Bacon's Rebellion

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More Budget Rumbles

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by

James A. Bacon
in

The escalating war of words between GOP legislators and Gov. Timothy M. Kaine over Kaine’s proposed budget is getting some attention in the press. Garren Shipley at the Northern Virginia Daily and the editorial writers at Washington Examiner focus on the $180 million in transportation spending that Kaine wants to defer. The issues don’t appear to have evolved much since we covered them in this blog, but the differences are getting aired.

Meanwhile, Chelyen Davis at the Free Lance-Star gives ink to the unease that GOP legislators have with Kaine’s two-year revenue forecasts.

In a letter to the govenror, House Speaker William J. Howell, R-Stafford, and House Appropriations Chairman Del. Lacey Putney expressed concern that the Governor’s revenue forecasts are not based on the most current expectations of economic performance. Since the November 19 meeting of the Governor’s Advisory Council on Revenue Estimates (GACRE), “the national economy has continued to see wild swings,” while “the sustained decline in the housing and subprime mortgage markets further affect consumer and financial confidence.” The lawmakers continue:

Subsequently, the Commonwealth’s economic and forecasting consultant Global Insight has updated their forecast based on more recent economic data, including assumed GDP growth of less than 1 percent over the next three quarters. In turn, these financial experts have raised the probability of a recession from 30 percent to 40 percent.

Howell and Putney called upon the Governor to reconvene a meeting of the Advisory Council in January to update the budget projections on the basis of the most current data.

According to Davis, Kaine spokesperson Delacey Skinner responded that GACRE met in November, and agreed then to stick with the revenue forecast from August, which reflected the weakening economy. The governor’s office has a regularly scheduled review of the forecast in mid-February, and that it wouldn’t be prudent to call another meeting of GACRE just a month beforehand. Said Skinner: “Calling a special meeting would send a message to the public that we’re panicked, and that would be an unwise message to send.”

Bacon’s bottom line: So, Skinner doesn’t want to send a message that, “We’re panicked.” Personally, I think it would send a message that, “We’re prudent.” Instead, Skinner prefers to send a message that the Kaine administration is content for budgetary deliberations to rely upon what will be, by January, five-month-old data. Given the volatility of the economy, I think the Howell/Putney proposal makes sense.

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7 responses to “More Budget Rumbles”

  1. Larry Gross Avatar
    Larry Gross

    I think the Roanoke Times had some comments on the mark(excerpts):

    Editorial: More wheeling and dealing on roads

    Well, what do you know? Economic conditions do change, and transportation funding is vulnerable. Virginia Republicans are shocked!
    .
    .

    But it is the course House Republicans laid out for him [Kaine], and future governors and legislators, when they insisted earlier this year on using paste and string to patch together a transportation package, rather than create an adequate, dedicated revenue stream.
    .
    .
    As skeptics noted at the time, the trouble with tapping general fund surpluses is that they disappear when the economy slows down, which is what happened almost before the ink dried on the Rube Goldbergesque transportation deal. Then, general fund money targeted for critical transportation projects gets pitted against basic state needs.
    .
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    The GOP has a partisan interest in stirring alarm. And was it not House Republican leaders who earlier dismissed worries about mingling transportation with other pressing priorities in the general fund?

    “There’s nothing more general than transportation,” House Majority Leader Morgan Griffith argued at this time last year, “and these designations are mere accounting devices.”

    .
    .

    Still, in its first year, the transportation compromise shows how ripe it is for abuse.

    http://www.roanoke.com/editorials/wb/144381

    TMT in another thread lamented the tendency for politicians to talk the talk .. and bob and weave when it comes time to walk-the-walk.

    When as a political party, your NEON headliner is “no mo taxes” and you’re confronted with flat or even declining gas tax revenues at the same time that construction costs have doubled…

    and your response is to try to finagle a way to DIVERT (yes DIVERT) money from the General Revenues to the unlocked transportation trust fund.. guess what..??

    What is diverted from the General Fund is no different than any other General Fund allocation subject to change per the whims (aka priorities) of the Governor and the GA and indeed even their own “kind”.

    I’m not arguing for higher taxes or necessarily for raising the gas tax, though indexing it would be a fair and equitable approach.

    No.. I’m agreeing with TMT.

    The R’s in Virginia have clearly demonstrated in my view that they are not up to the task of Leading, showing leadership in their ideas and problem solving much less in Governance where, as a party, they decry big government solutions then hypocritically backdoor “fees” so they can claim technical compliance with their “no mo taxes” mantra.

    If the R’s really wanted to strut their stuff – they and Mr. Gilmore would have passed a law mandating the personal property taxes on automobiles be dedicated as a permanent Transportation Trust Fund revenue.

