Column: Finalizing the State Budget
Tuesday, March 09, 2010
This week we will finalize the budget in the General Assembly. Due to the weak economy, the projected state revenue for the next two years is about $77 billion instead of the $81 billion previously projected. The challenge for this session was to bridge that $4 billion gap. Given this challenge, Northern Virginia and the 34th District did much better under the current House budget than the budget that outgoing Gov. Kaine (D) had proposed.
Gov. McDonnell (R) recently outlined some guiding principles in our budget this year: “First, new tools for job creation and economic development to foster future growth. Second, no job-killing tax increases. Third, generating a balanced budget on time that preserves our Triple-A bond rating and attractiveness to new private investment. Finally, protecting public safety and focusing reductions on those areas that had not received large cuts before.”
As the House and Senate budgets are brought together this week to produce the final budget, we should be on target to meet these principles. The Republican House of Delegates and the Democratic Senate both rejected tax increases, preserved car tax relief, included funding for job creation, reversed the freeze on the education funding formula that harmed Fairfax County schools (and could have cost us $60m in school funds), and focused spending reductions in areas not cut significantly before.
We will avoid the crushing 17 percent statewide income tax hike proposed by Gov. Kaine in his outgoing budget proposal. This would have been the largest tax increase in the Commonwealth’s history. The House voted 97-0 to reject this tax increase. Instead, the House of Delegates focused on job creation (with $50 million in targeted jobs creating efforts) and funding core services, including a 15.4 percent increase for Fairfax County schools over the Kaine proposed budget for a total of approximately $500 million to our schools. Fairfax County also will be able to reduce expenditures made in contributions to the Virginia Retirement System (VRS), which frees up an additional $66 million in funding for local schools.
To reduce the effects on public education of scarce tax dollars, the House budget also gives local school divisions significantly greater flexibility in allocating the funds provided to them by the state. Under the House plan, portions of direct state aid will be distributed as a block grant and state mandates relaxed, easing the restrictions inherent in the existing Standards of Quality (SOQ). Recognizing that responding to challenging economic times is not aided by a “one-size-fits-all” approach, the House gives local schools the ability to make the most of available funds, allowing them to determine where best to dedicate available resources.
We also were able to reject Gov. Kaine’s recommended freezes to the home and community-based waivers; so now more people will be able to choose to stay in their own home instead of institutions. And we were able to add 178 new Medicaid Waiver slots for the most vulnerable citizens among us.
Another positive item in the House budget is that it allows for the issuance of more than $400 million in transportation infrastructure bonds. The sale of the new bonds will be within the state’s conservative debt limits and the new bonds are expected to be issued later in 2010. The resulting funds will likely be used to secure federal matching money to pay for new roads, overpasses, and mass transit projects in Northern Virginia and other parts of the state.
Our state government is experiencing the most serious and sustained revenue reductions in generations. States such as Maryland, New York, Michigan and many others, which have continued to raise taxes in a recession, have found themselves in far worse situations with higher unemployment rates, more cutbacks for schools and fewer prospects for job creation.
Our budget was designed to reverse the downward spiral that our economy is in. When you look at the projected tax increases and burdens coming from Washington, we wanted to do everything we could in the Virginia budget to restore and expand prosperity, not punish it. Unlike Washington where they can print money and spend with abandon, we are obligated to live within our means and prioritize spending. And unlike those in Washington, we have been able to come together and focus on the number one priority of jobs and economic growth while meeting our obligations on core government services. Many challenges remain in these tough economic times, but we came together to start the turnaround.
By Barbara Comstock
State Del. (R-34)