DATE: Wednesday, October 1, 1997            TAG: 9709300203

SECTION: LOCAL                   PAGE: B3   EDITION: FINAL 

TYPE: Public Life: Election '97 

                                            LENGTH:  292 lines

TAXES AND SPENDING

The issue:

The state expects to have a $216 million surplus at the end of this fiscal year, the result of a thriving economy. Candidates for governor want to use some of that money - and are banking on continuing good fortunes in the future - to eliminate or soften the personal property tax on automobiles Virginians pay to localities.

Republican candidate James S. Gilmore III was the first to target the tax. He has proposed phasing in a repeal of the levy on privately owned cars worth less than $20,000. He has promised to match losses to localities dollar-for-dollar and has estimated his proposal would cost the state $650,000 a year. The Virginia Municipal League, however, reviewed the plan and has said it would actually cost $1.4 billion a year to eliminate the tax.

Democratic candidate Donald S. Beyer Jr. has suggested income tax credits to offset the personal property tax on cars. Individuals would still pay their taxes to their local governments, then they would get a credit on their state income tax of up to $150 per person earning $40,000 or less or up to $250 per family earning $75,000 a year or less. Beyer has estimated the cost of his proposal at $202 million a year.

The General Assembly makes all decisions on taxes and will have to pass legislation to enact either plan.

The Virginian-Pilot asked the 10 opposed candidates running for House seats in South Hampton Roads to explain their stand on this matter.

The question:

An unexpectedly robust economy has left the state with a surplus. Both gubernatorial candidates have proposed amending or eliminating current property taxes in what amounts to a rebate. Each has pledged to match city losses dollar-for-dollar from the surplus.

If you do, how do you answer those who say it would be smarter for Virginia to retain the tax windfall and reinvest the money in crumbling schools and roads? And how would you react if the economic trends turn downward again and the state is strapped for cash?

Coming up:

For the next four weeks, turn to the Public Life dpage for the candidates' answers to questions on jobs creation, crime and punishment, economic development and education. *********************************************************************** 76th District, Southern Chesapeake and most of Suffolk

Michele Degnan (D)

The personal property tax is local money used for local needs. As I've traveled across the 76th House District and talked to thousands of its citizens, it is clear to me that this is a resource we cannot afford for the state to take away. I recently participated in a meeting at Lakeland High School where citizens were exploring possible solutions to our burgeoning school population. The common thread in every possible solution is money. When I go door to door talking to our neighbors, they consistently tell me about the need for better roadways, an expanded municipal sewage system, and safety concerns: street and traffic lights; fire, police and rescue services. These services cost money, and the citizens of the 76th know it.

If there are surplus revenues in the state budget, then I believe that these monies should be sent back to the localities where they can be earmarked to meet the specific needs of our citizens - for roads, school construction and renovations.

Investing the surplus in meeting these needs will help ensure that future tax rates and assessments remain stable.

S. Chris Jones (R)

One of the first priorities of state government should be to fully fund education and public safety. As a Virginia taxpayer, I know that the problem isn't that we pay too little in taxes each year. Our state and federal governments simply waste too much of the money we give them.

I am a strong supporter of public education. I believe we need smaller class sizes, higher academic standards, report cards on school quality and a safer environment for learning. We can increase funding for our schools, give our children the quality education they deserve and still cut the car tax.

Having served over a decade on the Suffolk City Council, I fully understand the needs of local government. Any tax cut plan that comes from Richmond must be revenue neutral to the localities. It is critical that we end unfunded mandates from Richmond. If the politicians believe in a program, they should be forced to find the funding to pay for it.

Jim Gilmore's first priority will be education and public safety. His plan will put 400 new teachers in Virginia's elementary schools, and he will implement the New Century Scholarship program to provide $2,000 merit scholarships to Virginia's high school graduates and college students. Only after those priorities are paid for will the car tax be cut. Gilmore's tax cut is also revenue neutral to local governments. 79th District, Northern Portsmouth and adjacent precincts in Chesapeake and Suffolk.

Johnny S. Joannou (D)

I will vote to eliminate the personal property tax on automobiles. Both Lt. Governor Beyer's and Attorney General Gilmore's approaches are reasonable. One favors rebating the funds by way of a tax credit, and the other favors eliminating the tax on all vehicles valued under $20,000. I tend to favor the simple approach of eliminating the tax. In either event, we must do it in a responsible manner.

