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Bolling enters debate over taxes and fees in Virginia

Anita Kumar

Lt. Gov. Bill Bolling (R) has weighed into the budget debate by encouraging the House and Senate conferees to reject certain tax and fee increases, including those that raise property and casualty insurance premium taxes, fees on phone lines, Internet sales taxes and taxes for retailers and manufacturers.

"These are broad based taxes and fees and I believe that increasing them would violate our promise to balance the budget without general tax increases,'' Bolling wrote in a column to supporters Monday.

Bolling presides over the Senate and is a close ally of Gov. Bob McDonnell (R), who has yet to express a specific opinion on the many fees that the Senate has included in its version of the budget.

Just last week we asked McDonnell what he thought of adding 18 cents to a 75-cent fee on phone lines a "surcharge" which code of Virginia calls a tax.

McDonnell's office has said that the governor could back fees if they're used to fund specific services, but has not expressed an opinion on this particular one.

Has that changed now that Bolling has expressed an opinion? McDonnell spokeswoman Stacey Johnson says no. "The governor has been clear that in regards to fees they must be rationally connected to the service provided, not have been raised recently and must be equal to or less than the actual cost of providing that service," she said.

Bolling's column comes at the end of a week-long push by the anti-tax group Americans for Prosperity, which has been criticizing the Democratic-controlled Senate for the millions of dollars in fees it approved in its budget. The group held a rally outside the Capitol yesterday and is in the middle of an ad campaign.

Read the full Bolling column below:

As I write this column, budget conferees from the Senate and House of Delegates are meeting to reconcile their differences and adopt a new state budget for the 2010-2012 biennium. While it may be a gross over simplification, their ultimate task really comes down to two things

First, they must agree on how much tax revenue the state will receive in the upcoming biennium. In other words, how much money do they have to spend? Then, they must agree on how they want to spend that money.

In recent days, much has been written about how many fee increases, or tax increases, are buried within the budgets adopted by the Senate and House of Delegates. So, I thought I would use this week's column to try and shed some light on that question.

In the budget he introduced before leaving office in January, former Governor Tim Kaine recommended a number of tax and fee increases that totaled more than $145M. (This does not include Governor Kaine's recommendation to de-fund the car tax reduction program, which would have raised taxes by an additional $1.9B.)

The budget adopted by the Senate included all of the tax and fee increases recommended by the Governor. These tax and fee increases included the following:
· Increase property and casualty insurance taxes by .5% of premium, for a total of $66M.
· Increase the E911 fee by .18 per phone line, for a total of $38.9M
· Increase the deed recordation fee by $10, for a total of $19.2M
In addition, Governor Kaine recommended a number of other fee increases totaling $21.3M. A complete list of these fee increases can be found below. *

In addition to the tax and fee increases recommended by Governor Kaine, the Senate budget also includes several other tax and fee increases that total an additional $195M. These include:
· $101.8M by increasing filing fees for civil litigation
· $10M by expanding Internet sales tax collections
· $18M by increasing the fee to reinstate a suspended driver's license
· $25.2M by increasing the $4 For Life Fee from $4 to $6.25
· $18.2M by increasing the Higher Education Capital Fee by $2.50 per credit hour
· $10M by increasing various hazardous/solid waste fees and pollution fees

I should note that the budget adopted by the Senate also affirms Governor Kaine's recommendation to capture $29.6M in additional revenue by repealing the so called dealer discount that has been provided to retailers for years. This discount is intended to reimburse retailers for some of the costs they incur in collecting and remitting the state sales tax. By repealing the discount, retailers argue that we are, in effect, increasing taxes on retailers by $29.6M.

When all of these tax and fee increases are added up, the Senate budget proposes increasing various taxes and fees by about $400M.

For the most part, the budget adopted by the House of Delegates does not include any of the tax and fee increases discussed above. (The only exception is $800,000 in new revenue derived by increasing park reservation fees)

However, there is one significant tax increase that is included in the House budget that is not included in the Senate budget.

In his Executive Budget, Governor Kaine recommended making various changes to Virginia's tax code to conform our state tax code to the federal tax code. As a result of these changes, certain taxes on manufacturers based in Virginia would increase by $60M.

Interestingly, the Senate removed this "manufacturer's tax" increase from their budget, but the House accepted the Governor's recommendation, which would, in effect, increase taxes on manufacturers by $60M.

I realize this is all very difficult to follow, but it does give you some idea of the various differences taken by the Senate and House of Delegates when it comes to producing new revenue for the Commonwealth, and it begs the question, when is a tax increase a tax increase?

Some of the proposals discussed above are clearly tax increases that should be rejected by the General Assembly.

For example, I would encourage the budget conferees to reject proposals to increase property and casualty insurance premium taxes, E911 fees and an expansion of Internet sales taxes. These are broad based taxes and fees and I believe that increasing them would violate our promise to balance the budget without general tax increases.

