Bacon's Rebellion

Democracy Thrives in Sunlight

“Virginia Is Not for Tax Lovers”

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by

James A. Bacon
in

In an editorial today, The Wall Street Journal has come up with a more optimistic interpretation of Tuesday’s primary election results than I did. American elections are so rigged in favor of the incumbent, the WSJ notes, that any ejection of entrenched office holders is significant. In that light, the low-tax movement made significant progress:

The most vocal of those pro-tax incumbents was so embattled that he withdrew from the race. Another was trounced, two-to-one, by a twentysomething political neophyte. Two others barely won, and in the statewide contest to select the GOP’s Lieutenant Governor and Attorney General nominees, the tax hike defenders were upset up anti-tax challengers. Several other tax-raising Republicans beat back challenges more comfortably, but we suspect that they also got the voter message.

The WSJ also raised the issue, little remarked upon by Virginia’s own commentariat, of Virginia’s massive surplus:

GOP taxpayers had reason to be upset because they now know the $1.4 billion tax increase was sold under false pretenses. Democratic Governor Mark Warner–who had won in 2001 on a no-new-taxes-pledge–argued that it was necessary to balance the state budget even as the reviving economy was creating a new revenue surge. This year Virginia is sitting on a $1.5 billion surplus thanks to a 14% rise in tax revenues.

I don’t sense that the mounting surplus played much of a factor in the primary races. I rarely heard it mentioned. But that doesn’t change the fact that Virginia voters ought to be furious at those who raised taxes unnecessarily.

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  1. Will Vehrs Avatar
    Will Vehrs

    Jim, I wondered why more candidates didn’t make something of the tax cut on top of surplus thing. It would take a little more space than a bumper sticker to explain, so maybe that’s why.

    It also might be that it’s a double-edged sword. If you start talking about a surplus, the next step is to talk about what to do with it. Then you’ll have the “well, just a little more tax increase on top of this surplus and we can solve all our problems ….”

  2. Jim Bacon Avatar
    Jim Bacon

    Will, It is a mystery to me as well that the low-tax crowd didn’t make more of the surplus. I didn’t examine all the campaign websites, but I did look at a few, and it was never mentioned. I’m also surprised that the groups underwriting the challengers’ campaigns didn’t raise the issue. It would have been a natural.

  3. Anonymous Avatar
    Anonymous

    PLEASE, PLEASE, PLEASE let the Dems and their friends on the editorial boards continue to believe the 2004 Warner “budget reform” (aka historic tax hike) was supported by “most” Virginians! If they do, “most” Virginians will answer with another GOP sweep in November!

  4. Anonymous Avatar
    Anonymous

    The surplus got spent PDQ by a broad-based bi-partisan coalition that included virtually all of the anti-tax sloganeers in the GA. A good bit of our anti-tax political sentiment is an abstraction – once the actual money is in the door, virtually all of our self-annointed “anti-tax” pols will spend it as quickly as those who thought it was necessary.

  5. Shaun Kenney Avatar
    Shaun Kenney

    Hey there Will,

    Now that I am unencumbered from a primary election, allow me to offer some insight:

    We did focus on the tax hike, and no one cared.

    Now that’s not to say it wasn’t an issue. For conservatives, as well as moderates, we were all upset with the tax increases.

    The real question voters were asking was “what do we do about the problem?” Collectively, while I agree wholeheartedly with the Taxpayer Protection Pledge, we didn’t have a single voice on how to solve the problem. Sure we can cut off the oxygen and put out the fire, but to what ends?

    I think voters are seriously looking for answers to the questions regarding transportation, education, and the like. TABOR is a good start. Devoting 65% of every dollar to the classroom is another (Virginia only allocates 61.6% on average). Restructuring VDOT so that rather than operating from the top-down, localities set the needs and agenda and VDOT chimes in. True tax reform that abolishes the car tax, property tax, estate tax, and comes up with a more equitable system of taxation that works at the local level first.

