Slow and Unsteady   Economic growth will slow in Virginia next year. Short-term, we must restrain state government spending to match. Long-term, we need to devise a fix for boom-bust budgeting.   The annual “Virginia Economic Forecast” published by the Thomas Jefferson Institute for Public Policy points to a slowing economy nationally as well as here in Virginia. This follows a robust but unsustainable economic expansion over the past few years. No recession is forecast, just slower growth.   This annual economic forecast is researched and written by the state’s most respected group of economic analysts, Chmura Economics and Analytics. Chmura's reports have been very accurate over the eight years that this forecast has been published.   The forecast, which is available on line at the Jefferson Institute’s website, has been mailed to 2,000 business leaders, political leaders and key reporters and editorial writers.   The cooling of the housing industry is the main cause for the slowing economy and will remain so over the next year. The biggest question mark, other than increased hostilities in the Mideast, is the volatility of oil prices. If the Iraq war does not worsen and the price of oil remains about $60 a barrel then the national and state economies will continue moving forward, just at a slower clip than in the past few years.   The implications for public policy are quite apparent. As the economy slows, the growth of state and local governments must slow. Projected state income in Fiscal 2007 was estimated to fall $300 million short of the number forecast a year ago. Had our elected officials not goosed the state budget by $700 million earlier this year, there would be no budget “shortfall” right now. But, as in the past, politicians spend every penny that comes in -- or is expected to come in. As long as lawmakers budget like this, an ever-expanding government will take more and more of our income to finance programs of lower and lower priority.   Until government growth in economic good times is slowed by statute we will find ourselves faced with budget “crunches” every time the economy slows a bit. Government spending needs to be shackled.   Our state government has grown very rapidly over the past few years, much faster than the rate of inflation and population. When the base cost of government increases too rapidly and the economy slows, we face the need to cut government spending or raise taxes. We would not face these alternatives if we'd stabilized spending on government programs in recent years.   This year’s “Virginia Economic Survey” clearly shows that here in Virginia skilled jobs are needed more than ever and that non-skilled workers are losing out financially in the modern economy.   Indeed, Chmura Economics and Analytics has developed a nifty data base program, Jobs EQ, that shows which jobs are available in a certain community, which jobs have been lost in that community, and which job skills are associated with both. Then this data base program projects which jobs are going to be available in that community and which skills are needed. This program then analyzes whether current job skills can be easily transferred to the new jobs that are available. This capability could be a huge asset to the businesses coming into an area, to the various Economic Development folks in the region, and to those workers wanting to re-train for their next step up the ladder of economic success. JobsEQ is a formidable analytical tool, and it is sitting, largely underutilized, at Chmura Economics and Analytics in Richmond right now.   Virginia has been blessed with one of the best economies in the nation. Our state is ranked at the top for its business climate, its efficiency in government and its educational system. Yet these current ratings were hard fought and we must work to keep our state in the top tier.   It is easy to spend money, especially when it is someone else’s. Government spends our money, creates programs that need financial feeding and then, when the economy slows, finds itself “short” of money to cover projected spending in the budget. We wouldn't have to endure these periodic fiscal "crises" if we restricted the speed of government growth.   The Jefferson Institute’s “Virginia Economic Forecast” for the next year shows that our economy will grow, albeit more slowly. This is important for business and for government to know. This report shows the details by region and, as in the past, it can be an important element in economic decision making.   As we enter a slowing economy, it is an ideal time for our state and local governments to review its programs, establish measurements, prioritize spending, and create a transparent system for analysis so that the taxpayers and our elected officials can better understand where and how our money is spent.   This year the Jefferson Institute’s “Virginia Economic Forecast” can be used to guide business decisions in the private sector and bring more effective business practices to the financing of government programs. We’ll see what happens.   -- July 2, 2007