TARDY BUDGET'S LAST ACT OPENS WEDNESDAY

By Bob Lewis
AP Political Writer

RICHMOND, Va. - The struggle that began in December over a $72 billion state spending blueprint concludes Wednesday, months late and with just two days to spare before a new budget year starts.
Virginia's feuding House and Senate return for one final time Wednesday to examine changes Gov. Timothy M. Kaine made to a delicate budget compromise, then accept or reject them.
The Kaine administration discovered a mathematical error of about $7 million in the compromise budget the House and Senate separately approved last week, said press secretary Kevin Hall.
Kaine also will restore $3.75 million that had been deleted from the compromise to help Lynchburg with federally mandated upgrades to its sanitary sewer and storm drainage system. The Environmental Protection Agency ordered the projects in Lynchburg and Richmond to keep raw sewage from washing into the James River after heavy rainstorms.
The $3.75 million for the Richmond project survived the budget negotiations, but the Lynchburg funding did not. Both cities have sewage systems that, in places, are nearly 100 years old.
Del. Shannon Valentine, D-Lynchburg, said she couldn't understand why Lynchburg's funding was deleted.
"When we're spending historic amounts of money to clean up Chesapeake Bay but we continue to put raw sewage into the James River made no sense to me," she said in an interview.
"But this is not a nutrient problem; this is a pathogen problem," she said.
Hall said Kaine's fiscal advisers discovered the math error with only six days to scrutinize and amend this year's budget instead of the usual five or six weeks.
But with a cushion of nearly $9 million, the budget could more than absorb the discrepancy, said House Appropriations Committee staff director Robert Vaughn.
Initially, the administration said the projected overage was only $4 million, requiring Kaine to free up $3 million elsewhere in the budget. Hall later deferred to Vaughn's larger estimate.
The administration, however, was silent Monday on what consideration it has given to legislation related to the budget that would repeal the estate tax and limit the total value of land that can be committed to conservation each year in exchange for tax credits.
"There have been discussions, but the No. 1 priority is to get the two-year budget review done," Hall said.
Kaine supports eliminating the tax levied posthumously on the estates of millionaires, but is a supporter of the conservation tax credits that have put hundreds of thousands of acres of land off-limits to developers in recent years.
In a compromise, however, negotiators agreed to limit to $50 million a year the amount of land that could be committed to conservation easements as a tradeoff for repealing the estate tax, which is estimated to cut revenue by about $98 million a year.
The use of conservation tax credits has grown wildly in recent years, and legislators fear that it could consume ever larger chunks of state revenue without restrictions.
House and Senate versions of the bill _ identical in substance _ have not yet won final passage, so the issue is not formally before Kaine.
"If we do get a bill, it will be after we do the budget," Hall said.
But actions Kaine might later take on the bill could affect the budget.
For instance, if he removes the proposed conservation tax credit cap, it could throw the budget out of balance by reducing revenue below the budgeted projections.
In a year of unprecedented delays, a protracted legislative fight over the governor's actions on the budget could threaten government funding should they persist past midnight on Friday. That's the moment the current budget expires.
The new budget got its start Dec. 16, when the first draft was introduced by then-Gov. Mark R. Warner. The House and Senate drafted their competing versions in February, but deep divisions over transportation funding created this year's unprecedented delays.
The regular winter legislative session ended March 11 with no sign of a compromise between demands by the Senate and governor for about $1 billion a year in new transportation funding and the House, which flatly rejected any new taxes.
The budget compromise came only after the Senate and House agreed last month to postpone legislation on new transportation revenues until after the rest of the budget is completed.