Va. Senate to take harder line on tax credit proposals
Democrats and Republicans on the Senate finance committee jointly agreed Tuesday to take a much harder look at proposed tax credits.
The committee unanimously agreed that starting next year, they will only approve new credits in years when the state's two-year budget is under consideration. Under that rule, they would approve no credits in alternating years--like the current one--when the General Assembly meets for 46 days instead of 60.
Starting this year, they agreed that any new credit approved will expire in five years and that no credit will be approved that relieves a taxpayer of more than 50 percent of their income tax liability. They policy statement notes that if the the legislature wishes to make a payment to a taxpayer, it should agree to make a grant rather than use the tax code.
They said they will only consider tax credit bills in the final week for committee action each session, allowing staff to pull together data about each bill's impact on state revenues. And no credit will be approved if staff believes its financial impact can't be determined--instead, such proposals will be delayed for a year for study.
Senators have long complained that state revenues are being eroded by dozens of bills filed by lawmakers to provide tax relief to certain classes of individuals and businesses. They say that often such credits are never reviewed to see if they served the purpose for which they were intended.
Upon approving the policy statement, the Senate committee then turned to its agenda of bills for the day.
"Senate Bill 1481 is a tax credit," Sen. Frank Wagner (R-Virginia Beach) told the committee, as he took the microphone to explain the first bill for the day's consideration, to laughter from the crowded committee room.
"Very timely," responded Chairman Sen. Chuck J. Colgan (D-Prince William).
"Probably going to need to add a five-year clause to it," Wagner responded.
But there was no need.
Wagner told the committee that his bill is a piece of a $54 million package of economic development incentives proposed this year by Gov. Bob McDonnell (R). The bill would give companies a break on their income taxes if they increased their use of the Port of Virginia by 5 percent in one year.
On a vote of 5 to 9, the committee rejected the bill.
Rosalind S. Helderman
| February 1, 2011; 1:34 PM ET
Categories: General Assembly 2011, Robert F. McDonnell, Rosalind Helderman, State Senate
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