In Virginia, Businesses Argue For Taxes

Business leaders, particularly those in construction, have long endorsed government spending on roads and schools. It's good for business.

But in Virginia, top executives are taking their concerns about poor infrastructure and untrained workers to a new level.

In a move that may be a harbinger of efforts in other states, more than 100 of Old Dominion's most influential businessmen - both Republicans and Democrats - are launching a campaign to get top local politicians to make a long-term investment in the state's education and transportation systems.

Most striking, the business leaders are open to tax increases to pay for it.

In a way, the campaign seems oddly out of step. Many states, including Virginia, are running budget surpluses. Around the country, these states have the happy task of figuring out how to spend excess wealth, not whether to bring in even more through higher taxes.

In Colorado, the hottest political issue of the year - whether to raise gasoline taxes and vehicle fees to pay for major road improvements -- vanished this past week when new budget numbers showed a surplus big enough to pay for the project.

But Virginia's business barons say their state's immediate surplus is not the issue, and that the zeal for budget-balancing and tax-cutting has gone too far.

"Business folks are saying, here are the things we need for Virginia to be successful in a knowledge-based economy. It's up to the legislature to find the funds," says Martin Haley, staff director of the Northern Virginia Roundtable, a business group that is organizing chief executives statewide in a campaign called Virginia First.

WITH the Virginia governor's race in full swing, and proposals for tax-cutting de rigueur, business leaders hardly expect the politicians to openly embrace their ideas. They just want a fair hearing, and a willingness to look ahead.

"This practice of cutting taxes and downsizing government is beginning to run counter to business leaders all over the country," says Sid Dewberry, head of an architecture and engineering firm in Fairfax, Va., and a leader of the Northern Virginia Roundtable. "This is especially true in education. Our future depends on brain power."

What's different about the businessmen's effort is not that they want more government spending, but that they've organized a broad campaign, says Alan Rosenthal, a political scientist at Rutgers University in New Jersey. "They've gotten together on a program that extends beyond one policy area. I haven't seen much of that," says Professor Rosenthal.

What's also unusual is that many of the business leaders are Republicans - Mr. Dewberry is a financial backer of GOP gubernatorial candidate Jim Gilmore - and yet they're bucking the Republican antitax gospel.

The campaign is an outgrowth of the economic recession of the late 1980s and early '90s, when many states pulled back spending on roads and education. In Virginia, which prides itself on having one of the best state university systems in the country, state spending on post-secondary education has dropped dramatically since the mid-'80s. Virginia has gone from 22nd in the nation in per capita spending to 43rd.

Meanwhile, northern Virginia businesses face a shortage of 19,000 qualified high-technology workers, says Barbara Newlin of the Virginia Business Higher Education Council, a group chaired by powerful real estate developer John (Til) Hazel.

"Businessmen always want the government to spend money on them," says Jim Luciere of the anti-tax group Americans for Tax Reform. "In Virginia, the case of Til Hazel is unique ... here is a [top businessman] who's literally lobbying to say taxes are good. As far as I know that is unprecedented."