McAuliffe Short On Details, Long On Vision For Budget Reform

The Daily Press has a small snippet on His Excellency’s recent visit to WRVA:

Some ideas could be included in the governor’s new budget when it’s released late this year, though. McAuliffe said repeatedly on the radio he wants the code to be business friendly, and he discussed the possibility of a lower corporate tax rate.

On the 2013 campaign trail McAuliffe targeted several local taxes businesses love to hate, including BPOL and the Machinery and Tool tax. His propoal was to cut or end them, but with a promise to keep local government budgets whole by backfilling the revenue some other way.

Localities get nervous about that sort of thing.

…and for good reason, because any shifting of responsibilities without corresponding funding mechanisms is a tax hike using the worst possible form of taxation known to mankind: property taxes.

If the governor is truly interested in serious tax reform, there are a number of places where he could start.  Reducing (or eliminating) unfunded mandates to localities would be one place, as would eliminating BPOL, or shifting the cost of education funding to Richmond while using the local composite index (LCI) as a ceiling rather than a starting point would all be advantageous.  What’s more, the corresponding tax cut on real estate and personal property (both highly regressive taxes) would be welcome relief as education funding would shift to a broader and more widely shared investment mechanism — namely the income tax.

Of course, the lack of details is going to make VACo and VML rather jittery.  Nevertheless, as someone who has championed this sort of reform before, even discussion about places to start is welcome conversation.

One random thought?  If tax reform is going to encompass localities, the conversation with individual supervisors and city council members needs to begin in earnest, and with an encouragement to think bold and draw in sharp contrasts.  Even if realities force us to scale back, the path forward can be paved.

Heck — even if the LCI is used as a ceiling and education funding is shifted back to Richmond where it belongs, that would be a tremendous correction to a failure in the Virginia Constitution — and a lasting legacy, one might add.