Kaine Announces Tax Hike Plan

Governor Tim Kaine yesterday surprised absolutely no one when he announced a nearly $1 billion tax and fee increase proposal under the guise of fixing transportation. A special tax session of the General Assembly is scheduled for June 23.

The Governor's plan includes increasing the sales tax in Hampton Roads and Northern Virginia from 5 to 6 percent, something rejected by voters in those regions in 2002. It also includes increasing from 3 to 4 percent the motor-vehicle titling tax; an increase in the grantor's, or property seller's tax, of 10 cents per $100; and a $10 increase in the cost to register vehicles.

Last week I gave you two reasons why The Family Foundation does not support increasing taxes for "fixing transportation": the lack of a constitutional amendment that protects the Transportation Trust Fund from being raided, and the nearly 100 year old, depression era law that controls how Virginia funds its transportation needs. Until those two issues are resolved, Virginians should not be asked to send more money to Richmond to fund a broken system.

But there are other reasons to reject tax hikes for transportation. One of them is the new third rail of politics - education funding.

During this year's General Assembly session, the biannual "rebenchmarking" of the Standards of Quality resulted in a $1.1 billion increase in education spending in the new budget. What does "rebenchmarking of SOQs" mean? A convoluted formula that automatically ensures that Virginia's public school establishment will receive at least a billion more dollars every two years, regardless of student outcomes or reductions in enrollment. That spending goes up no matter what. By continuing with this system, public education is assured of securing funds at the expense of other core budget items (public safety, transportation, etc.). Any legislator who is honest will tell you that there is absolutely no way to fund this annual education increase and the rest of state government without some type of massive, statewide tax increase.

And here we are. In fact, do you know how much spending increased on transportation in the recently passed new budget? Zero. Not a penny. Zilch.

Why? Because as long as the SOQ funding formula remains unchanged, every other area of state government, including transportation and public safety, will get short changed. (Of course, the Virginia Education Association was one of the first to publically endorse the Governor's plan.)

This year, The Family Foundation supported a short-lived proposal to adjust the SOQ formula slightly, which would have in no way directly affected what is spent in the classroom. But such a change would have saved $200 million per year. That nearly half billion dollars every biennial would go a long way toward fixing the transportation crisis the Governor alleges needs immediate action.

As I said in my last email alert on this subject, because The Family Foundation has opposed increases in taxes over the years, we have gained a reputation as being "anti-tax." That isn't the case. We simply want our state government to be more responsible in how it spends our money before it comes to working families asking for more.

Family Foundation