Wednesday, December 17, 2008

Sen. Mark Obenshain: Virginia needs to rein in spending

Sen. Mark Obenshain (R-Harrisonburg) today expressed his disappointment in Governor Tim Kaine's revised state budget calling for increased taxes after saying he would not do so to balance the budget:
This morning, Gov. Tim Kaine issued a revised budget addressing the serious budget shortfall for the current biennium. In this period of economic downturn, the Governor and those of us in the General Assembly face hard choices, and I commend the governor for his proposals to reduce expenditures. I remain concerned, however, that this latest round of cuts may be insufficient, and I am disappointed to see that the Governor has reneged on his promise to balance the budget without raising taxes. Perhaps even more troubling is the Governor's reliance on bond issues, "saving" $350 million this biennium by passing along even greater debt to another year and the next gubernatorial administration.

When faced with a revenue shortfall, increasing the tax burden has a certain allure in its seeming simplicity. The reality, however, is that tax hikes penalize economic activity and place recovery itself in jeopardy, and funds raised by taking on new debts are not "savings." To raise taxes and go further into debt is to compound folly; it is an extension of the mistaken policies that led us to this point.

Make no mistake: through new bond issues, deferred payment of principle on existing bonds, and the shifting of payments to non-general fund sources, the Governor seeks to pass the bill on to another biennium and another governor rather than doing what it takes to solve the problem. Accounting tricks and new debt obligations can only deepen the crisis. We need to rein in spending, not hide it, and a government concerned about the Commonwealth's bond rating and invested in economic recovery cannot afford to engage in a high-dollar version of balancing the budget by putting everything on a charge card.

Declining revenues were inevitable in a recession that knows no political boundaries, but the scope of Virginia's shortfall is directly attributable to unrealistically high revenue projections and a budget that increased spending in the face of unmistakable signs of economic decline. Even now, the Governor's latest proposal relies on a presumption of 4% growth in the upcoming fiscal year, and his revenue projections are based upon a constant unemployment rate - even though the governor's own budget office expects the rate of unemployment to climb.

We cannot afford to close the gap incrementally, going back to find more savings each time revenues fail to meet projections, nor can we content ourselves to find "efficiencies." The situation we now face demands a thorough, top-to-bottom review of the entire budget. We should always seek to eliminate inefficiencies, but that is not enough. Any viable, long-term solution requires an assessment of the Commonwealth's priorities and a review of the best, most cost-effective ways to achieve them - an analysis based not on existing programs, but on desired outcomes.

In addition to $167 million in tax increases and $350 million in bonded debt, the Governor seeks permission to tap $490 million from the Commonwealth's Rainy Day Fund. We owe it to the taxpayers of Virginia to ensure that they need not continue to pay for a storm of our own making. To the extent that the Governor's Department of Planning and Budget has identified hundreds of millions in unnecessary administrative costs, I applaud this progress, but am disheartened that wasteful spending was deemed appropriate, or at least unimportant, until we faced a fiscal crisis.

The budget proposal released by the Governor today is a start, but much work remains to be done. We cannot rely, as this proposal does, on unsubstantiated hopes of better days ahead, nor can we afford to delay the deepest cuts until 2010. Such tactics will only exacerbate the problem and necessitate more drastic cuts in the future. In times such as these, we cannot further burden Virginia's taxpayers - and we cannot push the hardest decisions down the road.

The time has come to restore the fiscal integrity of that Commonwealth. The decisions that lie ahead will require careful discretion, and the decisions we must make may at times be unpleasant, but I look forward to working with both Republicans and Democrats to adopt budget amendments that are both responsible and taxpayer-friendly.
Cross-posted at

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