Monday, August 18, 2008

Mark Obenshain: "Kaine's Breathtaking Budget Errors"

By Sen. Mark Obenshain
(R-26th Senate District)

Over the past several weeks it has become apparent that the budget just adopted in March will need to be cut by upwards of $1.4 billion. That will result in less state money for schools, higher college tuition and reduced funding for virtually every government service.

Today Governor Kaine appeared before the money committees of the General Assembly to explain his administration's breathtaking forecasting errors. The Governor's explanation demonstrated that he has a firm grasp of the obvious. He told the Committees that "Virginia's economy is slowing." The problem is not the Governor's message. It is his timing.

When Gov. Kaine unveiled the 2008 "caboose budget" and 2009-2010 biennial budget on December 17, 2007, the economic slowdown was already well underway. The so-called "caboose budget" the governor proposed was designed to cover a $641 million shortfall for 2008 - an indication, one would think, of trouble on the horizon.

It wouldn't have taken an expert to determine which way the fiscal winds were blowing in the waning days of 2007. Profligate spending, unfortunately, was the order of the day, and the attempts my Republican colleagues and I made to inject a dose of fiscal sanity into the budget process were dismissed out of hand. Reality and new spending programs were at odds, and the Governor decided that reality would simply have to give way.

Consider the Governor's comments today:

"Sales tax collections, which would now have to grow at 4.9 percent to make the fiscal year 2009 forecast, grew at an average rate of only 0.8 percent in the last four months of the fiscal year. Likewise, income tax withholding, which would now have to grow at 6.4 percent to make the 2009 forecast grew at an average rate of only 1.6 percent in the same four month period."

Let that sink in. A mere eight months ago, Gov. Kaine stood before the very same committees he addressed today and predicted 6.4% growth in income tax withholding receipts.

To quote the governor again: "As anyone reading newspaper headlines knows, the effects of the ongoing housing downturn and turmoil in financial markets continue to be a drag on economic growth." The Governor, of course, is right; however, he would have been well advised to have started reading the newspaper headlines a little earlier. The Housing Market Index was down almost 50% on the year when Governor Kaine unveiled his budget in December of 2007. Reasonable people might ask how he could have possibly missed that. Did he dismiss it as a blip? Did the Governor stake Virginia's economy on some wildly optimistic expectation of a massive rebound?

Back in mid-January, while the General Assembly was considering the Governor's budget, my colleague, Sen. William Wampler, warned that the economy was slowing and observed that "it's a lot easier to avoid making new spending commitments than it is to cut spending after the fact," a lesson Gov. Kaine is just now learning. Even before that, Sen. Walter Stosch wrote an open letter to the Governor noting that since the budget is built on assumed revenues for the forthcoming biennium, "we can easily over-commit in the budget and build expectations we cannot meet if we fail to estimate revenues conservatively." The Governor and his Secretary of Finance, Jody Wagner, refused to listen.

More to the point, when the Governor presents revenue forecasts put together by his Secretary of Finance, we need to be able to rely on those projections as an unbiased and factually-based estimate. Instead, however, the numbers were merely a ploy to push new expenditures our Commonwealth can ill afford.

The Governor's confidants have made no secret of their boss's vice presidential ambitions, and perhaps Kaine is, indeed, precisely the man Sen. Obama has been seeking. After all, it takes a lot of audacity to submit a budget predicated on the economic numbers you only wish you had. If that's "the audacity of hope," Virginians should want nothing to do with it.

I believe in doing things a different way. I believe in being upfront with the hard-working taxpayers of Virginia, and in putting together a budget that reflects fiscal realities - even one that requires tough choices. With all due respect to the Governor and his ambitions for higher office, that would be change we can believe in.

Cross-posted at

No comments: