The Magical Surplus Part I

I’m starting a series of posts called “The Magical Surplus”. In these posts, which will run through the end of the GA session, will cover lawmakers plans to deal with the huge surplus this year. This will be one of many continuing series. There are many options. I’ll rank them in order of likelihood: 1. Pretend like the surplus isn’t a surplus. Rather, it’s just another chunk of revenue to be spent. Create government programs and long term spending initiatives. 2. Pass some one time spending initiatives. 3. Pass some one time tax refunds. 4. Pass some long term tax cuts. Of course, we’ll get into specifics as the year goes on. Right now, it’s a good bet that a large chunk of that money will go to one time spending on the Chesapeake Bay Cleanup and Transportation (both have bipartisan support). I’d hope that at least 1/4 of the money goes into the Rainy Day Fund, and at least 1/4 goes into a one time tax refund. If GA insists on passing long term tax cuts (not likely with Chichester the chair of the Senate Finance Committee), then I would favor the following tax changes: 1. Updating the tax code. Right now it looks like it’s inflation adjusted to 1935 dollars. The top bracket for individuals is $17k (at a 5.75% rate). In essence, we have a flat tax in Virginia right now, because most working people who make under $17k are eligible for the Virginia EITC anyway, which cancels out their taxes. I haven’t decided what I think we should do here (I’d like it to be a tax cut or revenue neutral), but I’m thinking about it…any ideas? 2. Getting rid of the BPOL tax. This is an outdated tax that taxes business revenue (not profits). 3. Exempting small farms from the state tax (getting rid of the “sprawl tax” that encourages small farmers to sell out to developers instead of passing their land down) but KEEPING THE ESTATE TAX ON RICH PEOPLE. 4. Enacting some sort of tax relief for seniors on their property taxes. I don’t really know how to do this without creating another Gilmore style state expenditure to the localities… but I really don’t like the fact that elderly people are being forced to sell their homes. Random questions that I’ll be focusing on: 1. How are UVA, W&M, and VT’s revenue streams looking after the quasi-Charter School thing was enacted? Will tuition rise? 2. What will Chichester do? Will Kaine back him or back away? 3. What will the House GOP do? Will they keep their Caucus together or will we see another group break off and work with the Senate? 4. What will Tim Kaine’s proposals look like? Will he push new programs (like the pre-school program) or will he figure that they are DOA in the Republican controlled GA? 5. How many “fiscal conservatives” will vote to spend spend spend that surplus? This is really the first time I’ve blogged during a GA session, so it’s a new experience for me. We’ll see how it goes. I can’t wait for the session to start.