THREE MONTHS LATE, BUDGET SENT TO GOVERNOR

By Rosalind S. Helderman and Michael D. Shear
Washington Post

RICHMOND, June 20 -- Members of the Virginia House of Delegates approved a $72 billion state budget Tuesday -- three months late and with little additional money for roads and rails -- then immediately pledged to turn their attention to transportation.
By 91 to 2, the Republican-controlled House agreed to the two-year spending plan, which had been negotiated over weeks of grinding conflict with senior lawmakers from the state Senate. The Senate approved the budget Monday. It now goes to Gov. Timothy M. Kaine (D), who may offer amendments or veto it.

Republican leaders in the House hailed the budget as a victory over Kaine, who had supported higher taxes to pay for increased spending on transportation projects. Kaine and his allies in the Senate had pushed for tax increases that would have raised billions of dollars over the next decade for roads, bridges, tunnels and transit.

"What those who supported unnecessary tax increases failed to take into account was the solidarity of the House Republican caucus," said House Majority Leader H. Morgan Griffith (R-Salem.)

The budget legislation repeals Virginia's estate tax and provides billions in new state spending. But it provides almost no new money to expand road and transit construction, a result of a House-Senate deadlock over taxes that lasted for months.

"To say it took a while is an understatement," said House Appropriations Chairman Vincent F. Callahan Jr. (R-Fairfax) as he urged passage of the budget on the floor of the House.

Kaine praised lawmakers for finishing the budget, but he urged them to return to Richmond in August to pass a statewide transportation package. And he reiterated his belief that higher taxes statewide will be necessary to deal with the transportation issue.

"This is the day of reckoning," he said, speaking at a regional United Parcel Service facility in Richmond. "You don't make anything happen by giving up."

House leaders said they would like the transportation debate to begin after Labor Day. But there was little to suggest that the philosophical differences between the House and Senate over higher taxes will be resolved by then.

Del. Phillip A. Hamilton (R-Newport News) said the GOP "faced a relentless campaign by those advocating higher taxes" and refused to back down.

Griffith added, "We never said we would come back and agree to tax increases carte blanche."

Still, some Northern Virginian lawmakers said they fear a voter backlash if they do not win support for substantial spending to cut commute times on crowded roads back home. They said they are ready to engage that subject.

"My work does not end after today; it really just begins," said Del. David B. Albo (R-Fairfax), who will try to persuade wary delegates to pass a plan allowing Northern Virginia to raise taxes regionally for local projects.

Buoyed by billions in unanticipated tax revenue produced by a booming economy, the budget deal for 2006 through 2008 includes additional spending for core government services. Teachers and state troopers will receive raises; colleges and universities will get more money to accommodate growing enrollment; and dozens of additional prosecutors will be hired.

The plan also provides tax relief. Virginia's estate tax, now assessed on holdings of at least $2 million, will end July 1, 2007. The repeal was part of a deal struck by budget negotiators on the final day of talks.

Republicans in both the House and Senate cheered the repeal in a rare sign of unity within a party that has been deeply divided on issues of taxes.

"We were asking people to devote energies throughout their lives to paying taxes on investments and income and then to pay again upon death," said Sen. Walter A. Stosch (R-Henrico). "That's offensive to many of us."

Democrats, however, criticized the last-minute deal, saying it amounts to a tax cut for the state's wealthiest residents.

"It's a tax break for the very, very rich and the very, very few at the expense of everyone else," said Sen. Patricia S. Ticer (D-Alexandria), who voted for the budget on Tuesday but against a companion bill on the estate tax.

Democrats and some Republicans also complained about a part of the last-minute deal that imposed a cap on the amount of tax credits that can be offered to landowners seeking to protect open space.

"It would cripple the most valuable land conservation program the commonwealth of Virginia undertakes," said Del. R. Lee Ware Jr. (R-Powhatan).

Kaine has up to seven days to offer amendments to the budget, veto it or veto specific provisions. The General Assembly will return to Richmond next week to consider any changes and take a final vote.

Del. Jeffrey M. Frederick (R-Prince William) was one of two delegates to oppose the budget. He said it contained wasteful spending on unneeded government programs and not enough money for transportation. Asked what spending he would reduce, he declined to offer specifics. "I don't want to get into that," he said.

But even legislators disappointed with the outcome were largely jovial that the months of bitter deadlock had been broken. Del. David L. Englin (D-Alexandria), who led the chamber in prayer to open the session, began with the Shehecheyanu, a Hebrew blessing intended to mark special and celebratory occasions.

"I'm glad we're finally here," he said afterward.