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The
House Has the Upper Hand
Anti-tax
forces in the House of Delegates have one big
advantage in the battle over tax reform: Governor
Warner has not come close to exhausting all
opportunities to cut spending.
Prominent
political and business leaders in Virginia have
argued that the Commonwealth needs a huge tax hike
to avoid falling further behind neighboring states,
especially North Carolina. According to these folks,
the business climate is enhanced by raising state
taxes. Go figure.
Meanwhile,
North Carolina is seriously considering cutting
taxes this year to improve its business climate and
to encourage growth in state employment. Unlike
Virginia, North Carolina did lose its triple A
credit rating briefly in 2002, a year after raising
taxes, but North Carolina then addressed the real
cause of its financial problems — excessive
spending during the 1990s. Virginia
gained its reputation for fiscal discipline the hard
way. Controlling state spending was once an
obsession with Virginia’s business and political
leaders. Now they can’t be bothered.
Despite
the fact that state spending is projected to
continue rising at a rate greater than the rate of
inflation, population growth and expansion of the
state’s economy, there is no serious effort to
bring that spending pressure under control.
How
has this happened?
One reason is that the interests
pushing for more spending have lobbyists who plead
their case relentlessly. The Virginia Education
Association has 44 registered lobbyists in Richmond.
Colleges and universities have representatives
roaming the Capitol offering honorary degrees and
free tickets to football games, while painting a
picture of doom and gloom unless taxpayers cough up
at least another $1.2 billion over the next
biennium.
When
the House of Delegates proposed eliminating tax
exemptions for companies such as Dominion Resources,
U.S. Airways, CSX, Norfolk & Southern and
Verizon, no fewer than 30 highly paid lobbyists
descended to oppose the idea. When the Virginia
Chamber of Commerce testified on Gov. Mark R.
Warner’s proposed tax hike, it enthusiastically
supported elements of his plan that would raise
taxes on individuals, but vigorously opposed
Warner’s proposed elimination of tax breaks for
businesses.
This
is not to say that these interests shouldn’t be
represented. But who represents the average taxpayer
who can’t afford to take time off from a job to
come to Richmond to protect his or her interests?
It
has become easier for the governor and many of our
legislators to say yes to a tax increase than to say
no to lobbyists demanding more state spending.
Government
tends to be far less efficient than private
businesses. So as the state budget expands, the
accretion of government builds. Eliminating waste is
a constant battle.
Governor
Warner decided during 2003 that he would focus on
raising taxes rather than streamlining government
and cutting state spending. Notwithstanding
his claims about introducing efficiencies, he has
done relatively little.
Streamlining
state government in the first two years of his term
would have weakened Warner’s case for a $1 billion
or higher tax increase. If he gets a huge tax hike,
he can spend the remaining portion of his term
trimming the budget to fund new program initiatives
or expansions of old programs.
Republicans
can’t afford to let Warner have his cake and eat
it, too.
The
GOP-controlled House of Delegates has an opportunity
to put the governor on terms and deny him the high
ground when he uses his veto power or his
prerogative to call the General Assembly back into a
special session in an attempt to force legislators
to approve higher taxes. The House can insist that
Warner show how he exhausted every opportunity to
balance the budget without a $1 billion tax
increase.
Warner
can’t do it.
--
March 1, 2004
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