    Instead, he decided, with their enthusiastic support to “roll back” the “hated” tax on autos.

    and so when those inevitable transportation funding chickens came home to roost, instead of revisiting the car tax issue, HORRORS .. they could not be in favor of more taxes, much less reverse Gilmore’s legacy….

    so the R’s have painted themselves into a box. “no mo taxes” AND apparently no ideas on how to dedicate funds permanently to the transportation trust fund.

    what kind of leadership is that?

    Give Kaine credit. He walks-the-walk.

    When will the R’s step up and show that they can Lead and govern – differently instead of ankle biting?

  2. Anonymous Avatar
    Anonymous

    Larry, thanks for agreeing with me — my teenagers certainly don’t on most everything.

    A couple of comments — I don’t think Kaine is walking his talk. He, like Mark Warner before him, showered NoVA with TV commercials saying that he wasn’t going to raise taxes. But he’s generally been trying to do this. That is not walking one’s talk.

    I could see a reasonable argument in favor of dedicating car tax revenues to transportation or indexing the gas tax to inflation. But two problems arise in my mind: one is Virginia’s spending is generally out of control. It rises regularly much faster than inflation and the growth in population. Moreover, it rises faster than the income gains for many Virginians. This is simply not a sustainable trend for any government. When does it stop?

    Another concern is the fear that increases in transportation taxes and revenues will help fuel Virginia’s out-of-control development. “We own land and we have lobbyists on our side.” I and I think many others simply do not believe that Virginia will spend transportation dollars without regard to the impact on selected, well-placed landowners. Look at the fiasco known as Dulles Rail. We’re spending billions to build something that will not improve traffic flow measurably, but will trigger massive increases in density that, in turn, will make traffic even worse. If we have such big needs, why are we wasting money on this and other pro-development projects?

    Finally, I think that there is a good argument that, since most transportation projects are designed to help someone’s land become a lot more valuable, why aren’t we proposing to capture a large portion of the increased value in transportation proffers or impact fees? While I don’t have a problem with user fees (gas tax, tolls, higher registration fees), aren’t we screwing the little guy in favor of the big landowners? How is that in the public interest?

    I read an op-ed from a Minnesota paper arguing that the gas tax needed to be increased or the state would lose contractors to other places. Subsidize my business please.

    A big part of our problem is that much of our economy is based on someone paying taxes — and higher taxes to boot.

    Let’s restore some trust. If a candidate wants to raise the gas tax or whatever, let’s hear him/her say so in September and October of 2009 and not, for the first time, in January 2010. I’ll take the Jim Webb model over the Mark Warner one any day, even though I’d probably agree with Warner on more substantive issues.

    TMT

  3. Larry Gross Avatar
    Larry Gross

    I guess it boils down to whether one believes we need more transportation infrastructure or not and if so.. what to do.

    If one thinks we do not then “no mo taxes” is certainly one response.

    However, if one thinks we do need more THEN walk-the-walk.

    Do we raise taxes, fees, tolls, OR do we find a way to re prioritize the existing budget – aka PAYGO?

    So.. Kaine and company think we need “more” spending on several things and he has come back with a plan … comprehensive… i.e. use rainy day, recapture money from delayed trans projects, do some bonds via referenda.. do some reprioritization .. maybe some new fees.. in spite of his election promises.. he’s should be allowed to change his mind if he thinks it means a better Virginia.

    I prefer that approach to be honest better than “no no taxes” and then sneaking around with “fees” so so you can claim that you did not change your mind about taxes.

    Now.., if you are a voter who does not want more taxes and/or changes to the status quo then the “no no taxes” party should satisfy you.. at least the non-RINOs – right?

    but if you think transportation needs “more” .., then I’m not sure how you reconcile your views with “no mo taxes”.

    I mean this is sorta like the folks in the POLLS who think we need more roads but they’re dead set against increasing the gas tax.

    that is surely not “walking the walk” right?

  4. Anonymous Avatar
    Anonymous

    Larry, I’m not arguing against the Governor’s plan. It may or may not be reasonable. The biggest problem as I see it, is Mark Warner, Time Kaine, Russ Potts, and many others run on a platform that is very different from the way that they want to govern.

    That’s not telling the truth; it’s dishonest politics. It is not the type of politics that we should have in Virginia.

    It’s not wrong to change one’s mind or compromise, except on showcase issues that often make a difference with voters. If a person runs on a platform that opposes additional gun restrictions (or supports them, for that matter), the elected official should govern/vote in the General Assembly accordingly. It’s wrong to run on a pro-regulation of hand guns plank and then turn around and introduce a bill that would remove existing restrictions on handguns.

    The same thing holds true about taxes, fees, illegal immigration, school choice, etc. Good and reasonable people can disagree on the merits and specifics of these issues. But it’s morally wrong to tell voters one message and do the opposite.

    What if Mark Warner would have spend some of his millions on commercials that said he believed Virginia had a structural imbalance on fiscal issues. What if he would have stated that he would look at making cuts, streamlining government, but, even with those actions, it seemed clear to him that there was a need for more revenues. In other words, if you elect me Governor, I’ll work to streamline state government, but I’m most likely to going to seek some tax increases as well.

