Virginia income tax detail from Kaine's office....

Gov. Timothy M. Kaine's office is offering some historical perspective on his proposal to boost the state's income tax 1 percent to offset the $950 million a year spent on the car tax.

Here's the detail straight from the governor, and remember that these are answers from the folks who are advocating the increase:

- When was the last time the state income tax was increased?

The last time the state income tax was increased was 1972 when the 5.75% rate was added for income over $12,000 annually. (The $12,000 figure was increased to $17,000 in the late 1980s.) The corporate tax rate was also increased from 5% to the current 6%. Before 1972 the last increase was when the 5% rate was added in 1948.

The proposed maximum income tax rate of 6.75% (the current maximum of 5.75% + the 1% surcharge) would still rank Virginia favorably among states that have a state income tax rate. Neighboring state income tax rates include:

- MD, 9.23%

- Washington DC, 8.5%

- NC, 7.75%

- KY, 6.76%

- WV, 6.5%

- TN, 6.0% (on interest and dividends only)

- By how much in dollar figures would the average family see their income tax bill increase with a 1% surtax?

The increase in income tax liability is dependent on a person's taxable income. Some families with low income will experience only a small dollar increase, while the impact will be larger for those with higher incomes. Citizens will more broadly benefit as a result of a more diversified local revenue stream that avoids deeper cuts to public education, public safety, etc.

Gov.-elect McDonnell weighs in on Kaine's budget....

Here's the full statement released by Gov.-elect Bob McDonnell - we're adding emphasis to help you skim read.

“In accordance with his responsibilities as the Chief Executive of the Commonwealth of Virginia, Governor Kaine has put forward his proposed budget for the 2011-2012 biennium. I fully recognize that this has not been an easy time in which to lead Virginia, and I respect the tough decisions that the Governor has had to make in this budget and in previous budget reductions. I also commend the Governor for his stated goals in preparing this document: preserving Virginia’s Triple A bond rating, funding core government services, and making tough decisions necessary to position the Commonwealth for future economic growth. These are the right considerations in the preparation of a budget. I would add to them a focus on promoting policies which encourage job creation, and a restructuring of government in order to make it both more efficient and effective.

The budget put forward this morning contains numerous additional spending reductions and cuts. Budget adjustments of the magnitude necessary to equalize current state spending with the dramatic decline in revenue that the Commonwealth is experiencing cannot be made in a painless manner. The cuts proposed today will have a direct impact on Virginians in every county and city. While we both understand, and agree, that significant cuts must be made, we will differ on the specifics of those cuts. With that in mind, I am concerned with the effect that that the Governor’s suggested cuts to law enforcement could have on public safety, a core responsibility of government.

I applaud the Governor for his willingness to make smart investments in Virginia’s future during these tough times. The increase in funding for the Governor’s Opportunity Fund in order to spur job creation is a step in the right direction, although more will be required to keep Virginia competitive. Further I support the Governor’s direction of more education dollars to the classroom and out of overhead and administrative offices, as I pledged to do during our campaign.

I disagree, however, with the Governor’s proposal to increase taxes. It is bad economic policy to increase taxes on Virginians, especially as they continue to struggle with the worst economy in generations. Families and businesses are making strategic reforms and deep cuts, and government must do the same. We must be looking for every means by which we can attract businesses and entrepreneurs to the Commonwealth. Capital is mobile and I do not support any measures that could dissuade investment in Virginia, or put the state at a competitive disadvantage with our neighbors.

In the weeks ahead I will review the Governor’s proposed budget in further detail. I will work with the House and Senate money committee leadership in a bipartisan fashion to ensure the budget is balanced, realistic, encouraging of private sector job creation, and makes economic development investments crucial to the future prosperity and welfare of our citizens and our Commonwealth.”

GOP sounds off on Kaine's budget...

Here's the full statement from the Republican Party of Virginia:

Democratic National Committee Chairman Tim Kaine today submitted his final budget that only stays in balance if a massive tax increase he included is implemented. Kaine has proposed ending personal property tax and replacing it with an increase in income taxes, which he projects would raise billions in new revenues from taxpayers during tough economic times. In November’s elections, Republicans were overwhelmingly swept into all three statewide offices and increased their majority in the House of Delegates with a message that included a pledge to remain firmly against tax increases.

