McDonnell tells Kaine: no new taxes

RICHMOND - Gov.-elect Bob McDonnell called on outgoing Gov. Timothy M. Kaine on Tuesday to avoid proposing any tax increases as he seeks to close a projected state revenue shortfall that will almost certainly exceed $3 billion.

Kaine, a Democrat, will submit his final two-year spending plan to lawmakers next week. The General Assembly will then consider the budget during its session that begins Jan. 13 - three days before McDonnell is inaugurated.

Kaine has already cut roughly $6 billion from the state budget. With even more painful budget cuts coming, he has signaled that he might try to increase state revenue by eliminating certain tax breaks.

McDonnell, a Republican, said it is too early to opine on Kaine's budget proposal, but reiterated that he would oppose any higher taxes amid the economic downturn.

"I said during the campaign and I've said since then that I will not raise taxes," McDonnell said. " I would view repealing a significant tax reduction - say, the car tax - as a tax increase."

Sen. Janet Howell, D-Reston, said Kaine should propose a tax increase if he believes one is necessary to maintain the quality of Virginia's schools, support public safety and finance other essential government services.

"If he believes a tax increase is necessary, he may be the only one in Richmond who thinks it's a good idea. But if he thinks it's a good idea, he should do it," Howell said. "Both governors are going to have to do what's best for Virginia, and I'm confident that Gov. Kaine will do that."

Del. Kirk Cox, R-Colonial Heights, pointed out that Virginia elected McDonnell by a wide margin, partly because of his platform of low taxes.

"The biggest thing [Kaine] could do for us is not put a tax increase in the budget," Cox said. "The reason for that is elections have consequences, and in this election, Bob McDonnell ran on a platform of not raising taxes."

Despite the state's revenue challenges, McDonnell said he intends to prioritize state spending in ways that he believes will help Virginia's economy grow. These ideas include investments in energy, tourism, the film industry and a doubling of the Governor's Opportunity Fund, a discretionary account to help governors convince businesses to relocate or expand in Virginia.

"If we don't invest now, we're going to come out of this [recession] slower and we're not going to be a leading state," McDonnell said, speaking before 60 reporters and editors at a forum in the Capitol that was co-sponsored by the Associated Press and the Virginia Capitol Correspondents Association.

McDonnell also highlighted several high-profile items on his to-do list.

Within 90 days of taking office, McDonnell pledged, Virginia's shuttered rest areas will re-open. Kaine closed 18 rest stops in July to save $9 million as part of a long list of Virginia Department of Transportation budget cuts. McDonnell said he would find the money to re-open the rest areas through several strategies, such as relying on nonviolent inmate work crews to maintain the properties and establish a program allowing businesses and other entities to "adopt" a rest stop.

One of McDonnell's key campaign platforms was that he would find a way to fund Virginia's long underfunded transportation system. He said Tuesday that his goal is to tackle that issue in his first year in office, possibly in a special legislative session.

McDonnell renewed his support of several measures aimed at generating money for transportation, including privatization of ABC stores and adding tolls to Interstate 85 and Interstate 95 along the North Carolina border.