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Virginia
Business 20th Anniversary
Embrace and avoidance of taxes shaped 20 years of
politics
by Jeff Schapiro
for Virginia Business
March 2006 When Alf Goodykoontz, the late executive
editor of the Richmond Times-Dispatch, steered me to
a job at a startup that would be known as Virginia
Business, politics — and the muscular financial
interests that support it — was in transition.
Jerry Baliles, a Democrat, was settling
into the governor’s
office, lifted there by old interests and new: buckets
of cash from Southwest Virginia coal barons and,
from Northern Virginia and Hampton Road, big checks
cut
by leveraged-to-the-eyeballs real estate developers.
These fat cats — the info-tech crowd was just
starting to hit pay dirt — had a lot riding on
Baliles, not the least of which was a somewhat Wagnerian
initiative that proved to be his legacy and later landed
him a six-figure-a-year partnership at a white-stocking
Richmond law shop: transportation.
Baliles was the last governor to do anything substantive
about highways and mass transit. But he had to break
a promise not to raise taxes. Long before Mark Warner
made it fashionable to go back on your word on taxes,
Baliles did so with abandon — and, as was the
case with Warner, the public liked him more for it.
This is not to suggest voters tolerate
perfidy by politicians. Rather, the electorate in the
mid-1980s — when
Virginia’s suburbanization reached warp speed — was
ready to do something about congestion, lengthy commutes
and the competitive disadvantage for business caused
by a subpar transportation network.
So Virginians paid more — more fuel taxes, more
sales taxes, more titling taxes. When the economy slowed
heading into the 1990s, and the Baliles program — under
successor Doug Wilder — failed to keep pace with
need, voter resentment boiled over. This hastened a
Republican ascendancy, led by football scion George
Allen, whose approach to government recalled a hide-the-ball
play.
As governor, Allen would not stand
for additional taxes. But he was perfectly happy with
higher fees that, to
the folks unhappily paying them, seemed like a tax
increase. Allen also had a giddy time with the state’s
credit card, piling up bond-backed debt to build
prisons.
But Allen also had the good fortune
to govern during the dot-com craze. The explosive growth
of the state’s
technology sector pumped billions of dollars into the
treasury. The Republican who depicted state government
as too big, too meddlesome and too expensive left office
spending like a Democrat — and was well positioned
in 2000 to knock off Sen. Chuck Robb, the former governor
who first identified the emergence of IT as an economic
force.
The anti-tax orthodoxy of Allen Republicanism was elevated
to high art under his heir, Jim Gilmore, and this eventually
put the GOP at odds with traditional business.
Gilmore was elected on a promise to eliminate the car
tax, an important source of local revenue, but one
that infuriated folks in the area where votes are abundant:
the Washington-to-Virginia Beach urban-suburban crescent.
The car-tax plan had populist appeal,
but it also threatened to bleed the government white,
diverting about $1 billion
a year from education, law enforcement and social
services. The Virginia Business Council, made up of
the state’s
biggest employers, cautioned that the car-tax rollback
was a fiscal time bomb. But Gilmore successfully
bullied the group into repudiating its warning.
And you thought corporate bosses are paid big bucks
to make tough decisions? This one, for some, was a
no-brainer: Avoid offending a governor with keen a
sense of the jugular.
The car-tax flap, an accompanying budget crisis and
the perceived neglect of transportation and the university
system became too much for many business types to bear.
If only one of their own were in power, they mused;
that way, Virginia could set things right. (How quickly
the corporate set forgets: Tom Stanley, a furniture
exec, was governor in the mid-1950s and generally was
viewed as underwhelming.)
Enter Mark Warner: A youthful symbol
of Virginia’s
new prosperity, the Democrat made a fortune on a
bet that people wanted to talk by telephone any time,
anywhere.
With a lot of Republican money and $5 million of
his own, Warner won at a time when the GOP impulse
in Virginia
was supposed to be at its apex.
The let’s-make-a-deal approach that worked for
Warner in the board room initially flopped with the
red-eyed Republican partisans who came to dominate
the General Assembly on Gilmore’s watch. But
they eventually overplayed their hand.
Wrestling with a budget battered
by recession, the economic aftershocks of 9/11 and
Gilmore’s pricey
car-tax program, Warner decided in late 2003 that more
spending cuts would not stabilize the state’s
finances. He opted for the seemingly unthinkable: new
taxes.
After a bruising, 115-day session, the legislature
relented. A rebellion by moderate Republicans in the
House of Delegates against their conservative leaders
assured a $1.4 billion increase in a bevy of taxes.
Warner should have been the goat
for breaking his no-new-taxes pledge. Instead, he emerged
a hero. Virginians rewarded
him by electing his protégé, Tim Kaine,
to the Executive Mansion. Now, Warner is on the short
list of presidential prospects. (So, too, is George
Allen, having fattened the Republican majority in the
Senate as head of the party’s campaign arm in
2004.)
But Warner leaves Kaine important unfinished business:
long-term financing for roads and transit, which now
require at least $1 billion a year. Kaine may put in
place a Baliles-like remedy. Indications are Virginians
will go along, rejecting the something-for-nothing
thinking of the 1990s for more taxes and tolls.
Politics — and the muscular financial interests
that support it — is in transition.
Again. Jeff E. Schapiro wrote for Virginia Business from its
inception until April 1987 when he joined the Richmond
Times-Dispatch as a political reporter and columnist.
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