Sunday, June 24, 2007

Chris Saxman: "Anti-tax pledge signers not 'extremists' "

By Delegate Chris Saxman

Recently there has been discussion about those of us who have signed the Americans for Tax Reform pledge to not raise taxes. We have been called extremists, ideologues and undoubtedly other less flattering words that have not yet found their way to the media.

I would like to explain why I signed and continue to support the ATR pledge not to raise taxes.

What does the pledge mean? It means that I will not support higher tax rates for the purpose of increasing revenues to the commonwealth.

Economic growth and the current rates of taxation should be able to provide the government with sufficient money to provide and maintain quality government services. Since I have taken office, the revenues to the commonwealth have increased by over 50 percent in just three budget cycles, one of which included a recession where revenues were flat to declining. I dare say that few businesses and families have seen their income rise as dramatically as the government's has.

This increase in revenues is directly related to the strong performance of the economy, not the tax increases of 2004.

So, what should be done when we have an economic downturn and state revenues flatten or decline? Many of us in the legislature have been working very hard since the previous recession to reduce the cost burden of government while still producing essential government services — keyword being essential. Non-state agencies do not rise to that standard during a recession or for that matter any other time.

The General Assembly has created legislation that puts into place the Council on Virginia's Future (House Bill 2097 of 2003), which works with the Transparent Budget Act (House Bill 1838 of 2003) to set our goals and objectives and direct funding. That is a long-term steering of the ship to the calmer seas of government performance. An example of this in practice would be setting growth rates for Medicaid at 6 percent instead of 8 percent while still providing quality services. Hospital groups tell me that we can save up to $700 million per year as a result of this action alone.

Another example, according to a very senior member of the previous administration, is to manage down over an extended time period (6 to 8 years) the work force of just one department from 9,200 employees down to 5,000. That would result in aggregate savings of $200 million per year without harming delivery of services.

Other smaller yet significant savings have been found in asking simple questions.

The General Assembly asked one university where and how it negotiated its natural gas contracts and as a result was able to save the taxpayers $1 million per year. Another $400,000 was saved annually when we asked why VDOT painted its trucks orange. They realized that it was not necessary and now that money can be used for Rural Rustic roads—another great money-saving project.

Sound extreme? I don't think so.

So what if we do all that and still "need" revenue to balance the budget submitted by the governor? What then?

My business experience has taught me to look at accounts receivable first. These are taxes that are due to the Commonwealth but have not been collected. Several years ago I wrote legislation to streamline this process in anticipation of another downturn. The Warner amnesty produced almost $100 million. Given the present rate of budget (economic) growth, one can reasonably presume $150 million will result from another amnesty.

One can then look at tax exemptions as we did in 2004. These are individuals and businesses that do not pay taxes.

In 2004, the estimates were in excess of $4 billion annually. Lifting exemptions on those who do not pay current rates of taxation, temporarily or permanently, does not violate a no-tax pledge. Rescinding tax credits like the $60 million tax credit that one tobacco manufacturer received in the 2004 tax "reform" package should also be considered. With all the aforementioned, we have not even discussed the Rainy Day Fund.

What is the best answer though? I believe the answer is to reform and manage government operations every day to deliver better services at a lower cost. That way, conversation about increasing government revenue is as unnecessary as increasing the rates of taxation. Only then we can talk about real tax reform.

Instead of calling us extremist ideologues, maybe it's more appropriate to term those of us who pledged not to raises taxes as responsible stewards of government revenue — revenue that belongs to the taxpayers of Virginia. You decide.

Contact Chris Saxman by e-mail at or at his office at 886-8284.

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