Pain likely in new state budget
Senate Finance Committee Chairman Charles J. Colgan, D-Prince William
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By JEFF E. SCHAPIRO, Media General News Service
Published: October 11, 2008
RICHMOND—It's a legislator's parlor game: batting around alternatives to Gov. Timothy M. Kaine's solution for balancing the cash-depleted Virginia budget.
No matter what options they propose in January, when the General Assembly returns to Richmond, lawmakers say pain is unavoidable.
And it could be intense—more layoffs and hits on once-protected public education and health care—if a shortfall now estimated at $2.5 billion swells to $3 billion or more, as some legislators fear.
"We're going to have to cut deeper into programs," said Senate Finance Committee Chairman Charles J. Colgan, D-Prince William.
"We're just going to have to fine-tooth the budget and
see what we can drop.
Everybody's going to give something up."
Kaine on Thursday announced a sweeping array of economies and accounting maneuvers to generate bucks for the two-year, $77 billion budget.
Kaine is acting under his executive power, which allows him to unilaterally reduce government spending up to 15 percent. The legislature, however, can modify his actions when it convenes in three months.
Kaine's plan includes $324 million in spending reductions, 570 layoffs, leaving 870 jobs unfilled, postponing pay raises for public employees, and replacing cash with bond-backed debt for cash to finance $250 million i
construction.
Kaine also wants to grab $400 million from the state's rainy-day fund—an idea opposed by Del. Phillip A. Hamilton, R-Newport News, vice chairman of the House Appropriations Committee.
Hamilton says a raid on the state's emergency cash account should be a "last
resort."
He wants Kaine and the Republican-controlled House of Delegates and Democrat-run Virginia Senate to first go through the budget line by line, deciding what to cut or drop altogether.
Colgan generally supports the cuts Kaine is ordering to begin closing the latest budget gap. Earlier this year, Kaine and the General Assembly lopped spending by $2 billion.
The continuing shortfall is largely a consequence of the frenzy on Wall Street, the credit freeze and the collapse of the housing market.
Colgan also hopes the state fiscal crisis becomes an opportunity to restore in the Senate the bipartisan coalition that helped push through a overhaul of the budget in 2004 that included a $1.4 billion tax increase for schools, social services and police.
On Sept. 23—about an hour after Kaine publicly warned that the cash crunch was worse than expected—Colgan met with his chamber's Democratic and Republican leadership to discuss solutions to the budget chal-lenge.
No one's talking about higher taxes. But some
legislators say the state might look at delaying or reducing tax breaks. Colgan said the $150 million-a-year estate-tax repeal and the car-tax rollback, a program that annually costs $950 million, are too popular; that tampering with them would anger voters.
Colgan says he'd consider further scaling back land-preservation tax credits—a pet program of Kaine and House Speaker William J. Howell, R-Stafford. The credit costs Virginia $200 million a year.
Jeff E. Schapiro is a staff writer for Media General's Richmond Times-Dispatch.
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Posted by ( raywilliams ) on October 12, 2008 at 6:20 am
The facts are fairly simple. You either bring in more revenue, through taxes “fees, surcharges, or any other name”, or you spend less. Government (should) run the same as we run our households. We earn so much and we live within that means. If another state is richer than us by fate or luck, we can’t match their “lavish” lifestyle if we don’t earn the money.
Republicans for years have fought tax increases, yet do not provide alternate means of income or reduced spending.
This reflects our financial crisis on a national level. Bush tax cuts for the rich while fighting wars and spending billions on homeland security.
Something has to give at some point.
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