aside millions for a tax break.

``We don't know how long the robust economy is going to continue,'' said Chichester, co-chairman of the Senate Finance Committee. ``You need to build a sense of understanding that (a recession) could happen.''

Allen lavished much of the praise for the state's strong economic outlook on his administration's success in creating new jobs in Virginia.

Democrats bristled at the claim. ``You find that about 70 percent of the growth came from personal income,'' said Sen. Joseph V. Gartlan, D-Fairfax. ``That tells you that people have been cashing in some of their investments from the wildly growing stock market.'' MEMO: Staff writer Ledyard King contributed to this story. ILLUSTRATION: Color photo

But Gov. George F. Allen says it's too early to commit to the

reduction in the two-year budget that he will submit in December.

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