By Michael Sluss

Archives Reprint

    RICHMOND - With the General Assembly's budget negotiators deadlocked over the issue of new taxes, Roanoke County Sen. Brandon Bell has come up with his own idea for balancing the budget - eliminating the car tax reimbursements Virginia pays to local governments.

    In a move that is unconventional by Republican standards, Bell introduced a bill (SB 5005) on Friday that would effectively end the state's car tax relief plan in January 2005. The repeal would save the state more than $1.4 billion in the two-year budget cycle that begins July 1, an amount that would more than offset the existing gap between state spending demands and anticipated revenue.

    Bell proposed earmarking 90 percent of the savings for public schools.

    "I've had several constituents of mine suggest to me - independently of each other - that they would prefer to pay all of their car tax than have a sales tax increase," Bell said.

    Former Republican Gov. Jim Gilmore launched the popular car tax relief program in 1998, calling for the gradual elimination of the personal property tax levied on the first $20,000 of a vehicle's value. Because counties, cities and towns impose the tax, the state reimburses localities for revenue lost to the tax cut.

    Because of sluggish state revenue growth, the car tax rebate has remained frozen at 70 percent since 2001. But the program's cost has continued to increase, exceeding $920 million in the current fiscal year. The vast majority of the reimbursements flow to densely populated localities in Northern Virginia that also have high personal property tax rates.

    Bell said he has not lined up any support for the measure, but thought lawmakers should consider the idea along with other options for ending the impasse between the Senate and the House of Delegates. House negotiators have balked at Senate proposals to increase the sales tax on goods and income taxes on affluent households.

    Under Bell's bill, localities would decide whether to offer car tax breaks to their residents. His bill has been referred to the Senate Finance Committee.

    Bell called his proposal "more of a different approach" - perhaps an understatement for a GOP legislator.

    Bell noted that lawmakers launched the car tax relief program during a period when general-fund tax revenues were growing at double-digit percentage rates. General-fund growth has been virtually flat for the past four years.

    "Car tax relief is something we all supported in the past," Bell said. "However, the current financial situation dictates that we give this issue another look."

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