Virginia Raises Taxes to Fund "Core Services,"
Nationwide Anti-Tax Push Remains Strong

In late April, the Virginia legislature voted to raise taxes $1.36 billion to fund schools, health care, and public safety. As reported by the Washington Post, an intense struggle over four months saw the key decisions being made by moderate Republicans who "broke ranks" with anti-tax Republicans despite threats of political retribution.

To raise revenues, legislators chose to change Virginia's sales tax from 4.5 percent to 5 percent and Virginia's cigarette tax from 2.5 cents a pack to 30 cents, and they raised fees for recording deeds, according to the Post. Taxes on income and groceries will actually go down, but a popular car-tax reduction program is "frozen," the Post reported.

Coalition Members and Town Hall Meetings

In addition to moderate Republican and Democratic legislators, a strong statewide coalition of advocates for schools, health care, and police mounted a major campaign to push for funding essential services. When legislators went home from their regular session without a budget, coalition members turned out in impressive numbers at town hall meetings and convinced certain Delegates that they the taxpayers were willing to pay more to support core services.

Among other organizations, the Alliance for Virginia's Students and the Virginia Chamber of Commerce let legislators know that state government needed to raise and spend more revenue. In recent years, Virginia had cut funding to higher education and failed to address growth in K-12 enrollment, as well as other needs, so that the state risked seeing its reputation for quality education lost and its bond rating lowered.

Anti-Tax Pressure and Next Year's Fight

National anti-tax groups, including Citizens for a Sound Economy, led by former U.S. House Majority Leader Dick Armey (R-Texas), pressured legislators to vote against the revenue generating taxes, according to the Alliance for Excellent Education. Armey's group has defeated efforts to raise taxes for basic services in other states, most notably Alabama.

The anti-tax groups have promised to challenge those Virginia House Delegates who voted for the tax revenues in their primary elections next year, when all Delegates face an election. Many advocates believe that next year's elections will be pivotal.

Moreover, a Roanoke Times editorial argued that this tax increase and state budget are merely a partial return to "traditional principles of sound fiscal management and planning" and that more is needed.

Not A Trend

Although tax increases have passed in some states during the recession, New Jersey and Idaho for example, there is no indication at this time that the long-standing anti-tax fervor is subsiding. Virginia is an exception; local and national opponents of taxes have won recently in Kentucky and Missouri, among other states.

In Arizona, a disagreement between moderate and anti-tax Republicans developed but was short-lived due to improving state revenues. The revenue growth allowed a small increase in the state budget – based on the perception that core services, such as full-day kindergarten, must be funded – without a tax increase.

Prepared by Molly A. Hunter, June 7, 2004