Kaine faced a $3.5 billion shortfall in this budget, largely because his administration had based its spending roadmap on wildly optimistic projections of future revenues that did not materialize. He had hinted for weeks that he would raise taxes to close the gap he created, despite repeated appeals from Governor-Elect Bob McDonnell, Lieutenant Governor Bill Bolling and legislative leaders to resist raising taxes during a struggling economy.

“When you’ve got the incoming administration and the newly-elected House of Delegates saying all along that an increase in taxes is not an option in this economy, then why would you purposefully submit a budget which bases its viability on the very tax increases that have already been rejected as unacceptable?” asked Republican Party of Virginia Chairman Pat Mullins. “We understand that this situation is going to involve a lot of difficult choices, but placing an additional burden on hardworking Virginia families struggling through this economic climate is not one of them.”

“It seems obvious to me that Tim Kaine has put his partisan hat back on and purposefully set up a political fight between high-tax Democrats and the incoming administration,” Mullins said. “I guess he just wants to go back up to Washington, DC and watch the fun from the DNC.”

House Speaker Howell: car tax elimination dead on arrival

Well that was short lived: House Speaker William J. Howell took to the hallways of the General Assembly Friday morning to inform anyone who would listen that doing away with car tax relief won't survive the House of Delegates.

"That's very real relief," Howell said of the $950 million that Gov. Timothy M. Kaine proposed eliminating. "We're returning that to the taxpayers."

Howell and Del. Kirk Cox, R-Colonial Heights, were both dismissive of Kaine's proposal that the state should end car tax payments to cities and counties and raise the income tax 1 percent to provide local governments with level money. Kaine told the money committee's that the entire cost of the car tax is around $1.6 billion a year, and an income tax hike would provide about $1.9 billion annually.

Kaine called the car tax cycle "ridiculous" noting repeatedly that the idea was great on the campaign trail but has triggered major budgeting problems in Richmond. Kaine also pointed out that since lawmakers agreed to cap car tax payments at $950 million a year in 2004, very few lawmakers have complained about not fulfilling the campaign vow made by Republican Gov. Jim Gilmore.  

"It's ridiculous and they know it's ridiculous," Kaine said. "They abandoned 'no car tax' as soon as the campaign was over."

Cox, an influential budget negotiator, said that Kaine's proposal to boost the income tax to help local governments would not fly in the Republican-dominated House. Cox said it was "simply shifting to another tax."

"I see that as a total non-starter," Cox said. "I see that as having no chance to get through."

Howell said that House budget experts should be able to fill the holes in Kaine's budget without eliminating the $950 million for car tax.

"We've got some pretty sharp people and we'll be working for the next 60 days on that," Howell said, referring to the 60-day General Assembly session scheduled to start on Jan. 13. "We can find it."

Listen to the governor's budget speech

Here's a link to a recording of Gov. Timothy M. Kaine's budget speech this morning.

Warning: There's a lot of traffic. It moves slowly.

Listen here.

Kaine proposes stopping car tax payments - $950 million a year

Gov. Timothy M. Kaine just wrapped up a half-hour speech in which he announced that his two year budget will not include $950 million a year that helps outset local car tax payments.

Kaine said that he had reached a point where further cuts to education, public safety and health care would be too difficult for the state to handle.

Kaine proposed deep cuts to k-12 and funding for local governments - totalling about $2.3 billion. But the two-year budget had a $3.6 billion budget hole.

Kaine starts any second - budget details come out after speech....

For folks game planning their morning around Gov. Timothy M. Kaine's speech about spending cuts, you might have to wait a little while for the meat of the details.

Kaine's folks are passing out hard copies of the gigantic state budget, but Kaine's office isn't planning to release the full summary until after Kaine finishes speaking to the joint meeting of the House and Senate money committees.

So that means the details are going to be trickling out from everywhere over the next couple of hours. Kaine has a 11 a.m. conference call scheduled, so the full info should be out by then.

The room is up and applauding right now, Kaine has taken the stage. We'll be back soon.