    I don’t know what would have happened in the 2001 election. Mark Warner might still have been elected or he may have lost. But we, the voters of Virginia, would have known exactly what Mark Warner stood for.

    TMT

  5. Larry Gross Avatar
    Larry Gross

    funny.. I pretty much thought that Warner did pretty much what I thought he would…

    perhaps I was reading between the lines and you perceived something different?

    Kaine has actually turned out to have a lot more depth than I had originally thought… … at one point.. I perceived him as a Warner wannabe…

    In my mind.. Warner did not leave the State worse off than he found it.. but Gilmore did, but I stand to be corrected…..

    I don’t think ANY politician is going to come right out and say they will raise taxes.., but the ones that say they will not.. and then they do back-door fees..??? so they can claim a technical compliance with their professed principles?

    I mean this is sorta like expecting the car salesman to tell you that the car you are looking at really won’t get the EPA mileage.. right?

    🙂

    but isn’t it kind of hard to have a Gov serve.. have most folks perceive him as a relative success but claim that most folks just did not realize how “bad” he really was?

    It would seem by now..that we’d all know just how “bad” Warner was as Gov – right? But that’s not the perception.. right?

    I mean if he was that bad.. he wouldn’t have a prayer at being a Senator.

    Can you say that about Gilmore?

    I know where you are coming from…

    but politicians have to demonstrate to people that they have an upbeat positive vision… including dealing with the alligators in the swamp.

    But if a candidate ran a campaign that said over and over that the State was a fiscal mess and then spend the whole campaign ticking off one by one the specifics…

    no one would want to listen..

    and some would point out that Wall Street thinks Virginia is not so bad… on taxes and spending to start with. anyhow.. right?

    In order to win.. a politician has IMHO demonstrate a COMMITMENT to not raise taxes but not a promise not to and then later on sneak around with semantics on “fees”.

    Are you sure that you’re not doing a bit of wishful thinking in terms of having a Dem come to NoVa and say “I’m going to raise your taxes”, and get promptly defeated..???

    sounds like an R .. wet dream..

    🙂

  6. Larry Gross Avatar
    Larry Gross

    In terms of good government ideas… e.g. the concept of candidates …talking the talk and walking the walk… and/or saying what they’ll do and doing what they say.

    There is NOT SHORTAGE of good ideas.

    Both JLARC and Virginia’s version of CBO – The Auditor of Public accounts “tell it like it is” in strictly no partisan objective terms WITH recommendations.

    The “right” answer is:

    1. – NOT “no mo taxes”
    2. – NOT “tax&spend”

    The right answer, I would assert, is to implement the JLARC and VAPC recommendations.

    A candidate does not have to be WONKIFIED on this subject.

    He/she can detail in depth their positions with appropriate linkage to the JLARC/VAPC reports and then distill it down to the “sound bites” that they’ll need when talking to the general public via the media.

    But by having the website with the links, the candidate is showing their commitment to INTELLIGENT steps and actions towards better, more cost-effective government – and it does not hurt at all that they also show that they know that JLARC and VAPC actually exist and actually work in behalf of taxpayers.

  7. Anonymous Avatar
    Anonymous

    Larry:

    I don’t think popularity has anything to do with this. Trust in government at all levels continues to decline. I say one major reason for this decline is candidates not being willing to campaign on what they believe must be done. As you correctly note, this includes using fees for a substitute for taxes — at least in most instances. (I’d never criticize a candidate who ran against higher taxes, but permitted drivers license or court fees to increase by $10)

    As some point, this phenomenon could present a risk to our democratic form of government. Campaign and fib in October and sell out the public in February is the preferred style of government for the Fairfax County and Virginia State Chambers of Commerce. It’s consistent with government by deals made in the backrooms.

    “having a Dem come to NoVa and say ‘I’m going to raise your taxes’, and get promptly defeated.” No, my point is that, if a Democrat or Republican believes that higher taxes are necessary to produce certain results, that ought to be the campaign message. If they can’t make a compelling case for their preferred course of action, why do they think that they have a mandate to take action?

    I attended a meeting at which a newly elected delegate spoke. The delegate told the audience that three items included in the fall campaign are being drafted as bills for the 2008 session. Whether I like the bills or not, I admire the delegate for being consistent with campaign rhetoric.

    If a Governor supporting higher taxes for transportation or education or health care cannot be elected, then isn’t that better than having candidates lie about their plans to get elected?

    This has nothing to do with Warner or Gilmore. Both have some strong points and a number of weaknesses. It has, rather, to do with honest campaigns and American democracy.

    If we permit candidates to lie to get elected, why have elections? Let’s just move to appointed commissions like the NVTA.

    Seasons Greetings!

    TMT

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