

Virginia Gov. Terry McAuliffe (D), left, gestures at a news conference where he detailed his proposals to improve the Virginia Economic Development partnership at the Capitol in Richmond on Dec. 12. (Steve Helber/Associated Press)

All Gov. Terry McAuliffe (D) wants for Christmas is a chimera.

In his message to the General Assembly’s money committees last week, the governor said the commonwealth’s financial picture looks a little better than it did a few months ago, when a $1.5 billion hole appeared in the budget projections.

Now, the budget gap is slightly more than $1.2 billion. Small progress, but progress nonetheless.

McAuliffe has proposed a number of ideas to bring the books into balance, including a tax amnesty program that he estimates would bring in $59 million. There’s also a proposal to keep but tighten the accelerated sales tax gimmick lawmakers have used in past years to close budget shortfalls.

While none dare call this a tax increase, requiring certain businesses to pay 13 months of sales tax payments in a 12-month period — regardless of which party is behind the idea — is exactly that.

The governor also proposed limits on the state’s generous land-preservation tax credit and a slew of what he called “policy and technical changes” to be determined later.

Together, these ideas don’t come close to mending Virginia’s fiscal fences. But they do succeed in building a rather fantastic looking beast. To complete it, all we need is a head — maybe from a lion or perhaps a bear to make our chimera complete.

Instead, the governor offers Marketplace Fairness. In his remarks, McAuliffe said he has asked congressional leaders to “address this issue.” McAuliffe said passage of the Marketplace Fairness Act would “make internet sales subject to the same state sales taxes imposed on sales at brick-and-mortar retailers.”

Which, to listen to rhetoric of those who favor of the idea, seems like a perfectly fine idea. The governor said that without this bit of fairness, “Virginia is currently missing out on $250-300 million dollars a year .”

A number of conservative and free-market voices back the idea, too.

So what’s not to like?

Fairness. Online businesses with no physical presence in the commonwealth do not use its resources, roads, fire or police protection, schools, aid programs or anything else. The governor and the bill’s many bipartisan supporters think that in this one instance, the government should not be picking winners and losers through tax policy (so long as we ignore the many other ways in which state and local governments do exactly that).

I agree.

Marketplace fairness, however, dragoons retailers, big and small alike, into becoming tax collectors for governments over which they have no say.

And not just a few governments, but nearly 10,000 according to the Tax Foundation, with 174 in Virginia.

Yes, Virginians are already required to report their online purchases on their tax forms (and pay the requisite sales tax — you do pay it, right?). So this isn’t a new tax.

Marketplace Fairness hasn’t moved much in Congress. And, despite McAuliffe’s cajoling, Congress isn’t likely to run to his financial rescue anytime soon with a legislative fix.

So what’s a state starved for cash to do in the meantime? Virginia could, and should, pursue tax reform. Back when tax reform was last seriously debated in Virginia, the Tax Foundation suggested a plan that would clean up the state code, eliminate some truly hated local taxes (such as the business, professional and occupational license tax) and also a tax hike on gasoline. The plan’s authors said their approach would be revenue neutral, but would also “maximize growth in the state economy.”

Growth brings greater tax revenue, which is what the state needs over the long term to keep its books balanced.

Perhaps the worthies in Capitol Square should start here rather than joining the governor’s hunt for a budgetary chimera.