When the rumors were first floated that Tim Kaine would be eliminating the state’s contribution to car tax relief, it struck me as an odd proposal to come from a Governor who had been a Mayor.
As an elected official in Richmond, Kaine regularly voiced his displeasure with state policies that disadvantaged localities.
I didn’t quite understand why Kaine would want to pass them a $950 million bill on his way out of office.
We found out today that Kaine does want to eliminate the car tax. But the proposal had a second part that no one had ferreted out.
He proposes raising the state income from 5.75% to 6.75% and dedicating the increase to local government.
Far from losing, the localities appear to make about $1 billion per year on the deal.
No complaints there.
But since everyone knows it’s not going to pass, the big question remains
Why did Kaine propose it?
In policy terms, I’ve spoken over the year to a number of legislators who agree with Kaine’s position on the car tax that it was highly peculiar to cut a local levy in a way that actually resulted in a huge state expenditure back to the localities.
Yet besides the simple answer of forcing Governor-Elect McDonnell into authoring cuts of his own making, the politics aren’t so easy to figure.
The GOP contends that if the Governor feeels so strongly about matter, why didn’t he say anything about for his first three years.
This doesn’t seem unfair.
Major reforms are best initiated by the people who’ll be around to make the case for them.
Perhaps more importantly, with his party on the defensive, the Governor and the Head of the Democratic National Committee, has called for a tax increase (and just wait till the GOP starts to describe its size by the rate of growth in moving from 5.75% to 6.75%) that Democrats in the Assembly and running for Congress in 2010 will be asked to opine (and in some instances vote) on.
Maybe I’m wrong, but I’m just not certain that this is the key distinction that they’ll want to draw with their opponents.
Hi Bob: i’ve been enjoying your blog and look forward to your class at VHS. You had good points, political and policy, on Kaine’s proposal to raise income tax with return of increased funds to localities.
I’m hoping you will soon address a question that has occurred to me. Why aren’t McDonnell’s proposal for bonds to support issuing bonds the equivalent of a tax increase. Don’t taxes pay for the bonds and interest?
I also would love to see a discussion of the fiscal management options that are off the table in Virginia as long as so many folks subscribe to the “no new taxes” mantra.
it will be fun for Pat and me to see you again. We are big fans.
mary arg
The long and short of the Kaine proposal:
Great policy, terrible politics.
Since it isn’t going to pass, McDonnell and company will have some truly ugly choices to make on the budget.
Even with the increased revenue, Kaine made deep cuts for the third year in a row.
Without the revenue, those cuts will have to be brutal.