If you believe that our economy will slow, which I do not, then we will have to adjust the entire budget, not just one item in the budget. Virginia has a constitutional amendment which requires a balanced budget. I supported and voted for that constitutional amendment.

How we pay our future bills is the way we pay our present bills, by balancing revenues with expenditures. The growth of our economy will continue as it has in the past. When I went to the General Assembly in 1976, the budget was approximately $3.6 billion, and in 1997, the budget was approximately $18 billion. Since 1976, there has been no increase in the state income tax, and there was a one-half-cent increase in the state sales tax in 1986 that then brought in approximately $200 million per year, which, incidentally, I voted against. This increase in the budget has been brought about by inflation and growth in our economy. If we continue to grow, we will have increased revenues, which should provide for increased future expenditures; if not, then we will have to do what is necessary to balance our budget.

D.R. ``Dan'' Evans (R)

Unexpected robust economies happen when people are allowed to keep their hard-earned money. Governor Allen (like Ronald Reagan before him) has done what he said he would do. Those of us who support him, thank him and are not surprised by the ``robust economy.''

``State surplus'' is a buzz word liberals use to try and keep money from going where it belongs, to the hard-working men and women of Virginia. If the state has more than is needed for its budget, the people who pay taxes should receive a refund. Jim Gilmore's plan is the only one that pays that refund to everyone across all socio-economic boundaries and to people of all ages.

If schools are crumbling, it is because of lack of routine maintenance being performed on said schools. In Portsmouth, schools are allowed to deteriorate to the point of no return. Then NEW schools are built. Schools that are not ``GOOD ENOUGH'' to be high schools, become a college campus (Cradock High School). I see crumbling schools as a local problem best solved by elected school boards.

I will vote to repeal the personal property tax on cars and trucks. I will do this knowing that every time taxes have been reduced, a ``robust economy'' is created. With the future ``robust economy,'' tax dollars will be available for future needs. 86th District, Northwest corner of Norfolk.

Beverly ``Bev'' Graeber (R)

One of our greatest presidents, Thomas Jefferson, felt strongly that we should ``not take out of the mouth of labor the bread it has earned.'' I wholeheartedly agree. We Virginians are taxed too much, with the burden especially falling upon the hard-working families of our commonwealth.

Additionally, the use of a vehicle in today's society is no longer a luxury, but a practical necessity. We rely on our cars and trucks to take us to and from the workplace, take our children to school, visit the local grocer, and travel to and from our places of worship and recreation on the weekend.

That's why I support the gradual elimination of the personal property tax on cars and trucks and I support increased investment in education.

While different economists offer different revenue projections, all economists agree that Virginia's growing economy will produce more tax revenue for the state government. Whether it's $4 billion or $5.5 billion is less important than the simple fact that we will have the money to pay for current services and increase spending for our educational needs.

There are those who argue you can never cut taxes. I firmly disagree. I believe the hard-working people of Virginia expect and deserve tax relief.

When elected, the improvement of our school system and the elimination of the personal property tax on cars and trucks will be two of my very top priorities.

Don Williams (D)

My view is simple. No one enjoys paying personal property taxes. Therefore, I'll support any personal property tax relief plan that's fair to the residents of the 86th District, which does not result in a cut in resources for schools, public safety departments, or needed infrastructure improvements.

In Norfolk we can see prime examples of schools, neighborhoods and infrastructure which could benefit from reinvestment. Plans for renovation of Bayview Elementary have already been approved. There has also been talk for some time of the need to renovate or replace Taylor Elementary. My priority will be to make sure that these schools are in the proper condition, that our teachers have the needed resources to teach our children, and that projects like Bayview Elementary go forth as planned. Furthermore, cuts must not result in one less police officer or firefighter on the street.

We have all, at one time or another, sat in traffic waiting to pass through one of the tunnels. It's no secret we need a third crossing through Hampton Roads. We have studied this issue. We know which route the crossing should take. We know that in the future we may lose industry because industry will not come here if the lack of adequate transportation routes prohibits transporting goods and services to market.

Therefore, before signing on to any personal property tax cut plan, I would need to know that we are not sacrificing one child's education, one neighborhood's safety or our community's economic health. 87th District, Northeast corner of Norfolk

Todd M. Fiorella (D)

Over the past four months, my family and I have knocked on nearly every door in the district. I have seen run-down schools, worn-out streets and deserted business districts. I have heard families ask for help in ridding their neighborhoods of vandalism, drugs and gangs. In light of this, we should view claims of a booming economy and sustained economic growth with caution.

