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Fairfax leaders express doubts on Kaine's budget

Rosalind Helderman

One potentially natural ally of Gov. Tim Kaine's -- as he proposed eliminating Virginia's car tax and replacing it with an income tax hike earmarked for local governments -- might be some of those local governments.

After all, according to Kaine's calculations, they'll come out ahead in the exchange. Right now, local governments receive $1.6 billion a year in revenue from taxpayers and the state from the tax on cars. If income tax rates were raised by 1 percent, it would generate $1.9 billion a year to send back to localities.

But, at least in Virginia's largest jurisdiction, Kaine's budget has been greeted quite coolly. The reason is unrelated to the income tax proposal. Instead, it's a single line item in the budget that was the subject of just one paragraph in Kaine's speech to the General Assembly money committees last week: a one-year delay in readjusting the state's composite index.

Kaine presented the change as a way to provide localities more certainty in budgeting and noted that 97 school districts would come out ahead because of his change.

Though he was blunt about the pain contained in his budget generally, what he did not say about the composite index change is that a number of school districts would lose state funding through the change, and those districts are largely centered in Northern Virginia. Fairfax County has estimated it would lose $50 to $60 million next year.

What is this issue all about? Virginia splits the costs of providing a basic education between local governments and the state. The split varies from place to place, using a formula that takes into account a localities' wealth -- the composite index. Many Northern Virginians believe the formula is unfair, resulting in the wealthy Washington suburbs shouldering far more of the costs of their local schools than districts do in other parts of the state. This has been particularly true in recent years, as Northern Virginia has boomed and its affluence has been fed into the formula to result in fewer state dollars.

But now the economy has declined and Northern Virginia has lost a bit of its wealth. That will be reflected in the composite index, whenever it is recalculated. The result will be that the state picks up a bit more of the costs of education in places such as Loudoun, Prince William and Fairfax, and local governments a bit less. Delaying the recalculation will put off that change, meaning local governments will pay more.

"It's just not right," said Sharon Bulova, the Democratic chairwoman of the Fairfax Board of Supervisors, who estimates that Fairfax schools could lose $50 to $60 million from the change. "It's a proposal I view as fundamentally unfair."

"It's s not just the money, it's the principle of the thing," said Sen. Chap Petersen (D-Fairfax), noting that he's long been assured by other lawmakers that the composite index is a fair formula and not an attempt to target Northern Virginia for its wealth. "We tell people we have this objective measure on ability to pay, but as soon as it favors Northern Virginia, we throw it out the window?"

Will Gov.-elect Bob McDonnell (R) retain the change in his budget? As he looks to undo Kaine's income tax proposal, he will be looking for new places to cut in his budget, not spending items to add back in. Yet McDonnell promised Northern Virginia in the last campaign that he would be looking out for their interests. And Democrats in the region will be watching. "If it becomes part of Bob McDonnell's budget, I shift my criticism to Bob McDonnell's budget," Petersen said.

By Rosalind Helderman  |  December 21, 2009; 12:52 PM ET
Categories:  Fairfax County Board of Supervisors , General Assembly 2010 , Loudoun County , Prince William , Robert F. McDonnell , Rosalind Helderman , Timothy M. Kaine  
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Good thing we have the Virginia Lottery to contribute so much funding to education! That was the deal, right? Rivers of money flowing to our schools! How's that working out?

Posted by: TMFOtter | December 21, 2009 4:44 PM | Report abuse

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