by Kerry Dougherty
We’re in a hell of a mess here in Virginia, folks.
Oh, other states are in trouble too. But how many of them saw their state legislatures go on a wild spending spree less than a month ago, even while the coronavirus was spreading across the globe? How many of them have governors who rashly extended economy-wrecking stay-at-home orders through June 10?
On March 12th Michael Bloomberg’s — oops, Virginia’s — General Assembly giddily approved a $135 billion two-year let-the-good-times-roll budget.
That plan included 16 different tax increases, including levies on cigarettes, hotels, gas and plastic bags. (Those taxes are expected to cost the average Virginian $500 a year. The feds are about to give everyone $1,200. Here in Virginia, a chunk of that will go in the form of tributes to the state. )
Lucky us.
In addition, state lawmakers voted to hike the minimum wage, give some state workers bonuses and all state workers raises. Government workers also got the right to collectively bargain so they could negotiate for even higher wages.
Then came the virus. And Gov. Ralph Northam’s extreme shutdowns.
Unemployment, loss of revenues and an end of tourism quickly followed. The governor ordered the beaches closed, essentially telling Virginia Beach that Memorial Day was cancelled even though new models predict the virus peaking in Virginia on April 20, more than a month before one of the biggest holiday weekends of the year.
Hundreds of thousands of Virginians are jobless and the longer the shutdown goes on the more likely it becomes that they will remain unemployed when the state finally reopens.
Between March 14 and March 28, 160,000 Virginians applied for unemployment benefits. The most recent numbers are unavailable but promise to be even harder to stomach.
State officials are befuddled. And they ought to be. How can they plan for the commonwealth’s financial future with no handle on revenues?
On Monday Gov. Ralph Northam said he was putting a “timeout” on the budget.
Lawmakers will be back in Richmond for a “veto session” on April 22 and “…Northam will ask the reconvened assembly to allow use of the money that had been planned for reserve as cash for the state’s fundamental priorities,” reported The Richmond Times-Dispatch.
Northam will also propose amendments to restrict — but not eliminate — new spending proposed in the two-year budget according to the TD.
“Every item in new spending will have language attached to it that instructs state agencies they don’t have authority to spend it,” said the governor’s chief of staff Clark Mercer.
So the money — which may not exist — is allocated, but the agencies can’t spend it.
That’s an interesting sleight-of-hand.
One hopeful sign is that Virginia’s secretary of finance is Aubrey Layne, a smart, pragmatic politician from Virginia Beach. His skills will be tested in the weeks ahead.
“We’re not starting from revenues because no one can predict them,” admitted Layne to the Richmond paper. “We’re starting from what government has to do to serve its citizens and preserve the continuity of government.”
That’s bare-bone budgeting. The exact opposite of the orgy that took place in Richmond just a month ago.
Common sense says there are certain items that must be excised from the budget given the shutdown. But it will mean Northam standing up to the far Left in his party. Let’s see if he has the backbone.
The hike in the minimum wage has to go, for instance. According to legislation that was passed, the minimum wage is due to jump from $7.25 to $9.50 an hour on Jan. 1, 2021, eventually reaching $12 an hour by 2023.
That can’t happen. Jim Bacon raised the alarm weeks ago.
Northam expressed support for a higher minimum wage in his State of the Commonwealth address in January. The unemployment rate in Virginia was 2.7% at the time, the economy was growing, and one could argue plausibly that employers could absorb a doubling of the minimum wage with minimal disruption. But that was before anyone imagined the economic pain inflicted by the epidemic-containment measures.
Depending on how long Northam forces businesses to shutter, those enterprises that manage to survive will be struggling for months or years to make up lost ground. Demanding that they give unskilled workers a hefty raise in that climate borders on insanity.
Yet some of members of the General Assembly still cling to this fiscally irresponsible idea.
Then there’s the plastic bag tax; a bad idea from its inception. Taxes should be used to raise revenue. Period. Not as tools for social engineering. You want people to cut down on the use of plastic bags? Find a better way to encourage that behavior without taxing shoppers into submission.
In effect, this is a plastic bag ban. But supermarkets have now banned reusable bags because they’re unsanitary, forcing shoppers to use plastic. If the virus hangs around for 18 months, reusable bags will not be an option for at least that long.
If ever.
Many folks who are newly aware of how pathogens travel may cling to plastic bags once the pandemic is over.
Who could blame them? They’ll probably never shake hands again, either.
Finally, there’s the issue of pay hikes for state workers and teachers. Sorry, folks. Those can’t happen. You got paid while hundreds of thousands of Virginians were tossed out of work.
Count your blessings. Don’t complain.
This column was published originally at www.kerrydougherty.com.
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