Two weeks ago, I listened to both candidates for governor say that the commonwealth of Virginia does not have enough money to help rebuild our schools. Each placed that burden on local governments. In the next breath, both proposed plans to eliminate or decrease property taxes collected by the localities. These taxes directly impact the cities' ability to build and maintain schools.

Both property tax proposals are popular and are intended to gain favor with voters. A good idea? Maybe. But even good ideas have consequences. The consequences of these proposals are a crippled public safety system and a poorer quality of education for our children.

As your delegate, I will review both tax proposals with an eye toward decreasing our tax burden. I will vote for the better of the two proposals if I am confident that we can implement one or the other without sacrificing our commitment to education and crime prevention. I am not yet convinced we can. Any candidate who claims they are is not leveling with you and is not deserving of your vote.

Thelma Drake (R)

I wholeheartedly support abolishing the vehicle personal property tax. Our cars are our most heavily taxed necessity. We pay taxes to buy it, repair it, refuel it, register it, and often even to park it. To continually pay taxes to own our cars is wrong.

The people who said we could never abolish parole or reform welfare say we can't cut taxes. They're wrong. Our families struggle to pay personal property taxes and deserve our best effort to reduce or eliminate this tax. I pledge to ensure that localities are reimbursed for the money cities would have collected from their residents. If someone claims that real estate property taxes will have to be raised to implement this plan, they are dead wrong and are intentionally misleading you! If state tax collections don't continue to grow as expected, we will simply slow down the five year phase-in of the repeal of the personal property tax.

Not one person has ever asked me to raise their taxes. Many of my constituents believe many risky ventures have been pursued over our objections and at the expense of our schools and neighborhoods. As a former president of the Granby PTA, I stood with parents to refuse to accept any more delays or excuses. This essential renovation is now under way.

There will always be tough decisions and priorities to determine, but as your delegate, I am committed to fulfilling our obligations while minimizing the tax burden on all Virginians. 88th District, East-central Norfolk, including downtown, Ghent and Colonial Place

G.R. ``Bud'' West (R)

Most economic middle-class families work for over half the year - every year - to pay their taxes (federal and state income taxes, Social Security, personal property taxes, sales taxes, excise taxes, city stickers, etc., etc., etc.) The vast majority of those I have spoken with want tax relief. My family wants tax relief, and I believe personal property taxes are as good a place to begin with as any. I also believe that Jim Gilmore's personal property tax rebate plan is the most fair and equitable of the two plans currently offered, and I'll vote for it if he and I are elected.

In fact, some economists have shown that the increased spending brought on by lowering taxes actually brings in more revenue to the state, in the long run, than higher levels of direct taxation do. In addition, to be successful, organizations all over the world are having to rethink and re-engineer how they do business. Virginia's governments, both state and local, are no different. As the Allen-Gilmore administration has stressed for the past four years, we must continue to do better than just throwing more money after marginally successful programs that have escalating administrative overhead costs. If we are able to further accomplish this objective, while building in the appropriate amount of flexibility, I truly believe our state's government will be able to continue tax rebates while remaining effective in providing necessary services, even if the economy encounters a downturn.

Thomas Warren Moss Jr. (D)

I would disagree that the $76.3 million unobligated balance from last year can be considered a surplus. That amount is only .8 percent of our operating budget.

Consider the fact that the state still owes one last payment of about $65 million on the Federal Retiree Tax Case that was scheduled to be paid in FY 1999. If we have a debt, and we have the money, why wouldn't we go ahead and wipe out that obligation?

Mr. Gilmore assumes 6.2 percent revenue growth over the 5-year horizon to implement his proposed tax cut. But is this realistic?

I can say that if we experience 6.2 percent revenue growth through the year 2002, that will mean a 10-year run without a slowdown in the economy. I personally find that hard to believe.

And on the cost side of Mr. Gilmore's tax cut plan: He assumes that the plan will be phased in at a very low rate - and thus a very low cost - in the first four years - essentially his term in office if he were elected governor.

Then, in the fifth year, as the next governor is heading down the road, the cost of the plan would double! The Virginia Municipal League tells us that this cost would be over a billion dollars a year.

If we could count on revenue growth of over 6 percent for the next five years and beyond, and if we could be assured that spending over a billion dollars a year for this program would not detract from our ability to fund education, police protection and roads - our first responsibilities - then I would gladly support a tax cut. ILLUSTRATION: Photos of each candidate

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