    Those are ideas. Those are solutions. While we aggressively promoted them in the 54th, conservatives statewide didn’t speak with a single voice.

    While crossover hurt us and may have cost us a few HOD elections, we have to get back into the mentality that we are indeed a minority, and we need to offer a solution first before we offer a mantra.

    My thoughts anyhow. Hopefully some worthwhile conversation will result.

  6. Anonymous Avatar
    Anonymous

    Now it can be told. Warner sold Virginians a tax hike under false pretenses. He claimed the existence of WMDs (Warnings of Mass Deficits), when there were none. Warner lied, taxpayers fried!

  7. Will Vehrs Avatar
    Will Vehrs

    Shaun, thanks for stopping by and congrats on a good race.

    I can appreciate the difficulty in getting traction on the issue in a primary campaign on a shoestring. You should have gotten a lot more help in “pot-stirring” from those of us who oppose the “tax first, ask questions later” mindset.

    Please keep at it!

  8. James Atticus Bowden Avatar
    James Atticus Bowden

    My piece on how pleasing this primary was to the anti-tax Bubbas, at least this one, goes to Jim Bacon on Friday.

    Sorry Shaun lost, but he did very well. The Republican Party intramurals to determine which Party we will be – have just begun. This is just the warm up.

    Which candidate ran on a platform for tax increases? The incumbents may have defended their votes, but did they promise more? Or did they talk tax cuts?

  9. Informed Patriot Avatar
    Informed Patriot

    I am very impressed with your post Shaun and glad to see you are right back into the blogging world, but that the door to the elected world is certainly not closed for you.

    I think the point about looking for answers is very important as the general nears. This primary showed that answers to the base are not as important as mantras, which is disappointing to me and should be to all ‘pubs. There is one part where I do disagree with you- while we do need to be the party bringing forward new ideas and solutions, it is not by acting like we are the minority. We are the majority in VA and we need to start acting like it. We need to be advancing those ideas with the confidence substantiated by the elections in November. The RINOs in the Senate do not have the people’s blessing after they’re vote in 04, whereas the House will have taken their stance to the people for reaffirmation of conservative governance. My hope is they push their ideas as the majority should.

  10. James Atticus Bowden Avatar
    James Atticus Bowden

    Informed Patriot: Which ideas should be put forward? Like in 04 – the $2.5 Billion tax increase from Sen-R Chichester, the $1.5 Billion the RINOs worked with the Dems or the NO Tax increase of the majority of the House Rs and 12 of the Senate Rs?

  11. Bob Griendling Avatar
    Bob Griendling

    If you think TABOR is the answer, read this.

  12. Jim Bacon Avatar
    Jim Bacon

    Griendling points to an interesting article. As readers of the Bacon’s Rebellion blog and website know, I stand second to no man in my opposition to tax increases. But I am wary of TABOR as a means of controlling state spending. Yes, restricting the growth of the state budget to inflation + population growth would have the salutory effect of forcing government to make tough choices. But, cynic that I am, I can well imagine legislators, when confronted with those hard choices, resorting often to budgetary gimmickry and quick fixes at the expense of a sound budget. Therefore, I’m not surprised that Colorado’s budget is a mess.

    Secondly, Professor Mark Crain at George Mason has made the point that state governments with stable revenue flows tend to have lower spending than state governments with whip-saw revenue flows. What happens is that legislatures, in their desperation to staunch red ink, make decisions that save money in the short term at the expense of long-term economies and efficiencies.

    Finally, I would observe that some inflation in state government spending is absolutely unavoidable — particularly the Medicaid program. The rise in health care expenditures is an endemic problem beyond the state’s ability to fix. If you limit overall state spending to inflation + population growth, you’ll end up feeding Medicaid (which, for the most part, is mandatory) and starve the rest of the budget. Not good.

    I might go along with a TABOR-like initiative, however, that restricted spending to population growth + income growth. That would pose limits, but less onerous ones than population + inflation.

