Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: TUESDAY, February 11, 1992 TAG: 9202110319
SECTION: VIRGINIA PAGE: B-1 EDITION: METRO
SOURCE: BONNIE V. WINSTON STAFF WRITER
DATELINE: RICHMOND LENGTH: Medium
WILDER DOES A QUICK U-TURN
The Wilder administration, apparently preparing revenue estimates that could force further tightening of the state budget, assailed and then apologized Monday to Del. Richard Cranwell of Vinton, who is pushing a $1.15 billion sales tax/bond issue package to "jump start" Virginia's economy.Hours after issuing a memorandum that dismissed Cranwell's tax and bond plan as "fiscally irresponsible," the administration faxed reporters a statement calling the memo "unauthorized" and its release "unfortunate."
"Del. Cranwell has long been a friend and colleague of mine. I look forward to working with him during the rest of the session," Gov. Douglas Wilder said in the statement.
The confusion underscored tension between Cranwell, the House Majority Leader, who wants to put a half-cent sales-tax increase and a $1.15 billion borrowing program to voters in a June referendum, and Wilder, who favors a $535 million bond package that would require no new taxes.
The major difference between the programs is over highways. Wilder's plan includes no money for road construction; Cranwell proposes $500 million for highways and says that could create 20,000 new jobs for the state's lagging economy.
The disavowed administration memo was distributed by Glenn Davidson, Wilder's press secretary, late Monday afternoon. It suggested the state's debt capacity is insufficient to handle Cranwell's package and claimed that the road projects Cranwell would initiate would cost more than $3 billion to complete.
Davidson later asked reporters to say the document merely contained questions raised about the Cranwell plan by members of Wilder's Cabinet. But Wilder's apology said the administration had helped Cranwell develop his plan and had concluded that the bond issue would not "in and of itself jeopardize Virginia's AAA bond rating."
The Wilder statement also said that state Transportation Commissioner Ray Pethtel had told Cranwell that many of the state's critically needed road projects could not be built without borrowing. The state currently pays for roads out of gasoline tax and sales tax proceeds.
"I've talked to the governor, and he assured me it was a mistake," Cranwell told reporters. "It was an internal memorandum with incorrect information. The governor and I are friends and will continue to be friends."
Cranwell has been a vital ally for Wilder in the administration's highest-priority battle of the legislative session: a proposed $30 million-per-year tax on hospitals, nursing homes, and doctors.
Wilder says the tax is vital to help offset increasing state Medicaid expenses. It figures to become even more critical to state budget planning if state revenue estimates are lowered later this week, as senior legislators said Monday they have been told to expect.
Lower projections would force the General Assembly to make further budget cuts or turn to new taxes to fill the gap.
"Tough as it is right now, I just don't know what we're going to do," said Sen. Stanley Walker, D-Norfolk, noting that the legislature faces a Wednesday deadline to pass revenue bills.
Secretary of Finance Paul Timmreck notified the chairmen of the House and Senate money committees Monday that a drop in revenues is coming, but he didn't say how big it would be.
Timmreck said he will meet with his staff this morning, report to the governor and release his estimates to the legislature Wednesday or Thursday.
Cranwell said Timmreck already has warned him to expect a drop in forecast revenues for the current year and for the two to follow.
Lower estimates could force a hasty rewrite of the state's $28 billion budget, which House and Senate money committees are supposed to finish reviewing by Sunday.
That budget already includes 6 percent cuts in outlays for many state agencies, raising the total cuts to those areas to about 25 percent for the past two years.
If further cuts are needed because of the revenue drop, the most likely target will be public education, according to Walker and Sen. Clarence Holland, D-Virginia Beach. Wilder had tried in this budget to restore education cuts he has made during the recession, but lower revenues could make that seem like a luxury.
"It's a serious situation we're in," Walker said. "I just don't know if we could stand and future cuts in some of those areas."
Staff writers Rob Eure and Greg Schneider contributed to this story.
Keywords:
GENERAL ASSEMBLY