Kaine Proposed Tax Increases To Pay For Transportation Upgrades That Virginia’s GOP House Wanted To Finance With More Borrowing

Kaine’s Proposal Raise Taxes To Pay For Transportation Upgrades Contrasted GOP-Controlled Virginia House’s Idea To Borrow Money. From the Washington Times: “While most Virginia governors have enjoyed several weeks to offer amendments, Mr. Kaine was given the tentative budget about 10 days before the end of the fiscal year. The more than 150-day budget deadlock centered on how to generate new money for the state’s overcrowded roads and mass transit system. The House wanted to use part of the state’s projected $1.4 billion surplus and free up additional money in the General Fund through long-term borrowing. The Senate and Mr. Kaine wanted to raise as much as $1 billion a year in new taxes. In the end, the two-year proposal provides $568 million in new money for roads — $339 million of that is contingent upon a long-term revenue source being established before Nov. 1. The General Assembly agreed to take up transportation in a special session this fall.” [Washington Times, 6/27/06]

• Largest Of Tax Increases Kaine Proposed Over His Tenure Were Aimed At Funding Transportation. From PolitiFact: “Kaine led the state from 2006 to 2010. Katie Wright, Allen’s director of communications, sent us a breakdown of supposed tax-increases advanced by Kaine. The largest proposed hikes, from 2006 through 2008, were aimed at raising money for Virginia’s overcrowded roads. […] By our count, Kaine proposed raising about $4 billion in new taxes — $1 billion in 2006, $1.1 billion in 2008 and $1.9 billion in 2009. Of those increases, the 2008 plan represented a second attempt to raise new road funding, and the 2009 proposal would have been partially offset by a $650 million reduction in local car taxes.” [PolitiFact.com, 4/16/11]
• Virginia GOP Wanted Kaine To Borrow Money For More Transportation Spending. From the Virginian-Pilot: “Gov. Timothy M. Kaine’s proposals for spending a $1 billion budget surplus received a lukewarm reaction Friday from top Republicans, who are girding for an election-year battle. Transportation remained the focus of disagreement. The Democratic governor wants to spend half the surplus on road and rail projects. Some Republicans said that is too little and chided Kaine for refusing to borrow money to ease congestion. […] Republicans, under pressure to find consensus on the state’s transportation gridlock, said they are disappointed that Kaine doesn’t want to borrow money for roads. They noted that the governor is backing new debt for sewage plant upgrades and a new prison in Southwest Virginia. […] Kaine said environmental programs and prisons are financed with income and sales taxes, which can be used to pay off debt on capital projects. He said he cannot support borrowing for roads until lawmakers agree on new long-term revenues to pay off the bonds. Virginia relies on gas taxes – a declining source of revenue – to pay for new roads.” [Virginian-Pilot via Nexis, 12/16/06]

Kaine Proposed 1 Percent Tax Surcharge To Balance Virginia’s Budget

Virginia “Experienced Serious Budget Shortfalls” Because Of The Recession. From FactCheck.org: “Virginia adopts a new budget every two years, and amendments are added to it in the odd year to square the numbers. There’s no question that Virginia experienced serious budget shortfalls during the recession due to much lower-than-anticipated revenues. But the shortfall was closed by the end of the biennium. The same Virginian-Pilot story in which Kaine talks about a $3.7 billion shortfall, notes that the stimulus provided $1 billion in budget relief, and that lawmakers were forced to cut $2.7 billion to balance the budget, as required by the state constitution. Responding to the ad on Nov. 10, Kaine told WVEC ABC 13: ‘I left office with two balanced budgets that I submitted because you have to, by law, submit balanced budgets.’” [FactCheck.org, 11/15/11]

Kaine Proposed Replacing Car Tax With 1 Percent Personal Income Tax Surcharge To Help Balance “Recession-Wracked” Budget. From PolitiFact: “The Allen campaign, in a website post, backed Allen’s statement by citing news articles about a proposal Kaine unveiled in December 2009 as part of his farewell biennial budget proposal for 2010-2012. Kaine called for adding a 1 percent income tax surcharge and giving all proceeds to localities in return for them scrapping the car tax they levy on personal vehicles. Legislators in 1998 adopted a five-year plan to phase out the personal property tax on most cars and reimburse localities for their lost revenues. But the program was more expensive than anticipated and legislators eventually capped the state reimbursement at $950 million a year. The remaining share is paid by vehicle owners. Ending the car tax would mean the state wouldn’t have to provide the annual $950 million payment to localities, Kaine said in a speech to the General Assembly’s money committees. Kaine wanted to use the savings to help balance the state’s recession-wracked budget. News articles from the time said Kaine’s policy would raise the maximum state income tax rate from 5.75 percent to 6.75 percent. That maximum rate applies to all taxable income above $17,000 after deductions and exemptions are taken into account.” [PolitiFact.com, 8/3/12]