Richmond is buzzing waiting for Kaine, expect major cuts, layoffs and tax hikes...

Gov. Timothy M. Kaine is due to show up with a two year spending plan in Richmond in the next half and hour or so, and the General Assembly building is humming with state officials, lawmakers and insiders hoping to get an early glimpse of the plan.

As it stands now, Kaine is searching for ways to fill a $3.6 billion hole over the next two years. Kaine has warned that there won't be much good in his final budget, especially since his administration has been forced to cut $7 billion  in state spending over the past two years as the global economy soured.

Kaine, a Democrat, is crafting the two year spending plan that incoming Gov.-elect Bob McDonnell will have to work with over his first two years in office. Kaine is expected to announce deep spending cuts to previously untouched places like k-12 education, and most state workers are bracing for layoffs.

Meanwhile, there have been persistent rumors that Kaine might use tax increases, or get rid of previous tax breaks, to fill the budget hole. Some folks have mentioned the state's cigarette tax. But largely, attention has centered on the $950 million that the state spends every year reimbursing cities and counties for car tax payments. Kaine could opt to do away with the payments, which would trigger a pretty significant boost in the amount that folks pay every year for their cars and trucks.

House and Senate Republican leadership have written letters to Kaine warning him that tax increase are not going to fly when the legislature gets a hold of the spending plan. The letter was signed by House Speaker William J. Howell, House Appropriations Chair Lacey Putney and Senate Minority Leader Thomas Norment. McDonnell has also indicated that he would oppose any kind of tax increases, especially after running a campaign where he stressed his aversion to taxes and derided his Democratic opponent for favoring increasing state revenue through higher levies.

That means that any tax increases that Kaine includes House Republicans and McDonnell are going to almost immediately rip out - leaving the state's finance experts searching for other ways to bridge the budget gap.

Meanwhile, this is the first time in recent memory that the Peninsula - and greater Hampton Roads - won't be able to rely on the protection and cover usually offered by former Del. Phil Hamilton, a once powerful Newport News Republican who was the ranking Republican on the influential House Appropriations Committee until his November election defeat.

Hamilton's status as one of a dozen budget negotiators gave him front row influence on where the state spends money, which was a consistent boon for local priorities.

Blackberry's are humming right now, we'll be back soon with updates.  

  

Virginia tax amnesty pulls in $100 million...House cuts spending...

Virginia's tax coffers are $103 million richer today thanks to a tax amnesty program designed to get people to stop hiding and start paying.

The "Get Square VA" program opened a 60-day window for folks who owed money to pay up and dodge penalties and pay only half of the interest rates that they normally would have to pony up. So essentially the program was a cattle call for folks who hadn't paid up and the folks who didn't use the program now face an additional 20 percent delinquency charge.

The state was expecting to get about $41 million from the program.

The last time the state offered tax amnesty was in 2003 and the state collected $98.3 million that time around. Clearly this influx on money has the potential to help Gov. Timothy M. Kaine work toward a balanced budget - he doesn't have much time left - but this amount of cash isn't going to keep the state spending from getting a serious once-over in Richmond.

“Get Square VA gave Virginians who hadn’t or weren’t able to pay their taxes a chance to settle their obligations with the state,” said Governor Kaine. “Even in tough economic times, this amnesty period was a great success and will provide some much needed support to education, public safety, and other programs supported by the state’s general fund."

Meanwhile, House Speaker William J. Howell is touting $2.1 million in cuts on House of  Delegates spending.

Howell's office says it has frozen "per diems" paid to delegates and legislative aids. The IRS allows state's to spend up to $191 a day on folks on official business. Howell said that the payout is frozen at $135 a day. The House will also get buy without two staff positions usually filled during the General Assembly session and another 10 intern slots.  

Howell also shortened freshman orientation to a single day instead of two-and-a-half days as scheduled and said that House staffers would start limiting the amount of printouts they make to cut back on paper waste.

In all the cuts are supposed to save $2.1 million over the next fiscal year-and-a-half. Speaker Howell gives out the full details on his website.

