Expect No Virginia Tax Increase: McDonnell

By BOB LEWIS and DENA POTTER
|  Tuesday, Jan 19, 2010  |  Updated 7:00 AM EDT
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McDonnell Just Says No

AP

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Gov. Bob McDonnell bluntly ruled out tax increases on Monday as a solution for Virginia's $4 billion budget shortfall, promising to target them for vetoes.

Just 53 hours after being sworn in, the new Republican governor braced state employees for deeper job cuts and residents for
reduced services as the state struggles with its worst fiscal crisis.

"Some say taxes must be raised, it's unavoidable. Here's what I say. I will work with you -- Democrats, Republicans and
independents. We will meet and negotiate; there will be disagreements, and there will be compromises,'' he said.

But if a bill passes with a tax increase, "I will veto it,'' he said.

Former Gov. Timothy M. Kaine, a Democrat, in the budget he introduced one month ago, proposed a $2 billion boost in the state
income tax, despite warnings from McDonnell and a strengthened anti-tax Republican House majority that it would not pass.

He offered few details, however, of where he would make cuts to the state payroll other than reductions to his own salary and those
of his cabinet.

McDonnell also pledged for the first time as governor a promise he made as a candidate: to privatize Virginia's state-owned liquor
stores.

"It is time that we eliminated, consolidated or privatized programs and agencies that do not work or do not fulfill core government functions,'' McDonnell said, focusing on selling the state's Alcoholic Beverage Control stores.

"As I traveled the great commonwealth over the last year, I didn't run into anybody who thought selling Jack Daniel whiskey or Grey Goose vodka was a core function of government,'' McDonnell said.

As a candidate, McDonnell projected $500 million from selling licenses to private vendors to operate the stores, a figure that industry experts question and that Democrats have said is a daydream. He proposes using the revenues largely to jump start highway projects mothballed as transportation revenues ebbed.

But there are areas where McDonnell proposes to spend more.

He said he would reopen the 19 Interstate rest areas ordered closed last summer as part of drastic cost cuts to the Virginia
Department of Transportation.

McDonnell proposed doubling, from $10 million to $20 million a year, cash available to his administration to recruit businesses to
expand or transfer to Virginia.

He proposed $3.6 million, much of it to be used to air television ads in other states promoting the states beaches, mountains and historical tourist attractions, much as Michigan now pays to air ads in Virginia.

He proposed a tenfold increase in the Motion Picture Opportunity Fund, to $2 million, lamenting that an upcoming major film about
1973 Virginia-bred Triple Crown winner Secretariat was filmed in Kentucky and Louisiana.

He said he wants Virginia to be the first East Coast state to drill for oil and natural gas offshore. He said he wants the state
to begin selling underwater leasing rights for drilling by 2011, dedicating one-fifth of the revenue go to renewable energy programs
and four-fifths to transportation. Environmentalists say the drilling threatens the ecology of the Atlantic shoreline.

But McDonnell also proposed allowing motorists to drive faster on select rural stretches of highway, boosting the speed limit from
65 mph to 70 mph.

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