Income Tax Proposal Was Coupled With Tough Cuts. From the Richmond Times-Dispatch: “Outgoing Gov. Timothy M. Kaine is proposing a 1 percent increase in the state income tax to offset a proposed elimination of Virginia’s despised local car tax. The tax increase, which would raise $1.9 billion annually for localities, was the most striking aspect of the 2010-2012 budget plan that Kaine laid out for state lawmakers yesterday. In seeking to close a revenue shortfall that he projects to hit $4.2 billion by 2012, Kaine also is proposing cuts to services such as Medicaid, public education and public safety, along with 664 layoffs of state employees and a reduction in the commonwealth’s contribution to the state pension system.” [Richmond Times-Dispatch via Nexis, 12/19/09]

Rejecting 1 Percent Tax Increase Meant Cutting $1.9 Billion More From State Spending. From the Richmond Times-Dispatch: “Rejecting Kaine’s tax-increase proposal would mean that [incoming Republican Gov. Bob] McDonnell and Republican lawmakers would have to come up with a way to slice an additional $1.9 billion from state spending over two years, on top of the additional cuts announced yesterday.” [Richmond Times-Dispatch via Nexis, 12/19/09]

Refusal To Raise Taxes Meant The Budget Gov. McConnell Signed Into Law Had Deep Cuts To Education, Health Care, And Public Safety. From the Washington Post: “The Virginia General Assembly adjourned its annual legislative session Sunday evening after adopting a two-year, $82 billion budget that cuts millions from education, health care and public safety — curtailing state spending more aggressively than any in generations while fulfilling the new Republican governor’s promise not to raise taxes. The trade-off for holding firm against a tax increase to plug a $4 billion hole was a spending plan that cuts deeply into virtually every area of state responsibility.” [Washington Post, 3/15/10]

Kaine Supported Deal To Avoid Default, And Has Laid Out A Plan To Avoid Defense Cuts

The Federal Budget Control Act Was A Last-Minute Deal To Raise The Debt Ceiling That Also Created The Deficit Reduction Super Committee. From PolitiFact: “Last year, the United States government was reaching its legal debt limit, which meant Congress had to authorize a higher level for borrowing. Raising the debt limit (also called the debt ceiling) was in some ways symbolic: Congress has the power of the purse, and the decisions to spend the money had already been made. In prior administrations, Congress approved higher debt limits with some partisan sniping (including from then-Sen. Obama against President George W. Bush) but without too much fuss. But in the summer of 2011, House Republicans insisted that actual spending cuts go along with an increase to the debt limit. House Speaker John Boehner led negotiations with the Obama White House, and at first the two sides seemed to be moving toward a wide-ranging overhaul of the federal budget, referred to in the media as a ‘grand bargain.’ The closed-door negotiations fell apart, though. […] Republicans and Democrats came to a less ambitious agreement to raise the debt limit through the Budget Control Act of 2011. The law found approximately $1.2 trillion in budget cuts spread over 10 years. But it also directed Congress to find another $1.2 trillion through a Joint Select Committee on Deficit Reduction. This 12-member committee became known as ‘the super-committee.’” [PolitiFact.com, 9/21/12]

• Debt Ceiling Deal Imposed Harsh Defense Cuts Triggered By Super Committee’s Failure As Incentive For Compromise. From the Associated Press: “The deal between House Republicans, the Democratic-controlled Senate and the OK of the White House, came hours before the deadline for raising the amount of money the government can borrow. As an incentive, the agreement prescribes draconian cuts both parties would find unpalatable — $487 billion to defense over 10 years plus $492 billion in automatic cuts if a bipartisan congressional ‘super committee’ [failed to come up] with $1.2 trillion in savings. The committee failed.” [Associated Press via SFGate.com, 7/24/12]

Kaine Supported Debt Ceiling Deal But Believes We Can Still Find A Way To Avoid Defense Cuts. From the Associated Press: “Republican former Sen. George Allen is airing a new ad that deftly fosters a false impression that his Democratic opponent, Tim Kaine, supports potential deep military spending cuts under a debt-reduction compromise. The ad is rooted in Saturday’s debate between the candidates, when Allen attacked Kaine for supporting a bipartisan compromise in August that allowed Congress to increase the nation’s debt ceiling. […] In the weekend debate, Allen tried to graft the national tactic into his neck-and-neck Senate race against Kaine, claiming that Virginia — home to the Pentagon and the world’s largest U.S. Navy base in Norfolk — could lose more than 200,000 defense-related jobs. ‘George, the deal was the right thing to do — as Eric Cantor said, as Gov. Bob McDonnell said, as the U.S. Chamber of Commerce said,’ Kaine replied when Allen made the charge during the debate. But Kaine was clear in his reply that his endorsement of last August’s stopgap did not extend to approving of the super committee’s failure or of the continued partisan gridlock between House Republicans and Senate Democrats that jeopardizes a deal by year’s end. ‘This is a time when we really have to elevate what we do because the challenges are significant,’ Kaine said in his response. ‘We need people who will come together and try to find a deal and I believe Congress can still find a deal to avoid the need for cuts that are going to jeopardize our nation’s defense.’” [Associated Press via SFGate.com, 7/24/12]

