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For
most Virginians, getting two A's on a report card
would be a reason to celebrate. Perhaps this is why
Gov. Mark R. Warner's chief bean counter, Finance
Secretary John Bennett, seems unfazed by the fact
that Moody's, the bond rating agency, has put
Virginia on its credit watch list. Being put on the
list means that Moody's might downgrade Virginia's
bond rating from AAA to AA status.
Bennett
may believe that this is no cause for worry, but if
Moody's does take away Virginia's AAA bond rating,
it will kill state Democrats in 2005. It also will
undermine Warner's prospects for unseating U.S. Sen.
George Allen (R) in 2006.
Academics and editorial writers say the AAA rating
has taken on a mythical meaning disproportionate to
its fiscal and budgetary importance. But even
assuming those pundits are correct, the political
fallout of a lowered bond rating would be
devastatingly, and, yes, disproportionately bad for
Democrats.
Moody's says Virginia "has experienced a
significant deterioration of its balance sheet over
the past two years" on top of the $217 million
fiscal year 2002 accounting deficit that state
officials have never fully acknowledged.
Fact: The politicians in Richmond have repeated
nearly every budget gimmick and one-time
"fix" that they condemned when it was
first used or suggested by our last governor, a
Republican, "Deficit Jim" Gilmore.
Indeed,
they have invented new ones, only keeping the budget
in "balance" by accounting tricks and
continuous draining of the rainy day fund, possibly
in violation of state law and certainly in violation
of the spirit of that law.
Once again, Virginia Democrats may be falling into a
fiscal trap set by the Republicans. You can take the
following to the bank: The GOP General Assembly
majority won't be accepting any blame for any credit
watch fiasco or actual rating reduction. Already,
GOP members are saying that this problem has
happened on Warner's watch, while displaying
convenient amnesia about their own fiscal
blundering. Maybe Virginians recognize the truth.
Maybe not.
Right now, three things can happen, and the first
two aren't good for Democrats:
Options 1 and 2: Virginia stays on the credit watch
list or its credit rating gets downgraded. Either of
these scenarios threatens to make Republicans out of
most Virginia voters for a long time to come.
That leaves Option 3: Getting off the credit watch
list ASAP.
But Bennett's be-happy, don't-worry approach plays
right into GOP hands, letting Republicans claim that
the governor has "no exit strategy."
I say turn the tables: Have Bennett develop a plan.
Then the governor calls a special General Assembly
session to deal with the state's growing structural
deficit once and for all. In that way, Warner could
submit a plan to correct what needs correcting and
force Republicans to be either part of the solution
or part of the continuing problem.
If Warner doesn't act soon, though, Democrats could
be singing the Moody blues for years to come.
--
September 25, 2003
This column was originally published in the
September 21, 2003 edition of The Washington Post.
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