Addressing the Greater Richmond Chamber of Commerce, the Democratic governor said officials in Hampton Roads and northern Virginia want to see the state kick in more money.
Kaine said mayors and county board of supervisors chairmen told him in closed meetings last week they can't implement the regional packages as they now stand. He says the big problem - mostly in Hampton Roads - is the higher tax on commercial real estate.
The bill would allow localities in northern Virginia to boost the rate for nonresidential property by 25 cents per $100 of assessed value, and by 10 cents in Hampton Roads.
"Both jurisdictions, the leaders feel like they're going to put their own regions' economic development at risk, at a competitive disadvantage if they impose those taxes," Kaine told about 60 people at the Richmond Chamber gathering.
In all, the commercial property tax boost would be one of five tax and fee increases that would generate about $400 million annually for northern Virginia and about $200 million a year for Hampton Roads under the GOP-authored plan.
"They can kind of swallow the other revenue sources," Kaine said. "But the commercial real estate tax is really causing them problems."
Kaine said he planned to begin discussing his ideas for amendments with House and Senate GOP leaders this week, and the localities' concerns about the bill would be a priority.
House Speaker William J. Howell, R-Stafford and the sponsor of the legislative GOP package, said in an interview that talks with Kaine would be helpful, but questioned why the commercial property taxes were meeting as much opposition as Kaine suggests.
"Our local members worked very, very hard with local people (officeholders) to come up with these plans," Howell said. He noted that while commercial and residential property are usually taxed at the same rate, residential valuations have shown huge increases in recent years to only modest growth for commercial property. Yet when localities adjust their tax rates downward to offset skyrocketing residential assessments, commercial properties enjoy the same rate reductions.
Kaine said local officials in northern Virginia and Hampton Roads also sense that the legislative plan forces them to go it alone on transportation, Kaine said.
"The second issue they raised that's causing them serious concern is, â€˜Hey, state, why don't you be a partner?' You might imagine local elected officials are not too thrilled about the General Assembly saying, â€˜We've got a transportation deal!' and the fine print is, â€˜Local officials, you raise three-quarters of the money,'" Kaine said.
Besides redacting the commercial property tax increase, Kaine said, officials he met with last week asked if some of the additional regional taxes and fees could be levied by the state, giving the city and county governing boards some political cover. Kaine also voiced philosophical misgivings about enacting regional plans without a substantial statewide provision because it could balkanize the commonwealth into "an aggregation of regions," and weaken the legislative will to address rural transportation problems later. He said local officials from the rest of the state - particularly rural localities - told him in a gathering Thursday in Roanoke the statewide plan provides them too little money, and nothing for building or maintaining new secondary roads. After his private meetings in three different regions last week, Kaine on Monday began two weeks of public forums this week with business leaders as he musters political backing for the amendments he says the package will require and for a pocket veto that is likely if his amendments are rejected. Kaine says he's will substantially amend the bill by his March 26 deadline. But he said adding new statewide taxes - a boost in the 17 1/2-cent-per-gallon gasoline tax or the governor's preference, a 2 percentage point boost in the automobile titling tax - is pointless because it would die in the House of Delegates. "What the House says: they will not do a statewide tax increase; they will do a statewide fee increase and they will allow local officials to raise taxes," Kaine said. "I can challenge or quibble with the logic of it, but if I want to make a deal, I have to respect their position and try to find a way to accomplish a good end that has a chance of working," he said. Besides the autonomous regional components, the GOP measure would authorize the incremental issue of up to $2.5 billion in bonds through 2016. That would be primarily for maintenance and construction of interstates and primary highways outside the two regions. The legislative plan would pay the debt through up to $185 million annually in revenues normally used for general state operations such as public schools, public safety and health care for the elderly, indigent and disabled. That, along with general fund budget surpluses in years when there is an unspent year-end balance, would amount to about $400 million in general fund diversions annually, Kaine said. Kaine's chief objection has been the annual drain from the existing general fund tax paid to record deeds, lawsuits and wills to service the bond debt. The yield to rural areas, he said, would be insufficient to keep up with the highway maintenance deficit, which now requires the state to take about $450 million a year from new construction projects to do minimal maintenance on the state's roads and bridges. AP-ES-03-12-07 1826EDT