Responding to warnings that the state budget could experience a $300 million revenue shortfall this year, Gov. Timothy M. Kaine has asked state agency heads to look for savings in the current budget that can be set aside to soften the impact of potential cuts in next year’s budget. (Read Tim Craig’s story in the Washington Post.)
Del. Vincent F. Callahan Jr., R-Fairfax, chairman of the House Finance Committee, said the projected shortfall is “not a big deal” in a biennial budget of $70 billion. “The governor doesn’t really have to cut anything; he can juggle stuff around and delay spending.”
Callahan was referring to this year’s spending. Presumably, Kaine wrote his memo to agency heads in anticipation of possible additional shortfalls next year. A slowdown in revenue growth next year, compounded on top of one this year, could generate the kind of numbers that could become a big deal. Kaine is wise to prepare for the possibility.
Meanwhile, the Axis of Taxes is using the temporary dip in revenues to argue for… you guessed it… more taxes. As Craig summarizes the sentiment: “Even so, the forecast of lean budget times has become fodder for foes of the recently approved transportation plan. They argue that the plan is fiscally irresponsible and will not do enough to relieve traffic congestion because it does not include a statewide tax increase.”
Senate Minority Leader Richard L. Saslaw, D-Fairfax, finds the prospects so alarming that he’s reverting to Harry F. Byrd mode, advocating pay-as-you go for road funding. The problem with the newly enacted road funding plan, he said, is “you go sell those bonds, and those bonds have to be repaid. You can’t say, I am not going to fund the bonds this year because I am short of revenue.”
I don’t recall Saslaw speaking against issuing bonds earlier in the decade to fund the expansion of the state park system and a building program for higher education. Inconsistent, you say? The only thing inconsistent about Saslaw is the principles he evokes to justify his position of the day. He is utterly consistent in his quest to expand state spending. If issuing bonds to pay for parks expands state spending, bonds are wonderful. If issuing bonds for roads undercuts the case for raising taxes and spending even more, bonds are bad.
Fortunately, economic growth is likely to pick up speed next year, and Gov. Kaine’s worst revenue fears will not be realized… in which case all this talk will be forgotten.