  13. Sorrel Avatar
    Sorrel

    I’m quite wary of the Population + Inflation formulation for a number of reasons. I’ve asked here more than once why there should be a linear relationship between (population + inflation) and the revenue needs of any given jurisdiction. Population clearly has something to do with public costs, but I sniff gross oversimplification in this formula. I’ve never gotten an answer from Phil. Maybe someone else can enlighten me. We can bat this around over the next few months, so I’ll start out modestly. All these constraints (which sound arbitrary to me) seem to assume that we start from an optimal revenue platform to which we just apply the formula in the out years. My strong suspicion in Virginia and in many of its sub-jurisdictions is that there are at least some essential infrastructure elements that are not optimally funded (i.e. too high or too low). I’ve therefore supported the scarce-as-hen’s-teeth pols who have refused to sign on to formulaic restrictions in favor of being ready to attack the entire budget. I also am suspicious of the tax fetish so much in fashion as a cop-out that avoids the tough stuff about revenue needs and prioritization. They political figures who can articulate this tend to come across as wonks and the best of them didn’t get far this week. But I will forlornly claim that we all have our heads in the sand if we focus on the taxes, as opposed to the budget. This is the best blog in the world for this kind of discussion. Come on, guys, make me smart.

  14. Bob Griendling Avatar
    Bob Griendling

    “I would observe that some inflation in state government spending is absolutely unavoidable — particularly the Medicaid program. The rise in health care expenditures is an endemic problem beyond the state’s ability to fix.”

    Amen.

    “All these constraints (which sound arbitrary to me) seem to assume that we start from an optimal revenue platform to which we just apply the formula in the out years.”

    That’s because they are arbitrary.

    Go gettum, guys.

  15. Shaun Kenney Avatar
    Shaun Kenney

    Bob, you say arbirary as if we were dealing in Monopoly money and not the incomes of families.

    It’s not an illegitimate response to the problem of state spending to say “this much and no more.” That’s what TABOR does, and rightly so.

    If the problem is Medicare spending, then why is the antidote to raise taxes? If I have an added expense in my household, be it taxes or having to purchase a new washer and dryer, I tighten my belt first before I start looking for a second job.

    Why are the rules different for legislators too lazy or indifferent to make the tough choices?

  16. Sorrel Avatar
    Sorrel

    Shaun; If I thought we had just the budget tuned just so to meet all legitimate responsibilities of state government to the citizens, a TABOR-type approach for succeeding years might make some sense. We are so far off on the fundamentals at this point, I don’t think any of us can say that applying a formula, whetherbased on Russ Potts’ hat size or anything else nearly as arbitrary (like population growth +CPI) is a rational approach.

  17. Anonymous Avatar
    Anonymous

    Arbitrary – it is arbitrary, and the fact that we pay for it makes arbitrary solutions more of a problem. It’s all of our money and we need to use it wisely, not get caught up in philosophies that sound good and work out badly.

    Population growth plus CPI doesn’t make sense as a basis for growth in the budget. Growth in the budget will vary according to changes in demographics and income. Those budget needs are important for BUSINESS, not just feel-good programs.

    TABOR does more than “this much and no more” – it limits our ability to maneuver and to fix problems. It also doesn’t stay a fixed percentage of real income – with real income growth, that formula will result in a steadily DECREASING percentage of income in a growing economy, eventually winding up well below what is needed to accomodate a rapidly growing economy such as Virginia’s.

    Growing economies need more roads, more schools, and other public services to continue to grow. You can choke off the growth spigot with underfunded public services.

    For the family analogy – if you get out of med school and are making 6 figures, you don’t hold yourself to the same budget. You use some of that extra money. Same thing.

    If you look carefully at the Wilder Commission report, much of what’s required is better management and better administration. That’s a much tougher sell and harder to implement. They aren’t overnight fixes and some of those battles to change will be hard-fought.

    I’ll give Warner credit – he’s made some good changes in how the state runs its business, especially in information technology.

    I want to see the state run well as a business. I could care less about slogans. Keep business in mind – conservatism needs to be business friendly.

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