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“We’re put in a bind,” said Del. Plum. “We haven’t checked that out with the people at home,” he said.
Predicting a state budget surplus of close to half a billion dollars, the governor proposed to return $100.1 million of the federal tax reform windfall by offering Virginia’s individual income taxpayers a sliding scale tax credit.
‘Taxpayers with incomes ranging up to $68,000 would be entitled to a full or partial tax credit, depending upon the size of their family and its income,” explained Gov. Baliles.
A maximum credit of $35 would be received by some individuals. Baliles linked the return to the sales tax on food and non-prescription drugs — a tax from which Lt. Gov. Doug Wilder, unanounced candidate for governor, has urged relief. ^
Gov.Baliles claimed the credit would provide more relief in 1989 than removal of the sales tax on food and non-prescription drugs. Some individuals have failed to see the connection between the two, he said.
Gov. Baliles’ tax reform was labeled a “fraud” by Sen. Joe Benedetti, R-lOth District?, who last Thursday, Jan. 12, delivered the Republican response to Balilies speech.
“He is not returning the income tax windfall,” said Sen. Benedetti, of Richmond. “The money should be returned to the middle-income itemizers who have seen their state income taxes go up,” he said.
“But neither does his plan solve the other problem — the regresssive sales tax on food and non-prescription drugs,” continued Sen. Benedetti. He said that low-income families who pay little or no income tax will still be paying the sales taxes without relief.
However, Del. Plum disagreed. “I don’t see it as short term,” he said, referring to the tax credit. “I think that if we enact it, it will continue.”
Gov. Baliles has also introduced legislation to appropriate $283 million in expected lottery funds for 83 priority capital projects. “This way people who buy lottery tickets will see .something concrete for their lottery money,” said Del. Plum, who was enthusiastic about the proposal.
Del.Guest, however, said he plans to introduce legislation to return a portion of the lottery funds to - localities for their building improvement needs.
Gov. Baliles proposed that of the remaining portion of the additional general revenue funds, $77.5 million be held in a revenue reserve; $103 million be allocated to prisons and law enforcement; $94 million be put toward increased compensation to state employees and faculty members, and the final $43 million be allocated to federal and state mandated programs.
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