Kaine Was Not Talking About Sequestration When He Listed ‘Cutting Defense Spending’ As Part Of A Deficit-Reduction Strategy. During a July 14, 2011, discussion on the political battle over raising the debt ceiling, Kaine stated: “Remember when the Bush tax cuts were put in place they were made temporary for one reason and one reason only – if they were permanent they were going to mess up the deficit. That was why Senator Allen and his colleagues made those tax cuts temporary. Well, here we are, it’s exactly what’s happened. They’ve messed up the deficit. We need to let them expire at the top end, but Republicans are basically saying to the president, ‘We want you to give on all the entitlement things but we’re not going to give on revenues.’ The American public fully understands that the only way we’ll solve this deficit issue is if we touch everything. We have to cut defense spending, we have to cut non-defense discretionary spending, we have to find cuts and savings in entitlement programs, we’ve got to have new revenues, largely through closing these loopholes that we don’t need to keep in place.” [NBC12 Decision Virginia Interview via YouTube.com, 7/14/11, emphasis added]

• Failure To Raise Debt Ceiling Could Have Resulted In Default Or Had Other Severe Economic Consequences. From CNNMoney: “A failure to raise the debt ceiling would likely send shockwaves through the underpinnings of the financial system — and possibly ripple out to individual investors and consumers. The federal government would be forced to prioritize its payments. It would risk defaulting on its financial obligations. And if that happens, credit rating agencies would downgrade U.S. debt.” [Money.CNN.com, 7/21/11]
• Kaine’s Opponent, George Allen, Opposed Debt Deal Because Cuts Weren’t Deep Enough. From the Associated Press: “Like Kaine, Republican House Majority Leader Eric Cantor and Gov. Bob McDonnell also backed the August compromise that kept the government from defaulting on its debts for the first time and defused a global financial meltdown. Allen opposed the compromise, saying the cuts would not have been deep enough.” [Associated Press via SFGate.com, 7/24/12]

Kaine: Sequestration Involves “The Wrong Cuts.” From the Suffolk News Herald: “Kaine said he is concerned about the prospect of sequestration, the mandatory, across-the-board cuts the military faces if Congress cannot come to a budget agreement by January. ‘I think I know how to make cuts the right way,’ he said, adding that sequestration would be ‘the wrong cuts.’” [Suffolk News Herald, 4/12/12]

Kaine Has Laid Out Specific Proposal On Avoiding Defense Cuts

Kaine Supports Compromise Deal To Avoid Defense Cuts While Allen Has Stated He Will Not Support Any Compromise Involving Tax Increases. From the Richmond Times-Dispatch’s Virginia Politics blog: “On Monday, Democratic U.S. Senate candidate Timothy M. Kaine laid out his views on how to avoid looming defense cuts, part of the sequestration resulting from the failure of a so-called deficit reduction super-committee. […] In a conference call with reporters, Kaine said congress should create a new plan that would add $1 in new revenue for every $3 in spending cuts. He said that should be coupled with an expiration of Bush-era tax cuts on households earning $500,000 or more, which he said would create more than $500 billion in new revenue to offset cuts. ‘We cannot solve our deficit and debt challenges through cuts alone,’ he said, criticizing GOP rival George Allen’s position, stated in a recent debate, that he would not support any tax increase, even if every $1 of revenue was matched with $10 in cuts. Kaine called that ‘a position that makes compromise impossible and a position that, frankly, also makes solving the deficit also impossible.’” [TimesDispatch.com, 7/30/12]

The Deficit Panel Failed Because Conservative Lawmakers Refused To Compromise

Deficit-Reduction Committee Failed After Republican Members Refused To Budge On Tax Cuts For The Wealthiest Americans. According to the Los Angeles Times: “The committee faced a Wednesday deadline to vote on a proposal to slash the nation’s deficits by $1.5 trillion over the decade. The panel that was brought into existence as a result of the summer debt ceiling fight spent three months in mostly secret negotiations. A deal needed to be posted by Monday evening to provide a 48-hour review. But Republicans and Democrats were unable to compromise on the tax and spending issues that have divided Congress all year, punting the debate to next year’s presidential and congressional campaigns. Republicans refused to substantially raise taxes and wanted to cut federal deficits largely by reducing spending on Medicare and other domestic programs. Democrats wanted a more equal balance of new taxes and spending cuts — a level of taxation the GOP could not accept. A focal point in final days became the George W. Bush-era tax cuts, which are scheduled to expire in December 2012. Republicans wanted to extend those tax breaks for the wealthy and other Americans, rather than carve into that source of new revenue. Most Republican members of Congress have signed an anti-tax pledge with conservative activist Grover Norquist, and were hesitant to agree to new taxes. [Los Angeles Times, 11/21/11]