Bacon's Rebellion

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McDonnell Unveils 2013-2014 Budget

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by

James A. Bacon
in

Gov. Bob McDonnell has submitted a proposed budget for the next biennium that is built upon anticipated revenue growth of 3.3% in 2013 and 4.5% in 2014. Crafted with an eye to maintaining Virginia’s AAA bond rating, which Moody’s Investors Services had placed on credit watch this summer, the governor couples modest spending increases in core areas with several moves designed to shore up the state’s financial strength.

Among the highlights, McDonnell proposes:

  • Allocating $2.21 billion in total employer contributions to shore up Virginia’s under-funded retirement system, helping make up for previous under-funding.
  • Boosting the state’s Rainy Day Fund by $132 million in FY 2013 and $168 million in FY 2014, bringing the total to more than $600 million.
  • Appropriating $50 million to eliminate the accelerated sales tax affecting roughly 7,000 retailers.
  • Leaving $31 million unappropriated, “reflecting the need for a greater cushion given economic uncertainty.”

The new budget finds more money for Medicaid, K-12 education, higher education, mental health and economic development, and it does so without raising taxes. For the most part, it’s a sober-minded budget for a sobering time.

“I believe government must get more focused and effective,” McDonnell said in a prepared statement he was scheduled to deliver to a joint meeting of the Senate Finance, House Appropriations and House Finance Committees. “That work must occur as we navigate through a financial world marked by crisis and insolvency in Europe, the rise of China and India, crushing debt, shutdown threats and unfunded mandates from Washington and our citizens’ rightful demand that government work better.”

Looking at the big picture, McDonnell takes only one major wrong turn, but it’s a biggie — diverting tens of millions of dollars from the General Fund budget to  transportation, which traditionally has relied upon dedicated revenue streams. Refusing to raise the motor fuels tax, McDonnell is abandoning any pretense of a “user pays” principle for transportation funding. That is wrong, wrong, wrong, as I will explain in a future post.

— JAB

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2 responses to “McDonnell Unveils 2013-2014 Budget”

  1. larryg Avatar
    larryg

    well…. anyone who think a politician is or ought to fall on their proverbial sword over a tax … is not being realistic when it comes to Republicans.

    Note how ..in this blog.. both Kaine and Warner get whacked regularly for straight up advocacy of a tax increase…. while the Republican types seem to prefer back-door moves… to effect the same result.

    Republicans have demagogued the tax issue so much…and especially so the gas tax that no one… Dem or GOP is willing to walk that walk.

    but it could be that McDonnell is purposely trying to break the third-rail in Va…. i.e the idea that transportation cannot be funded from general revenues …. that cow has been out of the barn and grazing for some time ever since someone (who?) agreed that VDOT should get 1/2% of the sales tax.

    after that was done.. given the politics of the gas tax.. was it only a matter of time before someone decide to try to “bump” the 1/2% as a much less risky path that addressing the gas tax head on?

    one more… given the politically deadly nature of advocating for a gas tax increase… it’s thought to be by many, including VDOT and many other state DOTs a futile effort given the gains in gasoline engine fuel efficiency.

    I don’t think electrics are going to do much anytime soon.. but the reality is that the average gas mileage in 1986 (the last time the gas tax increased) is probably 1/2 what it is now. Most people don’t want a car that gets less than 25mpg these days…

  2. Groveton Avatar
    Groveton

    In 2004, Gov. Mark Warner talked about ending Virginia’s practice of “raiding the transportation trust fund”.

    http://www.landlinemag.com/todays_news/Daily/2004/Jan04/011904/012304-18.html

    But Jim Bacon writes, “Looking at the big picture, McDonnell takes only one major wrong turn, but it’s a biggie — diverting tens of millions of dollars from the General Fund budget to transportation, which traditionally has relied upon dedicated revenue streams. “.

    If the transportation trust fund can be raided for non-transportation projects why can’t the General Fund be raided for transportation projects?

    Or, in a stunning thought, why not put all the money into one fund and make all payments out of that fund (since it seems there is no respect by the Clown Show for the designations anyway)?

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