I would also encourage the conferees to reject Governor Kaine's proposals that would result in higher taxes for retailers and manufacturers. I believe that these proposals would also violate our promise to avoid general tax increases.

However, there may be a valid basis for including additional revenue from some of the other proposed fee increases in the budget. For example, perhaps it makes sense to increase reservation fees to help fund our state parks, and perhaps some increase in various other administrative fees is in order to help pay for the programs those fees are intended to fund.

In the final days of the legislative session the budget conferees will have to work through each of these proposals to determine which make sense and which do not. Governor McDonnell will then have the last chance to review the legislature's recommendations and make certain they do not violate his admonition against raising taxes.

* Includes increases in the following fees: weights and measure fee, boiler inspection fee, gas and oil well permit fee, mineral mine safety license fee, coal mine safety program fee, apprenticeship registration fee, vital records fee, license/certification of hospitals/health care facilities, environmental health services permit fee, shellfish sanitation fee, marina program fee, central child registry fee and park reservation fee.

By Anita Kumar  |  March 9, 2010; 10:22 AM ET
Categories:  Anita Kumar , Bill Bolling , General Assembly 2010 , House of Delegates , Robert F. McDonnell , State Senate  
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Comments

I'd love to hear Lt. Gov. Bowing try to defend his opposition to the E-911 tax in a debate. Leaving aside the fact that it's only 18 cents per phone per month--$2.16 per year--this tax is directly linked to the service provided, and it would be hard to find a purpose with broader appeal than paying death and disability benefits to families of uniformed first responders killed or injured in the line of duty.

All revenue from the 18 cents per month E-911 tax goes to Virginia's Line of Duty fund, which pays death and disability benefits to families of uniformed public safety officer injured or killed in the course of protecting or rescuing others.

The state and local government personnel covered by this measure respond to 911 calls, so the 18 cents E-911 tax is an appopriate and efficient way to fund their line of duty death and disability benefits.

Along with the tens if not hundreds of thousands of dollars that Americans for Prosperity is throwing into their opposition to this measure, they're throwing their credibilty out the window and public safety officers under the bus.

Their fundraising appeal calls this measure “a shell game to hide what’s really a huge tax hike,” neglecting to mention it’s only 18 cents a month per phone. Their website says the measure funds “an array of benefits for a wide variety of state and local government employees,” but the truth is all the money goes to the Line of Duty Fund for families of public safety officers injured or killed on the job, the very people who respond to 911 calls.

Americans for Prosperity's hype and deception exposes disdain for their donors, participants, and the general public.

- Steve Lebowitz, Annapolis, Maryland

Posted by: justdafactsSteveLebowitz | March 9, 2010 1:18 PM | Report abuse

Steve L - like we said its a tax - line of duty disabilities should be covered by workers comp and deats should be covered by insurance -911 fees were for the purpose of being able to have a 911 response system - not cover the people responding -just the facts please....

Posted by: judgebert | March 9, 2010 1:34 PM | Report abuse

Steve Lebowitz,
The last time I looked at my phone bill there was $23 JUST IN FEES AND TAXES!!!! How did this happen??? $23 in fees and taxes for a service that costs about $40/mth. I'll tell you how it happened "It's just another $0.18 per month, no big deal, right?."

I have since cancelled my home phone service, now they get NOTHING, NADA, ZERO, ZILCH!!


Posted by: savethepcbs | March 9, 2010 2:14 PM | Report abuse

It's easy to be in the GOP. You won't get confused on the issues. TAXES. One issue. One thought. But, not a fix for anything.

Posted by: jckdoors | March 9, 2010 2:14 PM | Report abuse

cut public safety.

Posted by: millionea7 | March 9, 2010 2:15 PM | Report abuse

Cut the bureaucracy of the tax agency and you save money. A large portion of most fees and tax collection at the state level go to just maintaining the bureaucracy to collect the taxes in the first place (because you have tax employees with salary, benefits, pension, health care etc.). Most small business owners know this - the largest cost to a business is labor costs - eliminate certain taxes, fees, then you eliminate the bureucracy to oversee it to collect it (labor costs) and you save money.

Posted by: AMS4 | March 9, 2010 4:54 PM | Report abuse

judgebert - Paying disability and death benefits for first responders from workers' comp and insurance would be a zero sum change. You're only shifting the cost....unless you're proposing to cut death and disability benefits to families of uniformed first responders injured or killed in the line of duty.

savethepcbs - How were you paying $23 in taxes on a $40 phone bill? I checked my last bill--$2.63 for "Regulatory Recovery Fee" with this note:

"The Regulatory Recovery Fee is not a tax or
government-mandated charge. It defrays regulatory costs
such as state universal services, relay services, and
certain state/local utility fees."

Then there's a "Universal Connectivity Charge" of $1.12. That's $3.75 total, and I'm not convinced the "Regulatory Recovery Fee" should be considered a tax.

- Steve Lebowitz, Annapolis, Maryland

Posted by: justdafactsSteveLebowitz | March 10, 2010 1:42 AM | Report abuse

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