Posted on 03/16/2004 8:33:31 AM PST by cogitator
Edited on 07/20/2004 11:51:19 AM PDT by Jim Robinson. [history]
With no budget compromise in sight, Virginia lawmakers played to the streets yesterday, groping to harness public opinion behind their poles-apart positions on taxes and spending.
After a new House proposal to end the impasse appeared dead on arrival, delegates and senators - in the second day of a three-day extension of the 2004 General Assembly - bitterly accused each other of playing politics to duck tough decisions on repairing the state's battered finances.
(Excerpt) Read more at timesdispatch.com ...
There's some interesting stuff in the Washington Post article about this today:
Barbs traded in talks on Va. Budget (that's putting it rather mildly)
Excerpts (disregarding the war words):
"In his most explicit suggestion so far for breaking the stalemate, Warner said the House and Senate could easily resolve their dispute over raising the sales and income taxes by choosing to increase one of them." ...
"Senators stressed Monday that the biggest difference between the two chambers' budgets is in public education -- the Senate puts $912 million more than the House into primary and secondary education.
"They argued that House members who oppose raising state taxes are not really saving people any money because a failure to fully fund the state's education commitments will force local governments to raise property taxes to meet their needs."
(And that has certainly happened before.)
From the latest Cuccinelli (www.notaxhike.org) email:
Recently, Del. Scott Lingamfelter pointed me to some startling information that I think you will find interesting. According to the United States Census Bureau statistics, as of 2002, Virginia ranked 27th in total state tax burden. This, in and of itself, calls into question the oft-spoken assertion that Virginia is a low-tax state. But what I found most shocking was the ranking we will have if we pass the Senate's tax package, adding over $250 of state taxes per person. Virginia will vault to number 15 – two notches above Maryland. MARYLAND!! We'll even be ranked just above Rhode Island! In fact, Virginia will have higher taxes than any other state in our region!!! That should do wonders for job creation.
NO NEW TAXES...Period!!
FReegards...MUD
How could I have guessed that "I won't raise taxes" Warner's "compromise" between raising taxes and not raising taxes would be... to raise taxes?
While I couldn't find a definitive financial source, a Utah Governor Web site says this:
"Other states that have AAA ratings from all three rating agencies include: Delaware, Georgia, Maryland, Minnesota, Missouri, South Carolina and Virginia."
(I thought Idaho did too.)
That's a small group. The question regarding revenues and taxes boils down to: how are you going to pay for what you need? Transportation projects and road construction/maintenance can be financed by bonds, but if that keeps happening, eventually the public debt of the state will go high enough that the bond rating agencies will downgrade the bond rating. Same goes for new schools and "refurbished" schools.
It appears that the Republican Senators in Virginia are trying to do a couple of things: they're trying to spend more money on things like transportation and education -- whether or not that is necessary is something that I've rarely heard discussed in depth -- while at the same time protecting the AAA bond rating by generating more revenue.
According to what has been said so far, Virginia's AAA bond rating is in jeopardy because the current level of debt is fairly high, and there isn't a long-term plan to firm up revenue sources. The bond rating agencies don't look favorably on accounting tricks and gimmicks that help balance the budget year to year.
The only other thing that can be done is to further cut the budget. Callahan in the House convinced his House Republican colleagues that wasn't going to work at all; the cuts were becoming too drastic. And the Senate doesn't think that the House is budgeting enough for what it deems to be important priorities, things like public works infrastructure, transportation, education.
So what is on the table is what the state of Virginia is going to look like, and how it is going to function, over the next decade. And with both sides dug in like this, it's not going to be quickly decided.
That was an easy guess. The House is still proposing to raise taxes, though, just in a different way than the Senate.
Virginia General Assembly: State Budget
Click "Senate Finance Committee". Then click "State Budget" under the February 26 briefing item. If you don't have it, you have to download a bit of software (which was quick and painless). Then you can read all the reports (PDF documents).
In Warner's original presentation on the budget, I believe that he said Virginia would add 100,000 new students (K-12) in the next decade. He didn't quantify the number of illegal aliens. In the budget document I referenced above, there is no item for non-English classes, but there is ~$17 million budgeted as an increase (over two years) for TOESL classes.
Close, but that's not the whole story. As far as the budget discussions are concerned, the whole AAA bond rating argument is a non-starter. The rating is in jeopardy not because of what the folks in the General Assembly are doing, but because of debts that localities have incurred.
Because of how these debts are issued, (usually by referenda, and couched in ambiguous language), there's no way for the rating agencies to get a good, solid dollar amount of how much debt the localities have. Several localities have defaulted and the state had to bail them out. Obviously this makes the rating agencies nervous b/c they can't get a handle on how many other localities may default - and the state will have to pick up the tab if/when they do so.
