RICHMOND — Legislators along Virginia's coast were fairly pleased with Gov. Mark Warner's State of the Commonwealth address last week Jan. 14.

The speech, in which the Democratic governor outlined his budget and tax proposals, offered realistic solutions, said Sen. Frederick Quayle, R-Chesapeake.

"I thought the governor clearly laid out the financial problems we're facing," he said. "If we do nothing for the next six years – even with 5 percent growth -- we will continue to fall behind."

Delegate William Barlow, D-Smithfield, agreed. "I thought it was the best speech I've heard a governor make since I came to office" in 1992.

Barlow said Warner expressed his willingness to work with everyone, Republicans as well as Democrats, to come up with a sound budget.

Sen. Thomas K. Norment Jr., R-Williamsburg, doesn't necessarily agree with the governor. But he thought it was a good speech.

"He used very few first-person pronouns," Norment said. He said he felt Warner was reaching out and offering to share credit with others.

Delegate Lynwood Lewis, D-Accomac, said the governor "put forth some interesting proposals." He said the overall theme was "let's get to work."

In the speech, Warner promoted his plan to raise some taxes while cutting others to generate more state revenues. He wants to use the money to plug the state's budget shortfall and increase spending on schools, roads and health care.

"Our commonwealth is at a crossroads," the Democratic governor told senators and House members as the General Assembly opened its 2004 session.

"Do we stand paralyzed? Or do we finally embark on a path that restores our fiscal integrity, invests in our core assets and prepares Virginia for a brighter and more prosperous future?"

Warner said his budget and tax reform plan would do three things:

• Boost spending for such "core commitments" as education (by $918 million), Medicaid and health services ($870 million) and transportation ($392 million). The budget also would increase spending for homeland security, law enforcement and environmental protection.
• Make Virginia's tax system fairer. Warner said his plan would lower the income tax for most Virginians and eliminate the sales tax on groceries and the personal property tax on vehicles. It also would raise the state sales tax from 4.5 percent to 5.5 percent, boost the cigarette tax from 2.5 cents to 25 cents per pack and create a higher income tax bracket for Virginians making more than $100,000 a year.
• Protect the state's Aaa [cq; not AAA] bond rating, currently the highest awarded by Wall Street. This grade, assigned by credit-rating agencies, reflects the state's perceived ability to repay debts and allows Virginia to borrow money at low interest rates.

"Our Aaa bond rating saves taxpayers millions of dollars in borrowing costs," Warner said. "The Aaa bond rating is a recognized seal of approval that indicates to the world that Virginia is a good place to do business-- and that means jobs for Virginians."

He said the bond rating is in "serious jeopardy" because of the state's budget problems. If the state does not restructure its tax system, Warner said, Virginia could lose its Aaa status.

"The taxpayers of Virginia did not hire us to let that happen, and I will do everything I can to prevent it," the governor said.

Quayle noted that Warner's budget and tax plans aren't the only proposals on the table. John Chichester, a Fredericksburg Republican who chairs the Senate Finance Committee, also has called for an overall increase in taxes. Many Republicans, especially in the House, want to address the problem by cutting the state budget.

Barlow said Warner made it clear he is willing to look at other proposals. "All of us need to work together as a team on a bipartisan basis," Barlow said.

In their official response to the speech, Republicans struck a chord of cautious optimism.

"Our governor has just finished his State of the Commonwealth address, but we're not going to pick it apart," said Sen. Martin E. Williams of Newport News, chairman of the Joint Republican Caucus.

Delegate David B. Albo, R-Springfield, said Republicans wanted a responsible budget that doesn't rely on tax increases.

"Our committee will craft a budget that relies only on the revenues (that) come from the existing tax structure," Albo said. "And with our improving economy, that will produce $1.8 billion more for the new budget."

The Republicans' respectful response to Warner's speech was a smart move, Quayle said. It showed that the Republicans are seriously considering the governor's proposal before attacking it.

Many legislators anticipate the budget and tax plan will spark a lot of debate during the 60-day legislative session.

"I think it's clear that there's substantial opposition to Governor Warner's proposal in the House, and perhaps even more opposition to Senator Chichester's proposal," Barlow said.

Lewis agreed. "Clearly there's going to be some contention. I think there will be more among the Republican ranks."