Much speculation in this morning’s papers on who won and who lost the political battle. Obviously, Gov. Mark Warner is getting praise.

“He staked his reputation for leadership on this package and in breaking the political model on taxes in Virginia,” said Mark Rozell, a professor at Catholic University. “It was a remarkable accomplishment to get a Republican legislature talking about the need for new revenue, largely on his terms.

Consultant Hal Malchow said that victory will “raise Warner’s stature in national Democratic ranks because there just aren’t that many success stories in this area. He has offered national Democrats a lesson in how to win both election and legislative battles in a conservative Republican state.”

“It’s a huge victory for the governor,” said Robert D. Holsworth, an expert on Virginia politics at Virginia Commonwealth University.

“He has staked his legacy on this. He took on a fight that a lot of people didn’t think he could win, but at the end of the day, the package looks an awful lot like the one he introduced.

“The only question is how Warner’s legacy will play down the road” if he seeks another office, Holsworth said.

“When Republicans end up making Mark Warner a viable Democratic vice presidential candidate, there’s a reason they call us the Stupid Party,” said Del. Robert G. Marshall, R-Prince William.

Editor’s Note: No, Mr. Marshall, Republicans aren’t stupid, try as hard as you may try to prove it.

“This is historic,” said Del. Brian J. Moran (D-Alexandria), who chairs the House Democratic caucus. “We recognized the unmet needs of the commonwealth.”

Others disagree.

First, although the legislators’ plan would keep the wolf from Virginia’s door for the time being, it – like the governor’s plan – represents only the bare minimum of responsible governance. That may satisfy worried Wall Street analysts, who have threatened to downgrade the state’s bond rating and so increase the interest rates Virginia pays on bonded indebtedness. But the plan funds only existing commitments and fails to provide for the possibility of new ones.
For example, the Senate’s initial plan, calling for $3.8 billion in new revenues for 2004-06, included $1.6 billion in new money for transportation. Instead, Virginia’s transportation system will continue to limp along on one fiscal cylinder as the gas tax continues to drop in after-inflation dollars.

And a main purpose of the Governor’s initiative went unfulfilled.

…the package did little to fundamentally make the tax code fairer. It did not, for instance, significantly shift more of the burden onto corporations, and it did not change the sales tax system by expanding it to cover services, such as lawn care, pedicures or accounting.

“This was not about fairness. What this ended up being about was raising more revenue,” [David Brunori, contributing editor to a tax policy magazine called State Tax Notes,] said.

It does not remedy the bias in the sales tax that exempts services in a service-driven economy. It retains an antiquated income-tax structure in which the highest tax bracket starts at $17,000. And, so far as the car tax is concerned, this plan replaces one convoluted collection and reimbursement system with another.

But it may have been our last chance for awhile.

“This is the tax increase for this generation,” said Sen. Kenneth W. Stolle, R-Virginia Beach, who was a key negotiator for the compromise. “It will probably be the last one for another 25 years.”

Why did conservative Virginia lawmakers pass a tax hike?

It was at town hall meetings that the tide turned, lawmakers said. House Republicans who returned home after adjourning the assembly’s regular session without a budget were deluged by angry constituents.

Editor’s Note: Ironically, the above is from this morning’s Washington Post, a paper that largely ignored the meetings.

Warner apparently cleared a major sticking point in the House, assuring delegates that new tax money earmarked for public schools would be split among localities according to the number of students. (Emphasis added)
Even the business lobby, increasingly irritated by the intransigence of the House, helped press delegates. Corporate executives were enlisted for last-minute telephone calls to at least one senior lawmaker.

And just a “Huh?”

“I didn’t like the way it was done, but we now have a new pot full of money, and I’m sure we’ll spend it all,” said [Del. Vince Callahan the House budget chairman].

“I don’t think we’re at an impasse any longer,” said Del. Vincent F. Callahan Jr., the House budget chairman. “I think we made substantial progress today.”

Callahan voted against the tax hike and the car tax cap.

And finally, the $64,000 question is how?

…legislators and political observers said the standoff and hard-fought remedy could dramatically color the 2005 elections for governor, lieutenant governor, attorney general and 100-member House by shifting debate away from taxes.