To put it another way, it's like asking a lender to consider you a good credit risk, but you only disclose information about how much income you have, and nothing about your outstanding obligations.
Bottom line - keep the pressure on the Senators in Richmond to keep the tax rates low. If your Senator starts babbling about the bond rating tell him that you know he's full of *#*!
Do the bond rating agencies also judge whether or not they think the state will have sufficient revenues to bail out localities that default on their bonds?
But... as I said, the Senators are trying to do two things - increase spending on several fronts (notably nearly $1 billion more on education, which floored me, because Maryland is in a similar bind, except that the idiots in the Maryland Assembly mandated $1.3 billion in spending without identifying where they were going to get it) and also preserve the bond rating. Obviously if they tried to increase spending without new taxes, they'd be downgraded in a jiffy.
The House isn't proposing to spend nearly as much (which given projections of 100,000 new students in the decade, also known as 10,000 new students a year seems a tad unrealistic), so if their budget held Virginia probably wouldn't get downgraded; but what wouldn't get funded that needs to be funded? Callahan indicates that he's covered the basics with his budget, and he knows what he'd doing, so the big question is priorities for new spending.
Here are two big differences: Senate, $983 million for education; House, $72 million. Senate, $948.7 million for highway construction; House, $45.6 million. Also under transportation, the Senate has an item called "FRAN debt service" of $346.9 million, for which the House has budgeted 0.0. "FRAN" is Federal highway Reimbursement Anticipation Notes. Warner's original proposal budgeted $66 million for this item. I have no idea what it is or does.
So, it's an obvious difference in philosophy. The House Republicans are holding the line on spending, with minimal funding for "improvements" in education and transportation; the Senate Republicans are advocating substantial funding for "improvements" in education and transportation. (I put "improvements" in quotes because there's no clear linkage between more funding and actual improvements.) While there are obviously many other items, those are the two big tickets, accounting for nearly $2 billion of the gap.
I don't know what they're going to do. It's interesting to watch this battle of philosophies play out, though.
As part of my answer, see the reply to giericism directly above.
Virginia wasn't alone in inflating their budgets when revenues were flush in the 90's. There was obviously too much spending. When revenues crashed, the projected budgets were cut -- $6 billion in Virginia, according to most reports. There was room. Now, I found this in a WashPost article about Vince Callahan:
"When [House speaker] Howell and other House conservatives said state spending was out of control, Callahan had his staff director produce a spreadsheet for the GOP caucus. It showed that the state's taxpayer-supported general fund had grown 0.1 percent in four years."
Here's the link to that thread: http://209.157.64.200/focus/f-news/1085238/posts
So for one, I don't think that the Virginia budget has been increasing 8% over the past 3-4 years (feel free to check and correct me on that). The Senators have stated that the state is behind on doing necessary work (such as road maintenance). If I was a Virginian I'd be p*ssed off if I had to spend a few hundred bucks because my car hit a pothole that should have been paved over if there was more money in the roads budget.
What you "need" depends on priorities. Virginia ranks last in the country on parks and natural resources spending. And it's a beautiful state; should a little more be spent on preserving that? As a citizen, I want smooth roads, good schools, safe streets (and harbors and airports and trains), clean air and water, high property values (think parks, open space, cultural resources), and I also think we have some obligation to help those in lower economic sectors get a chance to move up -- but Democratic programs overspend and underhelp in that regard.
I hope that clarifies my position a little. Right now regarding the state of the Virginia Assembly and the budget, I think the bottom line is: the House is proposing a budget that's too small, and the Senate is proposing one that's WAY too big. It would seem to me that a 75% cut in what the Senate is proposing and a 25% increase in what the House is proposing might be a reasonable outcome. But even a 25% increase in what the House is proposing would require more revenue sources than they're willing to find, and that's sticky.
Yup, and that's where a big part of the problem lies. Say, for instance, the Senate budget passes, the state raises taxes, and all of the revenue is allocated to various projects. If/when localities default on their bonds, it would be difficult for the state to raise taxes again to raise the revenue required.
I personally prefer the House plan, or something very close to it. It still increases spending substantially - more than my own salary increased - but keeps taxes at current levels.
As a Republican I'm also ideologically opposed to a tax increase simply because we can not longer refer to "tax and spend liberal Democrats" if we're responsible for the largest tax increase in the state's history. Fiscal conservatives form a substantial part of the Party base, and I don't see the point of alienating them as we're coming into the Gubernatorial elections next year.
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