But you've seen the theme emerging in a big way at the state level, nobody wants to labeled a spendthrift. With big cuts looming, state officials realize that the everyday taxpayer is going to want to make sure every single dollar spent is going to the right place.

In fact, you can bet that Gov.-elect Bob McDonnell's team is going to work very hard so that the Republican inauguration has the appropriate austere look. Sure the GOP wants to celebrate the victory - and they have every right to after the overwhelming numbers that all three statewide GOP candidates put up. 

But McDonnell's folks know that sitting at the helm of state government is going to be a very tough job in the near future and that a governor asking residents to deal with fewer state services - and potentially more layoffs - better not spend a huge chunk on a "We won" blowout party.

McDonnell has just launched a new inauguration website and you can see that there are plenty of gala balls planned for the run up to Jan. 16. But during an economic depression, celebrating over wings and beer is probably a better option that Dom Perignon and caviar.

GOP eyeing Virginia Sen. Webb as possible health care defector....

National Republicans are searching the U.S. Senate rolls for Democratic allies, who might vote against a health care reform bill.

And over the weekend, the GOP eyes started turning more aggressively toward to Virginia Sen. Jim Webb, a notoriously independent Democrat who has voted with the Republicans recently on a number of health care issues.

The research arm of the Republican National Committee sent out a email detailing Webb's legislative history and attacking health care for what it could to mean to Virginia families. And a number of Republicans told Politico that they are trying to "smoke out" Webb to see where he stands, hinting that Webb could end up voting against sending a health care bill to President Barack Obama. Here's some good detail from the folks at Politico.

South Dakota Sen. John Thune, No. 4 in GOP leadership, said Webb’s votes “came as a bit of a surprise” and that he “probably wasn’t on our initial list that we thought of [as] people we might get.”

Webb, who won his seat in 2006 in a cliffhanger race against Republican George Allen, has taken a low-key role in the debate so far. It’s far from clear whether he’ll vote for the bill in the end, although Senate Majority Leader Harry Reid (D-Nev.) is “confident” that Webb’s concerns will be addressed and that he will ultimately back the bill, a Reid spokesman said.

“Jim’s gone his own way on several things — he’s independent, and I respect it,” said Reid’s deputy, Majority Whip Dick Durbin (D-Ill.). “But he’s been very honest with us throughout, and I count him as an important and valuable member of our caucus.”

Still, his early votes have given party leaders pause. He voted for GOP efforts to send the bill back to the Senate Finance Committee as well as to restore proposed cuts to Medicare — a move some in the GOP said was intended to keep entitlement programs from being “raided” to pay for the new health care initiatives, a label most of Webb’s party strongly rejects.

With eyes ever turned to the next election cycle - for Webb it's in 2012 - the folks at Politico also have a quick hit list of folks who might give Webb a run.

And already, political circles are buzzing on who might take on Webb — including everyone from Allen to former Rep. Tom Davis to the state’s new attorney general, Bill Mims, to House Minority Whip Eric Cantor.

Both Webb and Sen. Mark Warner told the Daily Press last week that they weren't ready to vote yes on health care yet. And here is Webb's full statement from last Wednesday.  

“The need for health care reform is great. While a number of Americans are satisfied with their health care, the system is not working for millions of American families—nor is it sustainable for many of the nation’s small businesses. At the same time, reform needs to be done in an effective and responsible fashion.

“The bottom line is to achieve a more cost-effective health care system that increases accessibility, affordability, and quality of care.

“Over the past few weeks, I have taken some difficult votes. I voted three times against cuts to Medicare because I have concerns about taking half a trillion dollars out of the Medicare system at a time when the pool for Medicare is going to expand with the retirement of those in the Baby Boom generation. Further, I am a long-time supporter of Medicare Advantage programs which have, in my view, greatly improved services in rural areas such as Southside and Southwest Virginia.

“I have been doing what I can to shape the bill, and then voting my conscience on all these votes. As we continue to debate the bill and amend it, I remain hopeful that the Senate can reach consensus on fair and effective health care legislation.”

It sure sounds like Webb is hoping that he can vote for the final bill, whatever shape it takes. But that statement sure doesn't corner him on one side or the other. Can anyone else read the tea leaves and say exactly where Webb will wind up?