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By Jacob Geiger April 16, 2011

George Allen says Tim Kaine proposed $6 billion in tax increases while governor

Hours after Democrat Tim Kaine announced he is running for Virginia’s open Senate seat in 2012, Republican George Allen, a rival candidate, was on the attack.

Allen’s campaign manager told supporters in an e-mail that Kaine was a "big government" liberal who proposed more than "$6 billion in tax increases from the time he entered the Governor’s mansion until the time he left."

We wondered if Kaine’s record as governor matched Allen’s claim. Kaine led the state from 2006 to 2010.

Katie Wright, Allen’s director of communications, sent us a breakdown of supposed tax-increases advanced by Kaine. The largest proposed hikes, from 2006 through 2008, were aimed at raising money for Virginia’s overcrowded roads.

Transportation has troubled state politicians for nearly a decade, as growing populations in Northern Virginia and Hampton Roads face ever-denser gridlock. In other parts of the state, rural highways need expansions and arterial interstates are facing increased traffic loads. The Senate has wanted to raise taxes to build roads, arguing it is vital to establish a permanent source of new revenues.

In this year’s General Assembly session, GOP Gov. Bob McDonnell won approval for a $4 billion package that relies on borrowing and surplus funds found in an audit of the state transportation department. Critics say the plan provides only a small, short-term solution to transportation woes.

Allen’s statement is based on three tax proposals by Kaine.

The first came days after Kaine took office. He rolled out an unsuccessful plan to raise about $1 billion a year for transportation. Allen, factoring in the four years of Kaine’s term, calls this a $4 billion tax increase. That’s a misleading number. State tax increases are typically valued by the yearly revenues they produce. So this is more accurately described as a $1 billion tax increase.

Kaine wanted to raise taxes on auto insurance and vehicle purchases in addition to increasing car registration fees and imposing steeper fines on drivers who got tickets. The registration fees are similar to a tax, since all drivers must register their cars. But Allen takes license when he calls higher fines for traffic offenses a tax, since those payments can easily be avoided.   

The State Senate’s plan, proposed by the body’s Republican leaders, also raised taxes on vehicle purchases and proposed higher taxes on the price wholesale gasoline, which stations buy from distributors and then resell to individual customers, often passing along the tax to motorists in the form of higher prices.

Kaine’s second tax proposal came during the summer of 2008, when lawmakers gathered for a special transportation session. Ahead of the conclave, Kaine proposed a $1.1 billion plan that would increase the titling tax to 4 percent from 3 percent, and hike vehicle registration fees by $10. Kaine’s plan and competing proposals were again killed, leaving the state without a long-term transportation solution.

Kaine’s final tax proposal came during his last month in office, when he proposed raising the state’s income tax and wiping out the car tax. Between 1998 and 2000, the state phased out most of the local property taxes on vehicles. As of December 2009, the localities were receiving about $1.6 billion from vehicle taxes. The state originally covered 70 percent of that car tax income, with the rest coming from taxpayers in twice-a-year payments.

But as the cost of the reimbursement climbed, lawmakers set a $950 million cap on the payments to cities and counties. Kaine thought the car tax had become too complicated should be trashed. To offset the loss to localities, he proposed increasing the state’s 5.75 percent income tax to 6.75 percent. That would generate $1.9 billion a year, and Kaine wanted to give all the money to municipalities.

In reality, this $1.9 billion increase would be partially offset by the $650 million taxpayers would no longer pay to localities. By our math, this was really a proposal to raise taxes by $1.25 billion. Some low-income taxpayers would have seen lower overall payments, while other people would have paid slightly more. The state would not have received any new revenue from the deal, but it would have stopped paying $950 million to localities each year.

Having steered you though the twists and turns of state policy, let’s conduct an after-action review.

George Allen says Tim Kaine proposed "over $6 billion in tax increases" as governor. Kaine did suggest a $1 billion per year transportation plan, mixing taxes with new fees and fines, during 2006. But Republicans also proposed new taxes for transportation that year.

The 2007 transportation compromise between Kaine and Republican legislators left the taxing power with regional authorities and raised most of its other funding through debt financing and higher traffic fines. The 2008 plan contained another $1.1 billion tax proposal, but only because Kaine was unsuccessful in garnering new transportation funds in the prior two years.

In effect, Allen is trying to double-count Kaine’s transportation-related proposals. The governor had to keep crafting new plans because elected officials in both parties repeatedly failed to find a long-term solution. Had a deal been reached in 2006, Kaine would not have laid out new plans in 2007 and 2008.

And the governor’s 2009 proposal was really a move to replace one type of tax with another.

By our count, Kaine proposed raising about $4 billion in new taxes -- $1 billion in 2006, $1.1 billion in 2008 and $1.9 billion in 2009. Of those increases, the 2008 plan represented a second attempt to raise new road funding, and the 2009 proposal would have been partially offset by a $650 million reduction in local car taxes. So Allen’s campaign is right that Kaine proposed some tax increases, but inflates the number by 50 percent. The campaign also fails to acknowledge the offsets in Kaine’s final plan.

We rate this claim Half True.

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Our Sources

The Washington Post, Rival Va. road plans costly but could ease commutes, Jan. 22, 2006.

Richmond Times-Dispatch, Senate OKs state budget, June 20, 2006.

Richmond Times-Dispatch, State budget goes to governor, June 21, 2006.

Richmond Times-Dispatch, Kaine’s budget revisions killed - House Republicans gut millions in funds for an array of projects, June 29, 2006.

Richmond Times-Dispatch, Governor may revive spending proposals, June 30, 2006.

Richmond Times-Dispatch, Kaine solves road block - Republicans say they’re likely to sign off on the compromise plan April 4, March 27, 2007.

Richmond Times-Dispatch, Parties trade road shots, May 14, 2008.

Richmond Times-Dispatch, Proposal may spur area road projects, May 22, 2008.

Richmond Times-Dispatch, Assembly recesses with road gridlock - Kaine transportation plan killed, June 27, 2008.

Richmond Times-Dispatch, Road session resolves nothing - Kaine proposal revived, than easily dispatched, July 10, 2008.

Richmond Times-Dispatch, Kaine proposes 1% rise in state income tax, Dec. 19, 2009.

Richmond Times-Dispatch, House rejects Kaine’s proposed tax-increase plan, Jan. 22, 2010.

Richmond Times-Dispatch, Differing transportation bills heading to conference, Feb. 18, 2011.

Interview with Katie Wright, director of communications, George Allen for Senate, April 6, 2011.

Interview with Brandi Hoffine, press secretary, Kaine for Virginia, April 7, 2011.

Interview with Anne Oman, legislative fiscal analyst, House Appropriations Committee, April 15, 2011.

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George Allen says Tim Kaine proposed $6 billion in tax increases while governor

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